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.

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 Eliminated dividend/interest tax

Special Cases

State Income Tax Capital Gains Tax Notes
New Hampshire None on wages None (usually) Taxes dividends/interest only
Washington None on wages 7% on gains >$250k New capital gains tax

State Capital Gains Tax Rates

Highest State Capital Gains Tax Rates

Rank State Top Rate Notes
1 California 13.3% Taxed as ordinary income
2 New Jersey 10.75% Taxed as ordinary income
3 Oregon 9.9% Taxed as ordinary income
4 Minnesota 9.85% Taxed as ordinary income
5 Vermont 8.75% Taxed as ordinary income
6 New York 8.82% Plus NYC at 3.876%
7 Hawaii 8.25%* *Preferential rate for LTCG
8 Maine 7.15% Taxed as ordinary income
9 Washington 7.0% Only gains >$250k
10 Connecticut 6.99% Taxed as ordinary income

All States: Capital Gains Treatment

State Top Income Tax Rate CG Treatment
Alabama 5.0% Ordinary income
Alaska 0% No tax
Arizona 2.5% Ordinary income
Arkansas 4.4% Ordinary income (some exclusions)
California 13.3% Ordinary income
Colorado 4.4% Ordinary income
Connecticut 6.99% Ordinary income
Delaware 6.6% Ordinary income
Florida 0% No tax
Georgia 5.49% Ordinary income
Hawaii 11% (7.25% CG) Preferential rate
Idaho 5.8% Ordinary income
Illinois 4.95% Flat rate
Indiana 3.05% Flat rate
Iowa 5.7% Ordinary income
Kansas 5.7% Ordinary income
Kentucky 4.0% Flat rate
Louisiana 4.25% Ordinary income
Maine 7.15% Ordinary income
Maryland 5.75% Ordinary income
Massachusetts 5% (9% short-term) Different rates
Michigan 4.25% Flat rate
Minnesota 9.85% Ordinary income
Mississippi 5.0% Ordinary income
Missouri 4.95% Ordinary income
Montana 5.9% Preferential rate (partial)
Nebraska 5.84% Ordinary income
Nevada 0% No tax
New Hampshire 0% (5% div/int) Special treatment
New Jersey 10.75% Ordinary income
New Mexico 5.9% Preferential rate (partial)
New York 10.9% Ordinary income
North Carolina 4.5% Flat rate
North Dakota 2.5% Ordinary income
Ohio 3.5% Ordinary income
Oklahoma 4.75% Ordinary income
Oregon 9.9% Ordinary income
Pennsylvania 3.07% Flat rate
Rhode Island 5.99% Ordinary income
South Carolina 6.4% Ordinary income (44% deduction)
South Dakota 0% No tax
Tennessee 0% No tax
Texas 0% No tax
Utah 4.65% Flat rate
Vermont 8.75% Ordinary income
Virginia 5.75% Ordinary income
Washington 7% (>$250k) Capital gains only
West Virginia 5.12% Ordinary income
Wisconsin 7.65% 60% exclusion on LTCG
Wyoming 0% No tax

Combined Federal + State Capital Gains Tax

Long-Term Capital Gains (Top Bracket)

State Federal State Total
California 20% 13.3% 33.3%
New York City 20% 12.7% 32.7%
Oregon 20% 9.9% 29.9%
Minnesota 20% 9.85% 29.85%
New Jersey 20% 10.75% 30.75%
Hawaii 20% 7.25% 27.25%
Florida 20% 0% 20%
Texas 20% 0% 20%
Wyoming 20% 0% 20%

Plus 3.8% Net Investment Income Tax for high earners

Including NIIT (Net Investment Income Tax)

State Federal NIIT State Total
California 20% 3.8% 13.3% 37.1%
New York City 20% 3.8% 12.7% 36.5%
Texas 20% 3.8% 0% 23.8%

States with Preferential Capital Gains Treatment

States with Special CG Rates or Exclusions

State Treatment
Hawaii 7.25% max rate for LTCG (vs. 11% income)
Montana 2% rate reduction on capital gains
New Mexico 50% LTCG exclusion (40% for higher incomes)
South Carolina 44% exclusion on net CG
Wisconsin 60% exclusion on net LTCG
Arkansas Exclusions for certain investments

Massachusetts Short vs. Long-Term

Type Rate
Short-term gains 8.5% (12% on gains >$1M)
Long-term gains 5% (9% on gains >$1M)

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 Most states: 183+ days = resident
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

Federal exclusion ($250k single / $500k married) applies, THEN state tax on remainder:

Scenario Gain Federal Exclusion State Taxable CA Tax (13.3%)
Single $400,000 $250,000 $150,000 $19,950
Married $700,000 $500,000 $200,000 $26,600

Investment Property

No federal exclusion for investment property:

State $200,000 Gain Tax
California $200,000 $26,600
New York $200,000 $17,640
Florida $200,000 $0
Texas $200,000 $0

Impact Comparison: $1 Million Capital Gain

State State Tax Fed + NIIT Total
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

Difference between CA and FL: $133,000 on a $1M gain

Key Takeaways

  1. Most states tax capital gains as ordinary income — No preferential rate

  2. No-tax states have significant advantage — Save 10%+ on large gains

  3. California has the highest combined rate — Up to 37% total

  4. Washington added capital gains tax — 7% on gains over $250k

  5. Some states offer partial exclusions — Wisconsin (60%), South Carolina (44%)

  6. Residency matters for large transactions — Consider timing and domicile carefully

WealthVieu
Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy