Net capital losses can be deducted in a given year but are limited to what amount?

Net capital losses can be deducted against ordinary income up to the limit of $3,000 per year for individual taxpayers. This means that if an individual has capital losses that exceed their capital gains, they can use those losses to offset taxable income, but only to the extent of $3,000 in any given tax year.

For married individuals filing separately, the limit is $1,500. Losses beyond this amount can be carried over to subsequent years, allowing taxpayers to use the remaining losses in future tax years until they are fully utilized. Understanding this limit is crucial for effective tax planning and managing investment losses, as it directly impacts an individual's tax liability.