California does not give long-term capital gains a break. A gain is added to your income and taxed at the same rates as wages.
This guide explains the rule, shows the 2025 rate schedules for single and joint filers, covers the 1% Behavioral Health Services Tax on income over $1 million, and works through two examples. It follows the Franchise Tax Board's capital gains page, rate schedules and Form 540 booklet.
The Franchise Tax Board (FTB) states that California does not have a lower rate for capital gains: all capital gains are taxed as ordinary income. That means a long-term gain on stock, a business or real estate is added to your other taxable income and taxed through the same rate schedule as wages. This is the biggest difference from the federal system, which taxes most long-term gains at 0%, 15% or 20%.
You report gains and losses on your federal return and, if the state treatment differs, on California Capital Gain or Loss Schedule D (540). For the federal rules, see our real estate capital gains guide and capital gains brackets guide.
These are the 2025 California tax rate schedules, the latest full schedules we could verify against the FTB's published schedule. The FTB adjusts the brackets for inflation each year, so the 2026 amounts will be different. The FTB says to use the schedules only if your taxable income on Form 540, line 19 is more than $100,000; if it is $100,000 or less, use the Tax Table.
Schedule X: single or married/RDP filing separately
| Taxable income over | But not over | Rate on the amount over | Tax at the bottom of the bracket |
|---|---|---|---|
| $0 | $11,079 | 1% | $0.00 |
| $11,079 | $26,264 | 2% | $110.79 |
| $26,264 | $41,452 | 4% | $414.49 |
| $41,452 | $57,542 | 6% | $1,022.01 |
| $57,542 | $72,724 | 8% | $1,987.41 |
| $72,724 | $371,479 | 9.3% | $3,201.97 |
| $371,479 | $445,771 | 10.3% | $30,986.19 |
| $445,771 | $742,953 | 11.3% | $38,638.27 |
| $742,953 | and over | 12.3% | $72,219.84 |
Schedule Y: married/RDP filing jointly or qualifying surviving spouse
| Taxable income over | But not over | Rate on the amount over | Tax at the bottom of the bracket |
|---|---|---|---|
| $0 | $22,158 | 1% | $0.00 |
| $22,158 | $52,528 | 2% | $221.58 |
| $52,528 | $82,904 | 4% | $828.98 |
| $82,904 | $115,084 | 6% | $2,044.02 |
| $115,084 | $145,448 | 8% | $3,974.82 |
| $145,448 | $742,958 | 9.3% | $6,403.94 |
| $742,958 | $891,542 | 10.3% | $61,972.37 |
| $891,542 | $1,485,906 | 11.3% | $77,276.52 |
| $1,485,906 | and over | 12.3% | $144,439.65 |
Head of household filers use Schedule Z, which has different bracket points. Because gains are taxed as ordinary income, a large sale can push you into the 9.3%, 10.3%, 11.3% or 12.3% brackets.
If your California taxable income is more than $1,000,000, you also owe a 1% tax on the amount above $1,000,000, figured on line 62 of Form 540. This tax was formerly called the Mental Health Services Tax; the 2025 Form 540 booklet says references have been renamed to Behavioral Health Services Tax. It is added on top of the regular rate schedule, so a very large gain is taxed at a top marginal rate of 12.3% plus 1% (13.3%) on the part above $1,000,000.
Example 1: a gain in the 9.3% bracket. A single filer has $150,000 of California taxable income and then sells stock for a $100,000 long-term gain, taking taxable income to $250,000.
| Step | Amount |
|---|---|
| California tax on $150,000 (Schedule X) | $10,388.64 |
| California tax on $250,000 (Schedule X) | $19,688.64 |
| Extra California tax caused by the gain | $9,300.00 |
Both amounts fall in the 9.3% bracket (above $72,724 and up to $371,479), so the gain is taxed at 9.3%: $100,000 x 9.3% = $9,300.00. There is no lower California rate for the long-term gain.
Example 2: the 1% surtax. A filer with $1,400,000 of taxable income owes 1% of the $400,000 above $1,000,000, which is $4,000.00, in addition to the tax from the rate schedule.
Federal and California taxes on a gain are separate. Federal long-term rates are lower, but California applies its ordinary rates to the gain. For a state-by-state comparison see our state capital gains tax guide. Residency rules decide which income California can tax; our California residency guide covers them.
California Franchise Tax Board: Capital gains and losses, FTB 2025 California Tax Rate Schedules, FTB 2025 Form 540 booklet.
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