16 — Combine Short-Term and Long-Term Updated for tax year 2025

What this line means

The combined total of your net short-term capital gain or loss (line 7) and net long-term capital gain or loss (line 15). This single number determines whether you have a net capital gain, a net capital loss, or zero. If the result is a loss, you can deduct up to $3,000 against ordinary income ($1,500 if married filing separately). Any excess carries forward.

Does this apply to you?

• Everyone who files Schedule D completes this line
• This is a calculation: add line 7 and line 15 together
• The result determines how you complete the rest of the summary section and what flows to Form 1040

Easy to overlook

The $3,000 capital loss deduction offsets ordinary income If line 16 is a net loss, up to $3,000 reduces your taxable wages, self-employment income, or other ordinary income. This is one of the few ways investment losses directly reduce the tax on your paycheck. The deduction is automatic — you do not need to elect it. ¹ [SOURCE: General filing pattern — capital loss deduction limit]

Positive line 16 does not mean all gains are taxed at the same rate A positive result here includes both short-term gains (taxed at ordinary rates) and long-term gains (taxed at preferential rates). The tax calculation on lines 21-22 applies the correct rates to each category. Do not assume one rate applies to the entire amount. ² [SOURCE: IRS Schedule D instructions — Line 16]

Watch out for this

Deducting more than $3,000 of capital losses against ordinary income. If line 16 shows a loss of $25,000, you can only deduct $3,000 this year. The remaining $22,000 carries forward to next year’s Schedule D. Filers who deduct the full loss on their return will receive an IRS correction notice.

Related lines on your return

• Line 7 — Schedule D — Net short-term capital gain or loss
• Line 15 — Schedule D — Net long-term capital gain or loss
• Line 7 — Form 1040 — Where the net capital gain or loss flows onto your return
• Line 21 — Schedule D — Capital gain tax calculation (if line 16 is positive)