For the full state income tax comparison and relocation planning framework, see the State Taxes hub.
State Capital Gains Tax Overview
Most states tax capital gains as ordinary income, but treatment varies. Here’s how each state handles capital gains. Note: Several states cut their income tax rates for 2026 (see the table below) — confirm current rates before relying on any figure for tax planning, as multiple states have multi-year phase-down schedules tied to revenue triggers.
States with No Capital Gains Tax
True No-Tax States
| State | Income Tax | Capital Gains Tax | Notes |
|---|---|---|---|
| Alaska | None | None | No income or capital gains tax |
| Florida | None | None | Popular for wealthy retirees |
| Nevada | None | None | No income or capital gains tax |
| South Dakota | None | None | No income or capital gains tax |
| Texas | None | None | No income or capital gains tax |
| Wyoming | None | None | No income or capital gains tax |
| Tennessee | None | None | Former dividend/interest tax was eliminated |
| New Hampshire | None | None | Former interest/dividends tax was fully repealed effective January 1, 2025 — New Hampshire now has no income or capital gains tax of any kind |
Special Case: Washington
| State | Income Tax | Capital Gains Tax | Notes |
|---|---|---|---|
| Washington | None | 7% on gains above an inflation-adjusted threshold ($278,000 for 2025; confirm current 2026 threshold) | Standalone capital gains excise tax, not part of a general income tax |
State Capital Gains Tax Rates
Highest State Capital Gains Tax Rates (Top Marginal, 2026)
| Rank | State | Top Rate | Notes |
|---|---|---|---|
| 1 | California | 13.3% | Taxed as ordinary income |
| 2 | New Jersey | 10.75% | Taxed as ordinary income |
| 3 | New York | 10.9% | Plus NYC local income tax if applicable |
| 4 | Oregon | 9.9% | Taxed as ordinary income |
| 5 | Minnesota | 9.85% | Taxed as ordinary income |
| 6 | Vermont | Confirm current top rate | Taxed as ordinary income |
| 7 | Hawaii | 11% (confirm whether a preferential LTCG rate still applies) | — |
| 8 | Maine | Confirm current top rate | Taxed as ordinary income |
| 9 | Washington | 7% | Standalone excise tax on gains above threshold only |
| 10 | Connecticut | 6.99% | Taxed as ordinary income |
All States: Capital Gains Treatment (2026 Income Tax Rates)
Rates below reflect the last confirmed 2026 top marginal income tax rate for each state, since most states tax capital gains as ordinary income. Several states cut rates for 2026 — see the State Income Tax Guide for full sourcing on each figure.
| State | Top Income Tax Rate (2026) | CG Treatment |
|---|---|---|
| Alabama | 5.0% | Ordinary income |
| Alaska | 0% | No tax |
| Arizona | 2.5% | Ordinary income (flat) |
| Arkansas | 3.7% | Ordinary income (cut from 3.9% in May 2026) |
| California | 13.3% | Ordinary income |
| Colorado | 4.4% | Ordinary income (flat) |
| Connecticut | 6.99% | Ordinary income |
| Delaware | 6.6% | Ordinary income |
| Florida | 0% | No tax |
| Georgia | 4.99% | Ordinary income (flat; cut from 5.19% in 2026) |
| Hawaii | 11% | Confirm whether a preferential LTCG rate still applies |
| Idaho | 5.3% | Ordinary income (flat; cut from 5.695%) |
| Illinois | 4.95% | Flat rate |
| Indiana | 2.95% | Flat rate (cut from 3.05%) |
| Iowa | 3.8% | Flat rate (transition to flat tax completed) |
| Kansas | Confirm current top rate | Ordinary income |
| Kentucky | 3.5% | Flat rate (cut from 4.0%, effective Jan. 1, 2026) |
| Louisiana | Confirm current top rate | Ordinary income |
| Maine | Confirm current top rate | Ordinary income |
| Maryland | 5.75% | Ordinary income |
| Massachusetts | 5% (short-term gains taxed higher; confirm current rate) | Different rates for short vs. long-term |
| Michigan | 4.25% | Flat rate |
| Minnesota | 9.85% | Ordinary income |
| Mississippi | 4.0% (on income above $10,000) | Ordinary income (cut from 4.4%) |
| Missouri | Confirm current top rate | Ordinary income |
| Montana | Confirm current top rate | Preferential rate on some gains (confirm current treatment) |
| Nebraska | Confirm current top rate | Ordinary income |
| Nevada | 0% | No tax |
| New Hampshire | 0% | No tax (former interest/dividends tax fully repealed 2025) |
| New Jersey | 10.75% | Ordinary income |
| New Mexico | Confirm current top rate | Preferential rate (partial exclusion; confirm current terms) |
| New York | 10.9% | Ordinary income |
| North Carolina | 3.99% | Flat rate (cut from 4.25%) |
| North Dakota | Confirm current top rate | Ordinary income |
| Ohio | Confirm current top rate | Ordinary income |
| Oklahoma | Confirm current top rate | Ordinary income |
| Oregon | 9.9% | Ordinary income |
| Pennsylvania | 3.07% | Flat rate |
| Rhode Island | Confirm current top rate | Ordinary income |
| South Carolina | Confirm current top rate | Ordinary income (partial deduction; confirm current percentage) |
| South Dakota | 0% | No tax |
| Tennessee | 0% | No tax |
| Texas | 0% | No tax |
| Utah | 4.45% | Flat rate (cut from 4.5%) |
| Vermont | Confirm current top rate | Ordinary income |
| Virginia | Confirm current top rate | Ordinary income |
| Washington | 7% (>$278,000 threshold for 2025; confirm 2026 threshold) | Standalone capital gains excise tax only |
| West Virginia | Confirm current top rate | Ordinary income |
| Wisconsin | Confirm current top rate | Partial exclusion on LTCG (confirm current percentage) |
| Wyoming | 0% | No tax |
Combined Federal + State Capital Gains Tax
Long-Term Capital Gains (Top Bracket)
The federal top long-term capital gains rate is 20% (applies above $545,500 single / $613,700 married filing jointly for 2026). Adding the top state rate for the highest-tax states:
| State | Federal | State | Total (approx.) |
|---|---|---|---|
| California | 20% | 13.3% | 33.3% |
| New York | 20% | 10.9% | 30.9% (plus NYC local tax if applicable) |
| Oregon | 20% | 9.9% | 29.9% |
| Minnesota | 20% | 9.85% | 29.85% |
| New Jersey | 20% | 10.75% | 30.75% |
| Hawaii | 20% | 11% | 31% |
| Florida | 20% | 0% | 20% |
| Texas | 20% | 0% | 20% |
| Wyoming | 20% | 0% | 20% |
Including NIIT (Net Investment Income Tax)
The 3.8% Net Investment Income Tax applies to investment income for higher earners (above $200,000 single / $250,000 MFJ modified AGI, unchanged thresholds set by statute and not indexed for inflation):
| State | Federal | NIIT | State | Total (approx.) |
|---|---|---|---|---|
| California | 20% | 3.8% | 13.3% | 37.1% |
| New York | 20% | 3.8% | 10.9% | 34.7% |
| Texas | 20% | 3.8% | 0% | 23.8% |
States with Preferential Capital Gains Treatment
States with Special CG Rates or Exclusions
Confirm the current terms of each of these with the relevant state’s tax authority, as preferential capital gains treatment is one of the more frequently revised areas of state tax law:
| State | Treatment (confirm current terms) |
|---|---|
| Hawaii | Confirm whether a preferential maximum rate for LTCG (distinct from the 11% ordinary top rate) is still in effect |
| Montana | Confirm current capital gains rate reduction, if any |
| New Mexico | Confirm current LTCG exclusion percentage |
| South Carolina | Confirm current exclusion percentage on net capital gains |
| Wisconsin | Confirm current exclusion percentage on net LTCG |
| Arkansas | Confirm current exclusions for certain investments |
Massachusetts Short vs. Long-Term
Massachusetts has historically taxed short-term capital gains at a higher rate than long-term gains, with the additional 4% millionaire’s surtax (on income above $1,107,750 for 2026) layered on top for high earners. Confirm current short-term and long-term rates with the Massachusetts Department of Revenue, as this is one of the few states with genuinely different statutory rates by holding period.
Tax Planning Strategies by State
For Large Capital Gains
| Strategy | How It Works |
|---|---|
| Move to no-tax state | Establish residency before sale |
| Installment sale | Spread gain over multiple years |
| Opportunity Zone investment | Defer and potentially reduce gains |
| Charitable giving | Donate appreciated assets |
| Tax-loss harvesting | Offset gains with losses |
Residency Considerations
| Factor | Impact |
|---|---|
| Days spent in state | Many states use 183+ days as a residency trigger — confirm the specific rule for your state |
| Domicile location | Where your permanent home is |
| Driver’s license, voting | Evidence of residency |
| Business ties | Where you work/operate |
| Audit risk | High-value exits get scrutinized |
State Capital Gains on Real Estate
Home Sale Exclusion
The federal home sale exclusion ($250,000 single / $500,000 married) applies first, then state tax applies to any remaining gain:
| Scenario | Gain | Federal Exclusion | State Taxable | CA Tax (13.3%, illustrative) |
|---|---|---|---|---|
| Single | $400,000 | $250,000 | $150,000 | $19,950 |
| Married | $700,000 | $500,000 | $200,000 | $26,600 |
Investment Property
No federal exclusion applies to investment property:
| State | Gain | Tax (illustrative, using 2026 top rates) |
|---|---|---|
| California | $200,000 | $26,600 (13.3%) |
| New York | $200,000 | $21,800 (10.9%) |
| Florida | $200,000 | $0 |
| Texas | $200,000 | $0 |
Impact Comparison: $1 Million Capital Gain (Illustrative)
Using top marginal state rates and the federal 20% top rate plus 3.8% NIIT:
| State | State Tax (approx.) | Fed + NIIT (23.8%) | Total (approx.) |
|---|---|---|---|
| California | $133,000 | $238,000 | $371,000 |
| New York | $109,000 | $238,000 | $347,000 |
| New Jersey | $107,500 | $238,000 | $345,500 |
| Illinois | $49,500 | $238,000 | $287,500 |
| Pennsylvania | $30,700 | $238,000 | $268,700 |
| Florida | $0 | $238,000 | $238,000 |
| Texas | $0 | $238,000 | $238,000 |
Illustrative difference between CA and FL: $133,000 on a $1M gain — this simplified example ignores brackets below the top rate and any deductions; a real filer’s effective rate would typically be somewhat lower than these top-rate figures suggest.
Key Takeaways
- Most states tax capital gains as ordinary income — No preferential rate in most states
- No-tax states have a significant advantage — Can save well into five figures on large gains
- California has the highest combined rate — Over 37% when combining federal, NIIT, and state
- Washington’s capital gains tax is a standalone excise tax — 7% on gains above an inflation-adjusted threshold, not part of a general income tax
- Some states offer partial exclusions — confirm current percentages for Wisconsin, South Carolina, and others, as these are frequently revised
- Residency matters for large transactions — Consider timing and domicile carefully, and consult a tax professional before a major sale
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