Tax-loss harvesting with your RSU shares
When your RSUs vested, you paid ordinary income tax on the fair market value that day. That vest-day value is now your cost basis. If the stock has fallen since, selling those shares locks in a capital loss — and capital losses are one of the few tax levers you fully control.
What a harvested loss buys you
Capital losses are applied in a specific order:
- Against capital gains, dollar for dollar. Sold ESPP shares at a profit? Exercised options? Have gains in a brokerage account? Your RSU loss wipes them out one-for-one, with no limit.
- Against ordinary income — up to $3,000 per year. Leftover losses after offsetting gains can reduce your salary income by $3,000 annually ($1,500 if married filing separately).
- The rest carries forward. Unused losses carry into future years indefinitely, until used up.
A worked example: you vested $50,000 of shares and the position is now worth $38,000. Selling harvests a $12,000 capital loss. If you also realized a $12,000 gain elsewhere this year, the two cancel — you owe no tax on that gain.
The wash-sale trap
The IRS disallows the loss if you buy "substantially identical" shares within 30 days before or after the sale. For tech employees this trap has teeth:
- ESPP purchases count. If your ESPP buys company shares every six months, a purchase inside the 61-day window can trigger a wash sale on your harvested loss.
- Automatic dividend reinvestment counts. A DRIP buying even a few shares can taint the loss.
- Across accounts counts. Buying in your 401(k) or your spouse's account doesn't dodge the rule.
Before harvesting, map every automatic purchase of the same stock in the 30-days-either-side window and pause what you can.
When it makes sense — and when it doesn't
Harvesting is most valuable when you already have gains to offset, or when you want to reduce a concentrated company-stock position anyway (the loss just sweetens a sale you'd make regardless). It's least valuable as a standalone move: manufacturing a sale purely for a $3,000-a-year drip against ordinary income, while giving up any rebound, is a trade worth thinking through rather than assuming.