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
-
Most states tax capital gains as ordinary income — No preferential rate
-
No-tax states have significant advantage — Save 10%+ on large gains
-
California has the highest combined rate — Up to 37% total
-
Washington added capital gains tax — 7% on gains over $250k
-
Some states offer partial exclusions — Wisconsin (60%), South Carolina (44%)
-
Residency matters for large transactions — Consider timing and domicile carefully
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