Glossary · Crypto tax
Capital loss carryover
A capital loss carryover is the unused part of a net capital loss, carried forward to later tax years.
Updated · Sources
Capital loss limits for individuals, 2026
- $3,000
- of net capital loss can come off your other income, such as wages, each year.
- $1,500
- is the yearly limit instead for a married person filing a separate return.
- No expiry
- for an individual’s carryover, which moves forward until it is used up or the owner dies.
Both dollar limits are set in the tax code and are not adjusted for inflation.
Your capital losses first offset your capital gains for the year. If the losses are larger, you have a net capital loss. Some or all of it comes off your other income, within the yearly limit, and anything left carries over.
The carryover keeps its character. Unused short-term loss arrives in the next year as a short-term loss, and unused long-term loss as long-term. That year it offsets capital gains first, then other income within the same yearly limit.
Crypto held as an investment is a capital asset, so its losses follow these rules too. A coin that has only dropped in price gives you no loss to deduct. The loss counts once you dispose of the coin, for example by selling it.
Sources
- 26 U.S.C. § 1212, Capital loss carrybacks and carryovers
- 26 U.S.C. § 1211, Limitation on capital losses
- IRS, Notice 2014-21 (virtual currency is property)
- IRS, Publication 559, Survivors, Executors, and Administrators
Reviewed and updated September 2026. General information, not advice for your situation.