Taxes may be inevitable (to paraphrase Benjamin Franklin), but at Wealthfront we work tirelessly to help reduce what you owe so you can keep more of what you earn. Year after year, our automated Tax-Loss Harvesting, which we offer at no additional cost, is a major part of how we do that. 2025 was no exception—in fact, market volatility around Liberation Day gave our software an opportunity to harvest $100 million of losses in just three days. Here’s how much we estimate Tax-Loss Harvesting has helped clients save through 2025:
Total estimated tax savings from accounts with Tax-Loss Harvesting
| In 2025 | Last 5 years | Last 10 years | Since inception |
| $161 million | $831 million | $1.20 billion | $1.25 billion |
We think tax-loss harvesting is one of the most valuable services a robo-advisor can provide. It has the power to generate meaningful tax savings, and when it’s automated (as ours is) it eliminates the effort and toil associated with implementing the strategy yourself.
And when we use each client’s inferred tax rate to estimate their benefit from Tax-Loss Harvesting and compare that benefit to the actual amount they paid in advisory fees, we find that for nearly 95% of clients who have used Tax-Loss Harvesting for at least a year in an Automated Investing Account or direct indexing account, the estimated tax benefit exceeds fees paid.
We share our results because we’re proud of them, and we think you have a right to know. We know of no other robo-advisor that consistently publishes its tax-loss harvesting results, which we think might tell you something about how their services perform. In this post, we’ll take a closer look at how Wealthfront’s Tax-Loss Harvesting performed in 2025 and go over some of the basics of the strategy.
Wealthfront’s 2025 Tax-Loss Harvesting results
First, a note on methodology: We measure the benefit of our Tax-Loss Harvesting using a metric we call “harvesting yield.” Annualized harvesting yield is the daily amount of harvested losses divided by daily AUM (assets under management), averaged over time and then multiplied by the total number of trading days in a year. Whenever we show average harvesting yield, it is dollar-weighted. High harvesting yield is good news—it means our software found more opportunities to harvest losses.
Below is a closer look at harvesting yield for several popular account types. In some spots, we’ll break out some results by “client vintage” (the year a client first started using Tax-Loss Harvesting) and risk score to help you understand how various accounts have fared over time.
Tax-Loss Harvesting results for Classic portfolios
Let’s start by looking at results for the most common risk score in our most popular portfolio. The table below shows average annual harvesting yield for clients with a Classic portfolio with a risk score of 8 (the most common risk score for clients using Tax-Loss Harvesting) sorted by client vintage. You can see their average annual harvesting yield over multiple time periods, ranging from one year to more than ten.
Average annual harvesting yield for Classic portfolios with a risk score of 8 through 2025
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
| Since Inception | 2.58% | 3.05% | 3.04% | 2.56% | 2.99% | 4.20% | 4.04% | 5.87% | 5.44% | 6.37% | 3.38% | 3.60% | 7.86% |
| 1 year (2025) | 0.41% | 1.09% | 0.67% | 0.60% | 0.70% | 0.71% | 0.86% | 0.86% | 0.88% | 1.16% | 2.03% | 3.71% | 7.86% |
| 5 years (2021 – 2025) | 1.31% | 2.09% | 1.45% | 1.58% | 1.66% | 2.05% | 2.39% | 3.22% | 5.44% | ||||
| 10 years (2016 – 2025) | 1.87% | 2.53% | 2.43% | 2.56% |
Here’s how to interpret those numbers: A client who started using Tax-Loss Harvesting in 2025 in a risk-score 8 Classic portfolio had an average harvesting yield equal to 7.86% of their portfolio value last year. To understand the potential impact, we can multiply this harvesting yield by a range of marginal tax rates, 25% to 50%, to get a rough estimate of after-tax benefit. This translates to estimated tax savings worth between 1.97% and 3.93% of a client’s portfolio value (depending on their individual tax rate). Even at the low end, that is a large multiple of our 0.25% advisory fee (nearly 8x). At the high end, it’s nearly 16x.
You shouldn’t necessarily expect to maintain that high level of harvesting yield over time, especially without a lot of add-on deposits (more on this below, but it has to do with your cost basis and the tendency of markets to trend up over time). But older client vintages also have gotten significant harvesting yield from Tax-Loss Harvesting over long periods of time. The average annual harvesting yield for clients using Tax-Loss Harvesting in a Classic portfolio across all client vintages and risk scores was 1.59% over the last year, 3.03% over the last five years, and 3.87% over the last decade.
Tax-Loss Harvesting results for Socially Responsible portfolios
Wealthfront’s Socially Responsible portfolio launched in late 2021, and it has had similar harvesting yield results to our Classic portfolio.
| 2025 average annual harvesting yield | Average annual harvesting yield since Socially Responsible portfolio inception | |
| Socially Responsible portfolio | 3.20% | 5.70% |
| Classic portfolio | 3.10% | 5.45% |
Tax-Loss Harvesting results for customized portfolios
Wealthfront’s customized portfolios launched in mid 2021, and harvesting yield for those accounts has been a bit higher.
| 2025 average annual harvesting yield | Average annual harvesting yield since customized portfolio inception | |
| Customized portfolio | 3.74% | 5.91% |
| Classic portfolio | 3.08% | 5.38% |
Tax-Loss Harvesting results for our standalone direct indexing products
Wealthfront offers two standalone direct indexing products that are designed to let you hold stocks from two iconic indices and unlock tax savings through Tax-Loss Harvesting at the same time. Conducting tax-loss harvesting with individual stocks can provide even more opportunities to harvest losses, as stocks are generally more volatile than broad-based ETFs.
- Wealthfront’s S&P 500 Direct launched in late 2024. We estimate S&P 500 Direct helped clients save over $16 million in taxes in its first year alone. You can read more about its first year of performance here.
- Wealthfront’s Nasdaq-100 Direct launched in late 2025, so we don’t have results to report yet—but we look forward to sharing them in the future.
How does tax-loss harvesting work?
Curious about the details of the strategy? Here’s a quick primer.
Tax-loss harvesting is a tax-deferral and tax-minimization strategy where you sell investments that have declined below their purchase price and replace them with similar investments. When you do this, your portfolio keeps the same overall risk and return characteristics, but you get to “harvest” a loss that you can use at tax time. When you file your tax return, harvested losses can be used to offset capital gains and, if you have any left over, up to $3,000 of ordinary income for the year. If you still have losses left over after that, you can roll them over to future years.
How does tax-loss harvesting save you money?
As we mentioned above, tax-loss harvesting can save you money in two ways:
- Tax minimization: Tax-loss harvesting is a tax-minimization strategy because it offers you the opportunity to benefit from tax-rate arbitrage. This is another way of saying you can potentially lower the tax rate you eventually pay when you sell your investments. How? Tax-loss harvesting can allow you to offset short-term capital gains (which are typically taxed as ordinary income, currently up to 37% at the federal level) today and pay long-term capital gains rates (which currently top out at 20% at the federal level) when you eventually sell your investments in the future, provided you hold them for at least a year. Keep in mind that your ability to do this depends on your future tax rates and when you decide to sell your investments.
- Tax deferral: Tax-loss harvesting can also help you delay owing (and thus paying) taxes. This is valuable because of the time value of money. Money you save by not paying taxes today can be invested, meaning it has the potential to be worth more in the future when you do eventually pay taxes. You should know there’s some risk that your tax rate will go up in that time, however, and in that situation, your eventual tax cost could exceed the benefit you received from reinvestment.
How much benefit can you get from Tax-Loss Harvesting?
Your situation is unique, so the actual benefit you personally receive from Tax-Loss Harvesting will likely be higher or lower than the average figures presented in this post. Some factors that affect the benefit you’ll receive from Tax-Loss Harvesting are:
- The risk level of your portfolio: Riskier portfolios are generally more volatile, which usually means you get more opportunities to harvest losses.
- Deposit timing: If you make one deposit and never make another, it gets harder to harvest losses over time. This is because if the market trends up over time, your cost basis will be comparatively low, meaning you need a relatively large market drawdown to get an opportunity to harvest losses. Frequent add-on deposits, however, mean you’ll have more tax lots with higher cost basis and it’s more likely our software will be able to harvest losses.
- Your marginal tax rate: The higher your marginal tax rate, the more you’ll save when you use harvested losses to offset taxable gains.
- Your ability to use losses: You might not realize enough capital gains each year to use all of your harvested losses. That’s OK––you can roll unused losses over to future years.
- Wash sales: Occasionally, some benefit from Tax-Loss Harvesting can be lost to wash sales. Wash sales are rare at Wealthfront (they affect less than 0.01% of the average daily dollars traded, excluding withdrawals) because our software is designed to avoid them across all of your managed accounts with us. If you learn that a wash sale has occurred (you can generally find this information on the 1099-B provided by your brokerage during tax season), it’s not a big problem—you just have to wait until you sell the underlying investment at least 31 days later to realize the loss.
- Suitable alternates: Some investments offered in customized portfolios at Wealthfront aren’t eligible for Tax-Loss Harvesting because we don’t have suitable alternate ETFs available for them. Choosing investments without suitable alternates can lower your harvesting yield. All ETFs in our expert-built portfolios (including Classic and Socially Responsible) have alternates for Tax-Loss Harvesting.
Keep more of what you earn
We’ve shared a lot of information in this post, but if there’s one key takeaway, it’s this: Tax-Loss Harvesting is one of the most valuable services Wealthfront offers, and it’s kept an estimated $1.25 billion in clients’ pockets since the beginning—and at no extra cost. We’re excited to help that number continue to grow over time.
Disclosure
All performance figures in this blog are provided on a calendar year basis (January 1 – December 31), unless otherwise indicated.
The information contained in this blog is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation, offer or recommendation to buy or sell any security or to open any account. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers, Wealthfront Brokerage or any affiliate endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
A note on the “Total Estimated Tax Savings Chart”: We excluded Automated Bond Portfolios from the total estimated tax savings chart because they are designed for near-term, income-focused investing with very low volatility, which comes with a tradeoff: fewer opportunities to harvest losses.
We calculated the estimated tax savings based on our clients’ current self-reported income, state of residence, and tax-filing status. From that, we inferred a combined federal and state tax rate for each client. We then multiplied each client’s rate by their harvested losses and added those numbers up to get the figures above. This calculation also assumes that there are enough capital gains to be fully offset by the harvested losses and that current tax laws and rates remain in effect. The actual tax savings realized by any individual client will vary based on their specific tax situation, investment activity, and market performance. These figures are an estimate of potential tax benefits and are not guaranteed. Investors should consult with a tax professional regarding their specific circumstances.
The “estimated $16 million tax benefit” over the past year (12/01/24-11/30/25) was calculated using our clients’ self-reported income, state of residence, and tax-filing status. From that, we inferred a combined federal and state tax rate for each client and multiplied each client’s rate by their harvested losses. Actual outcomes will vary due to individual tax situations. Performance is not guaranteed.
The effectiveness of the tax-loss harvesting strategy to reduce the tax liability of the client will depend on the client’s entire tax and investment profile, including purchases and dispositions in a client’s (or client’s spouse’s) accounts outside of Wealthfront Advisers and type of investments (e.g., taxable or nontaxable) or holding period (e.g., short-term or long-term).
Keep in mind, any harvested losses are first used to offset capital gains of the same type. This means short-term losses are first deducted against short-term gains, and long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other type of gain.
Tax-loss harvesting involves certain risks, including, among others, the risk that the new investment could have higher costs than the original investment and the strategy could introduce portfolio tracking error into your account. Tracking error is a measure of financial performance that determines the difference between the return fluctuations of an investment portfolio and the return fluctuations of a chosen benchmark. There may also be unintended tax implications.
Wealthfront Advisers’ investment strategies, including portfolio rebalancing and tax loss harvesting, can lead to high levels of trading. High levels of trading could result in (a) bid-ask spread expense; (b) trade executions that may occur at prices beyond the bid ask spread (if quantity demanded exceeds quantity available at the bid or ask); (c) trading that may adversely move prices, such that subsequent transactions occur at worse prices; (d) trading that may disqualify some dividends from qualified dividend treatment; (e) unfulfilled orders or portfolio drift, in the event that markets are disorderly or trading halts altogether; and (f) unforeseen trading errors. The performance of the new securities purchased through the tax-loss harvesting service may be better or worse than the performance of the securities that are sold for tax-loss harvesting purposes.
Tax loss harvesting may generate a higher number of trades due to attempts to capture losses. There is a chance that trading attributed to tax loss harvesting may create capital gains and wash sales and could be subject to higher transaction costs and market impacts. In addition, tax loss harvesting strategies may produce losses, which may not be offset by sufficient gains in the account and may be limited to a $3,000 deduction against income. The utilization of losses harvested through the strategy will depend upon the recognition of capital gains in the same or a future tax period, and in addition may be subject to limitations under applicable tax laws, e.g., if there are insufficient realized gains in the tax period, the use of harvested losses may be limited to a $3,000 deduction against income and distributions. Losses harvested through the strategy that are not utilized in the tax period when recognized (e.g., because of insufficient capital gains and/or significant capital loss carryforwards), generally may be carried forward to offset future capital gains, if any.
Wealthfront Advisers and its affiliates do not provide legal or tax advice and do not assume any liability for the tax consequences of any client transaction. Clients should consult with their personal tax advisors regarding the tax consequences of investing with Wealthfront Advisers and engaging in these tax strategies, based on their particular circumstances. Clients and their personal tax advisors are responsible for how the transactions conducted in an account are reported to the IRS or any other taxing authority on the investor’s personal tax returns. Wealthfront Advisers assumes no responsibility for the tax consequences to any investor of any transaction.
Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
Wealthfront’s S&P 500 Direct: The S&P 500® index is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by Wealthfront Advisers LLC. Standard & Poor’s®, S&P®, S&P 500®, US 500 and The 500 are trademarks of Standard & Poor’s Financial Services LLC and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Wealthfront Advisers LLC. Wealthfront’s S&P 500 Direct Portfolio is not sponsored, endorsed, sold or promoted by SPDJI or its affiliates and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500®.
Wealthfront’s Nasdaq-100 Direct: Nasdaq®, Nasdaq-100 Index®, NDX®, and Nasdaq-100® are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Wealthfront Advisers LLC. The Product(s) (“Wealthfront Nasdaq-100 Direct Index”, “Wealthfront Nasdaq-100 Direct”, “Nasdaq-100 Direct”) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
Our standalone direct indexing portfolios (S&P 500 Direct and Nasdaq-100 Direct) invest in many stocks in their respective underlying index, but they may not invest in all stocks in the index. Its performance may deviate from its associated index due to tracking error, market conditions, and limitations of Tax-Loss Harvesting. Account size and customization options, such as excluding individual stocks, may affect your portfolio’s ability to track its underlying index. Since indices are not available for direct investment, their performance does not reflect the expenses associated with the management of an actual portfolio.
All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Please see our Full Disclosure for important details.
Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products are provided by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a Member of FINRA/SIPC.
Wealthfront Advisers and Wealthfront Brokerage are wholly-owned subsidiaries of Wealthfront Corporation.
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About the author(s)
Alex Michalka, Ph.D, has led Wealthfront’s investment research team since 2019. Prior to Wealthfront, Alex held quantitative research positions at AQR Capital Management and The Climate Corporation. Alex holds a B.A. in Applied Mathematics from the University of California, Berkeley, and a Ph.D. in Operations Research from Columbia University. View all posts by Alex Michalka, Ph.D
