Why has the $3,000 capital loss deduction remained so low? Even though the deduction was set under the Tax Reform Act of 1976, it has not changed despite inflation eroding its value. Originally, the $3,000 limit was meant to help taxpayers offset investment losses with other income, but it hasn’t been adjusted for inflation since then. In today’s dollars, $3,000 would be equivalent to $16,583.83, which seems much more reasonable. Why hasn’t this amount been updated in decades?
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Your own query has been addressed. It’s not been updated to account for inflation. Why hasn’t there been an increase in the federal minimum wage since 2009? since it hasn’t been updated for inflation. Any further motive assignment is pure speculation.
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A more important question is why any dollar limits are established without including an inflation adjustment in the law.
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A more important question is why any dollar limits are established without including an inflation adjustment in the law.
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It probably doesn’t have a significant impact on many people.
The majority of Americans own stock through their 401(k) or IRA, where losses are not reimbursable. I estimate that a tiny percentage of Americans own stock through taxable brokerages and incur losses exceeding $3,000.
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I am still curious about how losing over $100k might sound worse than it actually was. Did you manage to recover some of it, or what? Because it sounds as severe as it seems at face value.