when an individual or business incurs capital losses that exceed their capital gains in a given tax year the excess losses can be carried forward to future years this allows taxpayers to utilize the losses in subsequent years reducing their taxable income and potentially lowering their overall tax liability 
correction sept 20 2023 a previous version of this article mistakenly stated that capital loss carryovers could only be used to offset capital gains it has been edited to reflect that capital loss carryovers may also be used as a deduction against ordinary income correction nov 5 2023 this text has been corrected to reflect that a decedent s capital loss is deductible only on their final income tax return and can t be carried over to their heirs 