Tax-Loss Harvesting Can Help Offset the Misery of a Bear Market

It’s hard to think of many upsides to selling a stock at a big loss, but there is one: It may lower your taxes.

Investors who take a loss in a taxable account can use it to offset capital gains taxes owed from selling stocks that have appreciated. Such tax-loss harvesting usually gets talked about at year-end, when people strategize about how to offset realized gains. But the S&P 500’s descent into a bear market has pushed the conversation up this year.

“If you have capital gains you want to offset — maybe from a stock you’ve held for years —and have losses from the last six to ...