How States Tax Capital Gains
Capital gains are profits from selling investments, real estate, or other assets. At the federal level, long-term capital gains (assets held over one year) are taxed at preferential rates of 0%, 15%, or 20%. However, most states treat capital gains as ordinary income, taxing them at the same rates as wages and salaries.
This means your state of residence can add significantly to your capital gains tax bill. A California resident selling $500,000 in stock gains could pay up to 13.3% in state tax on top of the federal rate, while a Florida resident would pay zero state tax on the same gain.
All 50 States: Capital Gains Tax Rates
| State | Capital Gains Treatment | Top State Rate | Max Combined Rate |
|---|---|---|---|
| Alabama | Ordinary income | 5.00% | 28.80% |
| Alaska | No state tax | 0% | 23.80% |
| Arizona | Reduced rate (2.5%) | 2.50% | 26.30% |
| Arkansas | 50% exclusion on gains | 2.35% | 26.15% |
| California | Ordinary income | 13.30% | 37.10% |
| Colorado | Ordinary income | 4.40% | 28.20% |
| Connecticut | Ordinary income | 6.99% | 30.79% |
| Delaware | Ordinary income | 6.60% | 30.40% |
| DC | Ordinary income | 10.75% | 34.55% |
| Florida | No state tax | 0% | 23.80% |
| Georgia | Ordinary income | 5.49% | 29.29% |
| Hawaii | Ordinary income (7.25% cap on gains) | 7.25% | 31.05% |
| Idaho | Ordinary income | 5.80% | 29.60% |
| Illinois | Ordinary income | 4.95% | 28.75% |
| Indiana | Ordinary income | 3.05% | 26.85% |
| Iowa | Ordinary income | 3.80% | 27.60% |
| Kansas | Ordinary income | 5.70% | 29.50% |
| Kentucky | Ordinary income | 4.00% | 27.80% |
| Louisiana | Ordinary income | 4.25% | 28.05% |
| Maine | Ordinary income | 7.15% | 30.95% |
| Maryland | Ordinary income | 5.75% | 29.55% |
| Massachusetts | 12% on short-term, 5% on long-term | 9.00% | 32.80% |
| Michigan | Ordinary income | 4.25% | 28.05% |
| Minnesota | Ordinary income | 9.85% | 33.65% |
| Mississippi | Ordinary income | 4.70% | 28.50% |
| Missouri | Ordinary income | 4.95% | 28.75% |
| Montana | 2% capital gains credit | 5.90% | 29.70% |
| Nebraska | Ordinary income | 5.84% | 29.64% |
| Nevada | No state tax | 0% | 23.80% |
| New Hampshire | No tax on gains | 0% | 23.80% |
| New Jersey | Ordinary income | 10.75% | 34.55% |
| New Mexico | 40% deduction on gains | 3.54% | 27.34% |
| New York | Ordinary income | 10.90% | 34.70% |
| North Carolina | Ordinary income | 4.50% | 28.30% |
| North Dakota | 40% exclusion | 1.50% | 25.30% |
| Ohio | Ordinary income | 3.50% | 27.30% |
| Oklahoma | 100% exclusion (OK assets, 2+ yrs) | 4.75% | 28.55% |
| Oregon | Ordinary income | 9.90% | 33.70% |
| Pennsylvania | Ordinary income | 3.07% | 26.87% |
| Rhode Island | Ordinary income | 5.99% | 29.79% |
| South Carolina | 44% exclusion on gains | 3.92% | 27.72% |
| South Dakota | No state tax | 0% | 23.80% |
| Tennessee | No state tax | 0% | 23.80% |
| Texas | No state tax | 0% | 23.80% |
| Utah | Ordinary income | 4.65% | 28.45% |
| Vermont | 40% exclusion (first $5K) | 8.75% | 32.55% |
| Virginia | Ordinary income | 5.75% | 29.55% |
| Washington | 7% on gains over $250K | 7.00% | 30.80% |
| West Virginia | 60% exclusion available | 2.60% | 26.40% |
| Wisconsin | 30% exclusion on farm/small biz | 7.65% | 31.45% |
| Wyoming | No state tax | 0% | 23.80% |
Max Combined Rate assumes the highest federal long-term rate (20%) plus 3.8% NIIT plus state top rate. Actual rates depend on income level and filing status.
Federal Capital Gains Tax Rates (2026)
Before state taxes, the federal government taxes capital gains at these rates:
Long-Term Capital Gains (held over 1 year)
| Rate | Single Filer | Married Filing Jointly |
|---|---|---|
| 0% | Up to $47,025 | Up to $94,050 |
| 15% | $47,026 – $518,900 | $94,051 – $583,750 |
| 20% | Over $518,900 | Over $583,750 |
| +3.8% NIIT | MAGI over $200,000 | MAGI over $250,000 |
Short-Term Capital Gains (held 1 year or less)
Short-term capital gains are taxed as ordinary income at both the federal and state level. The federal rate ranges from 10% to 37% depending on your tax bracket. States also tax short-term gains as ordinary income in nearly all cases.
States With No Capital Gains Tax
- Alaska — No income tax of any kind
- Florida — No income tax of any kind
- Nevada — No income tax of any kind
- New Hampshire — Eliminated interest and dividends tax in 2025
- South Dakota — No income tax of any kind
- Tennessee — No income tax of any kind
- Texas — No income tax of any kind
- Wyoming — No income tax of any kind
Note: Washington State has no general income tax but enacted a separate 7% capital gains excise tax on long-term gains exceeding $250,000 (upheld by the state Supreme Court in 2023).
States With Reduced Capital Gains Rates
Several states offer preferential treatment for capital gains through exclusions, deductions, or reduced rates:
- Arizona — Taxes long-term capital gains at the flat 2.5% rate (same as all income)
- Arkansas — 50% exclusion on capital gains, reducing the effective top rate to about 2.35%
- New Mexico — 40% deduction on capital gains income
- North Dakota — 40% exclusion on long-term capital gains
- Oklahoma — 100% exclusion on gains from Oklahoma-based assets held 2+ years
- South Carolina — 44% exclusion on net capital gains
- West Virginia — Up to 60% exclusion available on certain gains
- Wisconsin — 30% exclusion on farm and small business capital gains
Highest Capital Gains Tax States
If you live in one of these states, your combined federal + state capital gains tax rate can exceed 33%:
- California — 13.3% state rate, up to 37.1% combined
- New York — 10.9% state rate (up to 14.776% with NYC), up to 38.576% combined
- New Jersey — 10.75% state rate, up to 34.55% combined
- DC — 10.75% rate, up to 34.55% combined
- Oregon — 9.9% state rate, up to 33.7% combined
Capital Gains Tax on Real Estate
When you sell a home, the federal tax code provides an exclusion of $250,000 (single) or $500,000 (married filing jointly) on the gain from your primary residence, provided you have lived there for at least 2 of the last 5 years. Most states follow this federal exclusion.
For investment properties and second homes, the full capital gain is taxable at both federal and state levels. The gain equals the selling price minus the adjusted basis (purchase price + improvements - depreciation). In high-tax states like California and New York, selling an investment property can result in a total tax bill exceeding 35% of the gain.
Use our state comparison tool to see the full tax picture for any two states, or explore the income tax by state page for ordinary income rates.
Frequently Asked Questions
Nine states have no income tax and therefore no capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington (though it has a 7% tax on long-term gains over $250,000), and Wyoming.
Most states tax capital gains as ordinary income at regular state income tax rates. However, a few states offer preferential treatment. For example, Arizona taxes long-term capital gains at a reduced rate of 2.5%, and several states offer partial exclusions.
Federal long-term capital gains tax rates for 2026 are 0% (income up to $47,025 single / $94,050 joint), 15% (up to $518,900 single / $583,750 joint), and 20% above those thresholds. An additional 3.8% Net Investment Income Tax applies if MAGI exceeds $200,000 single / $250,000 joint.
California taxes capital gains as ordinary income, with a top rate of 13.3%. This makes California the highest-taxing state for capital gains. Combined with the federal rate, high earners in California can pay up to 37.1% on capital gains.