{"id":18168,"date":"2026-04-08T09:53:46","date_gmt":"2026-04-08T16:53:46","guid":{"rendered":"https:\/\/www.wealthfront.com/blog\/?p=18168"},"modified":"2026-04-08T10:00:25","modified_gmt":"2026-04-08T17:00:25","slug":"how-wealthfront-helps-lower-taxes","status":"publish","type":"post","link":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/","title":{"rendered":"How Wealthfront Helps Lower Your Taxes"},"content":{"rendered":"\n

When it comes to investing, one of the last things you want is a big chunk of your returns unnecessarily going to taxes. At Wealthfront, a core part of our investment philosophy<\/a> is using software to automatically look for ways to lower your taxes so you can keep more of what you earn. <\/p>\n\n\n\n

In this post, I’ll walk you through the highlights of how we help you do just that.<\/p>\n\n\n\n

Tax-loss harvesting<\/strong><\/h2>\n\n\n\n

There\u2019s a reason Chief Investment Officer Burt Malkiel called tax-loss harvesting<\/a> the \u201ccrown jewel of tax management strategies.\u201d Automated tax-loss harvesting is one of the most valuable services we offer, and we estimate that through the end of 2025, it has generated a total of $1.27 billion in client tax savings since its inception.<\/strong> (You can read more about how we calculate this here<\/a>.) You can use harvested losses to offset capital gains at tax time, thus lowering what you owe. They can be especially beneficial for anyone who has sold securities at a gain, like company RSUs that have increased in value, or appreciated investments you\u2019re selling to make a down payment on a home. We include Tax-Loss Harvesting in our advisory fee, so you get it at no extra cost. <\/p>\n\n\n\n

Tax-loss harvesting involves selling an investment that has decreased in value below its purchase price, \u201charvesting\u201d the loss, and then buying a similar investment (or investments) to maintain the overall risk and return characteristics of your portfolio. Many investment advisors only do this annually, but Wealthfront\u2019s software automatically looks for opportunities to harvest losses daily. This is how we were able to capture over $100 million of losses in just three market days<\/a> following the announcement of tariffs in April 2025. <\/p>\n\n\n\n

Direct indexing<\/h2>\n\n\n\n

Direct indexing<\/a> with tax-loss harvesting is a sophisticated tax minimization strategy that Wealthfront makes both affordable and accessible through automation. With direct indexing, rather than conducting tax-loss harvesting with an index-based ETF, you hold individual stocks from an index and harvest losses using those. Wealthfront\u2019s direct indexing products are customizable, low cost, and can lower your tax bill more than tax-loss harvesting with ETFs alone, because individual stocks tend to be more volatile. <\/p>\n\n\n\n

If you want to invest in a globally diversified portfolio that is managed for you, you can access direct indexing in our US Direct Indexing account (one of our Automated Investing Accounts) at no additional fee. The minimum account value for US Direct Indexing is $100,000. But if you prefer to have more control over asset allocation choices, you can use our standalone direct indexing products, Wealthfront\u2019s S&P 500 Direct<\/a> and Nasdaq-100 Direct<\/a>. These products are both designed to offer similar performance to popular indices and generate tax savings at the same time\u2014and for a lower fee than many other direct indexing products available today. <\/p>\n\n\n\n

Wealthfront\u2019s direct indexing products<\/strong><\/p>\n\n\n\n

Product<\/strong><\/td>Investments<\/strong><\/td>Advisory fee<\/strong><\/td>Tax-Loss Harvesting?<\/strong><\/td><\/tr>
S&P 500 Direct<\/strong><\/td>Stocks from the S&P 500\u00ae Index<\/td>0.12%<\/td>Yes, see year one results<\/a><\/td><\/tr>
Nasdaq-100 Direct<\/strong><\/td>Stocks from the Nasdaq-100 Index\u00ae<\/td>0.09%<\/td>Yes <\/td><\/tr>
US Direct Indexing<\/strong><\/td>Up to 100 from the CRSP US Total Market Index, plus completion ETFs<\/td>No additional fee beyond 0.25% annual advisory fee<\/td>Yes, see results in our white paper<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Tax-optimized portfolio allocations<\/h2>\n\n\n\n

Portfolio allocation matters when it comes to your taxes, because not all investments receive the same tax treatment. For our taxable <\/strong>Automated Investing Accounts<\/strong><\/a>, <\/strong>we offer three separate versions<\/strong><\/a> tailored for clients\u2019 tax level, and we recommend a portfolio for you based on the income information you provide us with, in addition to your state of residence and risk tolerance. <\/strong><\/p>\n\n\n\n

Californians don\u2019t need to be told that their home state has some of the highest tax rates in the country. For that reason, we also offer California-specific versions of our taxable Automated Investing Accounts which include a California municipal bond ETF.<\/strong> Interest earned from this ETF is exempt from both state and federal income taxes, helping you keep significantly more of what you earn.<\/p>\n\n\n\n

Tax-aware rebalancing, withdrawals, and transfers<\/h2>\n\n\n\n

It\u2019s a fact of investing that portfolios drift over time. Consider this simplified example: If your portfolio is 50% bonds and 50% stocks, but stocks have a great year and bonds less so, your portfolio will end up being more than 50% stocks. That\u2019s where rebalancing, or buying and selling investments to move you back to your target allocation, comes in. But that selling can also run up your tax bill. We use dividends and deposits to rebalance in our managed accounts whenever possible to help minimize taxable events. <\/strong><\/p>\n\n\n\n

Similarly, when you make a withdrawal from a managed investing account with us, we will sell investments to keep you close to your target allocation. Within asset classes, we aim to sell tax efficiently. And when you bring investments over to Wealthfront, whenever possible, we will incorporate them into your Wealthfront portfolio without selling so you don\u2019t incur taxable gains. <\/p>\n\n\n\n

Portfolio Line of Credit<\/h2>\n\n\n\n

Sometimes, you have near-term expenses that strain the amount of cash you have on hand, like a large tax bill. In that instance, you might consider selling some investments (potentially realizing a taxable gain) to handle the expense. Wealthfront\u2019s Portfolio Line of Credit<\/strong><\/a> offers an alternative to withdrawing\u2014taxable Automated Investing Account, Automated Bond Portfolio, or standalone direct indexing account clients with at least $25,000 in the account can borrow up to 30% of their portfolio value at a competitive interest rate.<\/strong> This allows you to access cash quickly without needing to sell your investments and potentially incurring a taxable gain\u2014instead, you\u2019ll pay interest on the line of credit until you\u2019ve repaid it in full. This approach can make sense for bridging short-term gaps when you know you\u2019ll have the cash to repay the loan soon. <\/p>\n\n\n\n

Fixed income with tax advantages<\/h2>\n\n\n\n

A ladder<\/a> of US Treasuries (whose interest is exempt from state and local taxes) can help you earn more and<\/em> keep more after taxes than you would with most savings accounts and some certificates of deposits. However, maintaining your own ladder (where you monitor maturity dates and handle purchases yourself) can be a real headache. Wealthfront\u2019s Automated Bond Ladder<\/strong><\/a> takes the busywork out of this strategy, and is designed to help you earn more on your extra cash with zero state taxes. <\/strong>You can compare the after-tax yield of Treasury interest with fully taxed interest using our calculator here<\/a>.<\/p>\n\n\n\n

Keep more of what you earn<\/h2>\n\n\n\n

Wealthfront wants to help you keep more of what you earn automatically, and this philosophy is woven into all of our products. Our commitment to improving your after-tax returns extends across your entire financial life, from managing your cash and near-term funds to maximizing your long-term investments. The list provided here details some of the most significant ways we work to improve your after-tax returns, but is certainly not exhaustive. We\u2019re proud to help keep more money in your pocket so you can meet your financial goals sooner. 
<\/p>\n","protected":false},"excerpt":{"rendered":"

When it comes to investing, one of the last things you want is a big chunk of your returns unnecessarily going to taxes. At Wealthfront, a core part of our investment philosophy is using software to automatically look for ways to lower your taxes so you can keep more of what you earn.  In this […]<\/p>\n","protected":false},"author":10000,"featured_media":18169,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282,1360],"tags":[],"coauthors":[2515],"class_list":["post-18168","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","category-product-news"],"acf":[],"yoast_head":"\nHow Wealthfront Helps Lower Your Taxes | Wealthfront<\/title>\n<meta name=\"description\" content=\"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Wealthfront Helps Lower Your Taxes | Wealthfront\" \/>\n<meta property=\"og:description\" content=\"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/\" \/>\n<meta property=\"og:site_name\" content=\"Wealthfront Blog\" \/>\n<meta property=\"article:published_time\" content=\"2026-04-08T16:53:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-04-08T17:00:25+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"959\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Dave Myszewski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Wealthfront\" \/>\n<meta name=\"twitter:site\" content=\"@Wealthfront\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Dave Myszewski\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/\",\"url\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/\",\"name\":\"How Wealthfront Helps Lower Your Taxes | Wealthfront\",\"isPartOf\":{\"@id\":\"https:\/\/www.wealthfront.com/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png\",\"datePublished\":\"2026-04-08T16:53:46+00:00\",\"dateModified\":\"2026-04-08T17:00:25+00:00\",\"author\":{\"@id\":\"https:\/\/www.wealthfront.com/blog\/#\/schema\/person\/dab26849baacffef502035f907045563\"},\"description\":\"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage\",\"url\":\"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png\",\"contentUrl\":\"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png\",\"width\":2560,\"height\":959},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.wealthfront.com/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How Wealthfront Helps Lower Your Taxes\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.wealthfront.com/blog\/#website\",\"url\":\"https:\/\/www.wealthfront.com/blog\/\",\"name\":\"Wealthfront Blog\",\"description\":\"Personal Finance & Investing Insights\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.wealthfront.com/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.wealthfront.com/blog\/#\/schema\/person\/dab26849baacffef502035f907045563\",\"name\":\"Elizabeth Rowe\",\"url\":\"https:\/\/www.wealthfront.com/blog\/author\/elizabethrowe\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"How Wealthfront Helps Lower Your Taxes | Wealthfront","description":"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/","og_locale":"en_US","og_type":"article","og_title":"How Wealthfront Helps Lower Your Taxes | Wealthfront","og_description":"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.","og_url":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/","og_site_name":"Wealthfront Blog","article_published_time":"2026-04-08T16:53:46+00:00","article_modified_time":"2026-04-08T17:00:25+00:00","og_image":[{"width":2560,"height":959,"url":"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png","type":"image\/png"}],"author":"Dave Myszewski","twitter_card":"summary_large_image","twitter_creator":"@Wealthfront","twitter_site":"@Wealthfront","twitter_misc":{"Written by":"Dave Myszewski","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/","url":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/","name":"How Wealthfront Helps Lower Your Taxes | Wealthfront","isPartOf":{"@id":"https:\/\/www.wealthfront.com/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage"},"image":{"@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage"},"thumbnailUrl":"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png","datePublished":"2026-04-08T16:53:46+00:00","dateModified":"2026-04-08T17:00:25+00:00","author":{"@id":"https:\/\/www.wealthfront.com/blog\/#\/schema\/person\/dab26849baacffef502035f907045563"},"description":"At Wealthfront, a core part of our investment philosophy is using software to help lower your taxes. Here\u2019s a closer look at how we do that.","breadcrumb":{"@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#primaryimage","url":"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png","contentUrl":"https:\/\/www.wealthfront.com/blog\/wp-content\/uploads\/2026\/04\/TLH-1-scaled.png","width":2560,"height":959},{"@type":"BreadcrumbList","@id":"https:\/\/www.wealthfront.com/blog\/how-wealthfront-helps-lower-taxes\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.wealthfront.com/blog\/"},{"@type":"ListItem","position":2,"name":"How Wealthfront Helps Lower Your Taxes"}]},{"@type":"WebSite","@id":"https:\/\/www.wealthfront.com/blog\/#website","url":"https:\/\/www.wealthfront.com/blog\/","name":"Wealthfront Blog","description":"Personal Finance & Investing Insights","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.wealthfront.com/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.wealthfront.com/blog\/#\/schema\/person\/dab26849baacffef502035f907045563","name":"Elizabeth Rowe","url":"https:\/\/www.wealthfront.com/blog\/author\/elizabethrowe\/"}]}},"_links":{"self":[{"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/posts\/18168","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/users\/10000"}],"replies":[{"embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/comments?post=18168"}],"version-history":[{"count":2,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/posts\/18168\/revisions"}],"predecessor-version":[{"id":18171,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/posts\/18168\/revisions\/18171"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/media\/18169"}],"wp:attachment":[{"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/media?parent=18168"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/categories?post=18168"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/tags?post=18168"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.wealthfront.com/blog\/wp-json\/wp\/v2\/coauthors?post=18168"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}