Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains taxes. When done correctly, it can lower your tax bill without materially changing your portfolio.
The key is to avoid the wash-sale rule, which disallows a loss if you buy the same or a substantially identical security within 30 days. Many investors use a similar but not identical fund to maintain market exposure.
It is most useful in taxable accounts and is typically automated by robo-advisors or managed portfolios.