Capital losses from Federal form are not being subtracted from Capital gains on PA state return

Jart1 — Wed, 04 Mar 2026 14:03:09 GMT

Pa forms look ok, but losses not subtracted

Re: Capital losses from Federal form are not being subtracted from Capital gains on PA state return

LindaS5247 — Wed, 04 Mar 2026 16:32:42 GMT

If your capital losses are not being subtracted from your capital gains, it may be because Pennsylvania tax law does not provide for the same capital loss deductions as federal tax law. It does not allow capital losses to offset gains from different types of investments. It also does not allow loss carryovers from prior years. Depending on what is on your tax return, this may be why you are seeing this.

Pennsylvania law provides that capital losses are only recognized for profit-seeking transactions in the same year, and they can't be used to offset other types of income such as dividends. Capital gains from mutual funds distributions are reported as dividends on the Pennsylvania tax return.

Spouses cannot use each other's losses to offset gains, even on a joint return.

Please see this from the Pennsylvania Department of Revenue Net Gains (Losses) from the Sale, Exchange, or Disposition of Property

If you have any additional information to share or additional questions regarding this, please return to Community and we would be glad to help you.

Re: Capital losses from Federal form are not being subtracted from Capital gains on PA state return

Jart1 — Thu, 05 Mar 2026 13:37:28 GMT

Thanks. So, in PA, Federal capital gains are ‘dividends’, a different income stream that can’t be offset. Seems crazy, but rules are rules. In researching the same thing happened last year, but I missed it. Additional withholding is in order. Thanks again.

topic Capital losses from Federal form are not being subtracted from Capital gains on PA state return in Deductions & credits

Capital losses from Federal form are not being subtracted from Capital gains on PA state return

Re: Capital losses from Federal form are not being subtracted from Capital gains on PA state return

Please see this from the Pennsylvania Department of Revenue Net Gains (Losses) from the Sale, Exchange, or Disposition of Property

Re: Capital losses from Federal form are not being subtracted from Capital gains on PA state return