by LarBrd33
I get you can apply capital losses against capital gains to minimize your taxable gains. I get there is a carryover where if you take more losses than gains, you can apply those losses against future gains. I get that there is a $3000 capital loss deduction where if your losses exceed your gains, you can apply $3000 against your ordinary income.
I just don’t get why that value is so low. Like, one year I took over 100k in losses (sounds worse than it was) and I suppose if I never were to have gains, I could just apply it against $3000 in annual income for the next 33 years. $3000 seems like such a small amount, though. I asked ChatGPT:
The $3,000 capital loss deduction limit has remained unchanged for individuals since it was established under the Tax Reform Act of 1976. Since then, the limit has neither increased nor decreased, even though inflation has eroded its value over time. The limit was originally set at $3,000 to allow taxpayers to offset other income with investment losses, but it has not been adjusted for inflation in the decades since its introduction.
Adjusted for inflation, $3000 in today’s dollars would be $16,583.83. That amount makes a lot more sense to me. Why hasn’t this been increased in decades?