Crypto Tax-Loss Harvesting in 2026: US, Canada and UK Rules

Crypto prices rarely move together. By the end of a year most portfolios hold a few coins that are up and a few that are down. Tax-loss harvesting is the practice of selling the losers on purpose so their losses cancel out tax on the winners. It is legal in all three countries this site covers, but each one has a different rule about buying the coin back, and in the US that rule may be about to change.

How tax-loss harvesting works

A loss only counts for tax once you dispose of the coin: sell it, swap it or spend it. A coin that is down 60% in your wallet is an unrealized loss and does nothing for your tax bill. Sell it and the loss becomes realized, and realized losses are netted against realized gains.

Here is the idea with one portfolio, before December 31:

If this investor sells the SOL and ADA before the year ends, $6,000 of losses offset the $8,000 Bitcoin gain and only $2,000 is taxed. If those gains were short-term and the investor is in the 24% US bracket, that is about $1,440 of federal tax avoided. The coins can be bought back later, which is where the country rules start to differ.

United States: 2026 rules

What a harvested loss can offset

• Losses first offset gains of the same type, short-term against short-term and long-term against long-term, then the other type.
• If losses are larger than gains, up to $3,000 of the excess ($1,500 if married filing separately) reduces your other income, such as wages.
• Whatever is left carries forward to future years with no expiry date.

Short-term losses are the most valuable to harvest because they cancel gains that would otherwise be taxed at ordinary rates of up to 37%.

The wash-sale rule does not cover crypto yet

For stocks and other securities, the wash-sale rule in section 1091 of the tax code disallows a loss if you buy the same or a substantially identical security within 30 days before or after the sale. Crypto held as property has not been covered by it, so under current law you can sell a coin at a loss and buy it straight back.

The bill that would change it

On September 14, 2026, Rep. Jason Smith introduced H.R. 10357, the Digital Asset Tax Certainty Act. Two days later the House Ways and Means Committee approved it 38 to 5. As reported from the committee text, it would disallow a loss on a traded digital asset, other than a qualified US dollar stablecoin, sold after September 14, 2026, when the same or a substantially identical asset is bought within 30 days before or after the sale.

The bill still has to pass the full House, which was expected to take it up after the November elections, then the Senate, and be signed. As of October 11, 2026 it is not law. The date is what matters for this year: if it passes as written, a sell-and-rebuy done in October or November 2026 could lose its tax benefit after the fact.

The same bill would also make crypto transaction fees of $10 or less free of gain or loss from 2028 and stop most qualified dollar stablecoin transactions from producing a gain or loss from 2027. Those parts do not affect harvesting this year.

How to harvest in the US this year

• Wait 31 days before buying back if you want the loss to survive whatever Congress does. Your money is out of that coin for a month.
• Buy something different to stay invested, such as a different coin. Whether a wrapped or bridged version of the same coin would count as substantially identical would depend on the final text, so do not rely on that swap.
• Pick the right lots. Your loss depends on which units you sell. Since January 1, 2025 basis is tracked wallet by wallet (Rev. Proc. 2024-28), and you can only choose lots held in the wallet or account you sell from. Identify the highest-cost units at or before the sale; afterwards is too late, and FIFO applies by default.
• Trade with a margin before December 31. The sale date decides the tax year. Many exchanges timestamp trades in UTC, so a trade late on the evening of December 31 in North America may already be dated January 1.

Canada: the superficial loss rule

Canada taxes half of a capital gain, so half of a capital loss is deductible. That allowable capital loss offsets taxable capital gains only, never your salary or other income. A net capital loss you cannot use this year can be carried back three years or forward indefinitely, again only against taxable capital gains.

Canada already has a rule like the wash sale. A loss is a superficial loss, and is denied, when both of these are true:

• you, or a person affiliated with you such as your spouse or common-law partner or a corporation you control, buy the same or identical property in the period that starts 30 days before the sale and ends 30 days after it, and
• you or that person still own the property at the end of that period.

A denied loss is not gone for good. It is added to the adjusted cost base (ACB) of the coins you bought back, so it reduces the gain, or increases the loss, when you finally sell them.

Example: you sell ETH with an ACB of $10,000 for $6,000 in November. That is a $4,000 capital loss and a $2,000 allowable capital loss. If you realized $5,000 of gains earlier in the year ($2,500 taxable), the loss cuts your taxable capital gain to $500. At a 30% marginal rate that saves about $600. Buy the ETH back on day 20 and the whole loss becomes superficial; wait until day 31 and it stands.

If the CRA considers your trading a business, your gains and losses are business income and different rules apply, so get advice before harvesting at volume.

United Kingdom: the 30-day rule

The UK does not have a wash-sale rule, but its matching rules have a similar effect. When you dispose of tokens, HMRC matches the disposal in this order (CRYPTO22200):

1. tokens of the same type bought on the same day,
2. tokens of the same type bought in the next 30 days,
3. the section 104 pool, which holds everything else at an average cost.

So if you sell a token at a loss and buy the same token back within 30 days, the sale is matched with the new purchase price rather than your pool cost. If the price barely moved, your harvested loss mostly disappears. Wait 31 days or buy a different token.

UK losses have two quirks worth planning around:

• Same-year losses are used in full. They are set against same-year gains before the £3,000 annual exempt amount, even if that wastes part of the allowance. Losses carried forward from earlier years are only used to bring gains down to £3,000.
• Losses must be claimed. Report them to HMRC within four years of the end of the tax year in which you made them, or they cannot be used.

The UK tax year ends on 5 April, so you have until 5 April 2027 to harvest for 2026/27. Gains above the £3,000 allowance are taxed at 18% within the basic-rate band and 24% above it. Example: a £5,000 gain on Bitcoin plus a £2,000 harvested loss on SOL leaves a £3,000 net gain, which the annual exempt amount covers, saving £360 for a basic-rate taxpayer or £480 for a higher-rate one.

The 30-day rule applies to the person who sold. A spouse or civil partner buying the same token is not matched with your sale, a technique known as "bed and spouse". Transfers between spouses living together are made at no gain and no loss, so ask an adviser before relying on it.

US, Canada and UK side by side

Step by step: harvesting before year-end

1. List your unrealized losses. Compare cost basis (US), ACB (Canada) or pool cost (UK) with today's value for every coin.
2. Total the gains you have already realized this year, including swaps between coins, which count as sales.
3. Decide how much loss you need. In the US, losing more than your gains plus $3,000 only adds to a carryforward; in Canada and the UK, extra losses carry over.
4. Choose the lots (US) before you place the order, in the wallet you are selling from.
5. Sell before the deadline, leaving a few days of margin.
6. Stay out for 31 days or move into a different asset if you want to keep market exposure.
7. Save the records: trade confirmations, the exchange CSV, and the lot or ACB calculation.
8. Report the sales on Form 8949 in the US, on Schedule 3 in Canada, or on your Self Assessment return in the UK.

Mistakes that cancel the benefit

• Moving coins instead of selling them. A transfer to your own wallet is not a disposal and realizes nothing.
• Trusting an exchange's cost basis blindly. Coins transferred in often show missing or wrong basis, which distorts the loss you think you are taking.
• Rebuying through a spouse in Canada. Affiliated persons are caught by the superficial loss rule.
• Forgetting the fees. Trading fees reduce your proceeds and add to your basis, which makes the loss slightly bigger, so record them.
• Harvesting a stablecoin. A dollar stablecoin bought at $1 and sold at $1 has no loss to harvest.

Frequently asked questions

Is crypto tax-loss harvesting legal?

Yes. Selling an asset at a loss to offset gains is legal in the US, Canada and the UK. What differs is whether you can buy the same asset back straight away: Canada's superficial loss rule and the UK's 30-day rule limit that today, and a US bill would do the same if it becomes law.

Does the wash-sale rule apply to crypto in 2026?

Not under current law. The US wash-sale rule covers stock and securities. H.R. 10357, approved by the House Ways and Means Committee on September 16, 2026, would extend it to most traded digital assets sold after September 14, 2026, but it still needs the full House, the Senate and a signature.

How much crypto loss can I deduct in the US?

All of it against capital gains, plus up to $3,000 a year against other income ($1,500 if married filing separately). Anything left over carries forward to later years with no time limit.

Can I buy the coin back straight after selling it?

In the US, yes for now, but a sale after September 14, 2026 could have its loss disallowed if H.R. 10357 passes as written. In Canada, buying back within 30 days makes the loss superficial. In the UK, a rebuy within 30 days is matched with the sale and usually wipes out the loss.

What is the deadline for crypto tax-loss harvesting?

December 31 for the US and Canada, because both use the calendar year. In the UK the 2026/27 tax year ends on 5 April 2027.

Do harvested crypto losses expire?

Not in the US or Canada: US capital losses carry forward indefinitely, and Canadian net capital losses can be carried back three years or forward indefinitely. In the UK they also carry forward, but only if you claim them within four years of the end of the tax year.

Can I harvest losses on coins I received as staking rewards?

Yes. A staking reward's cost basis is the value you reported as income when you received it, so if the price has fallen since, selling it realizes a capital loss like any other coin.

Sources

1. IRS, Topic 409: Capital gains and losses
2. Congress.gov, H.R. 10357, Digital Asset Tax Certainty Act
3. Forvis Mazars, Ways and Means approves Digital Asset Tax Certainty Act (September 2026)
4. Unchained, House panel advances crypto tax bill that would limit certain loss write-offs (September 2026)
5. Justice Laws, Income Tax Act, section 54 (superficial loss)
6. Canada Revenue Agency, Information for crypto-asset users and tax professionals
7. HMRC, Cryptoassets Manual CRYPTO22200: pooling
8. GOV.UK, Capital Gains Tax: losses

This guide is general information for the 2026 tax year, not tax, legal or financial advice. Tax rules change often, so confirm your situation with a qualified professional before you file. Spotted an error? Email taxoncrypto@gmail.com.