Why is $3000 in capital losses not being deducted from my federal tax of ~$1000?

[Jack2572]

I owe roughly ~$1,000 in federal income tax. When I enter my capital losses of $3,000+ in the TurboTax Free File Program, only a very small percentage is deducted from the total tax owed. Can anyone explain this? I was under the impression that I should not have to pay any taxes if my short term capital losses were greater than my federal income tax due. Thanks!

[Country Apple]

Capital losses reduce your taxable income, thereby reducing your tax.  Capital losses are not tax credits and do not lower your taxes dollar for dollar.  A $3,000 capital loss would translate to a small amount of tax.

[tagteam · Accepted solution]

Capital losses and capital gains are netted.

If you have a net capital loss, then the amount of the loss you can deduct from other income is limited to $3,000 per year ($1,500 if married and filing a separate return). 

See https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0