Taking a Bigger Loss in Stocks didn't Reduce Taxes Owed As Much

Selling a bigger loss doesn't always reduce taxes more.  Here is my story.

As part of tax loss harvesting, I sold a stock with long term capital losses on December 22, 2025.   I immediately calculated the estimated tax savings and it was less than I expected.   I tested selling stock for half the short term loss and the tax savings was greater.

I analyzed the situation and realized the reason.  My long term capital gains were taxed at 0%, while short term capital gains were taxed at 12%.   Therefore, reducing long term capital gains had much less of tax benefit than reducing short term capital gains.

I quickly called the brokerage firm and changed the selected cost basis shares to the short term capital loss, before T+1 settlement occurred.

Fortunately, I use Excel to do a real time analysis of may tax situation and caught this "error."   It increased my refund about $100 but doing this analysis, which I was able to do.  

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This is not financial nor tax advice. Please consult a professional advisor.

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