Capital gains taxes at the state level are one of the most consequential — and least understood — factors in investment planning. Unlike the federal government, which taxes long-term capital gains at preferential rates of 0%, 15%, or 20%, most US states simply add capital gains on top of ordinary income, taxing them at the same rate as wages. A California investor selling stock with $200,000 in long-term gains faces a combined federal and state rate of up to 33.3% (20% federal + 3.8% NIIT + 13.3% California), not the 23.8% they might expect from federal rates alone.
Only nine states have no state capital gains tax whatsoever — and all nine achieve this by having no income tax at all. A handful of states apply a flat income tax that affects capital gains uniformly. Understanding your state's treatment of capital gains is essential for timing asset sales, evaluating state residency changes, and planning large liquidity events such as business sales or real estate transactions.
This guide covers the capital gains tax rate for every US state in 2026, federal rates, the Net Investment Income Tax (NIIT), and worked examples at a $50,000 gain.
The table below shows the top state capital gains tax rate for each state in 2026. For the vast majority of states, this equals the top ordinary income tax rate, since states do not distinguish between short-term and long-term gains.
| State | Top CG Rate | Treatment |
|---|---|---|
| Alabama | 5.0% | Ordinary income rate |
| Alaska | 0% | No income tax |
| Arizona | 2.5% | Flat income tax rate |
| Arkansas | 3.9% | Ordinary income rate |
| California | 13.3% | Ordinary income rate — highest in US |
| Colorado | 4.4% | Flat income tax rate |
| Connecticut | 6.99% | Ordinary income rate |
| Delaware | 6.6% | Ordinary income rate |
| Florida | 0% | No income tax |
| Georgia | 5.49% | Flat income tax rate (phasing down) |
| Hawaii | 7.25% | Ordinary income rate (7.25% for CG specifically) |
| Idaho | 5.8% | Ordinary income rate |
| Illinois | 4.95% | Flat income tax rate |
| Indiana | 3.05% | Flat income tax rate |
| Iowa | 6.0% | Ordinary income rate |
| Kansas | 5.7% | Ordinary income rate |
| Kentucky | 4.0% | Flat income tax rate |
| Louisiana | 3.0% | Ordinary income rate (reduced 2025) |
| Maine | 7.15% | Ordinary income rate |
| Maryland | 5.75% | Ordinary income rate (plus local up to 3.2%) |
| Massachusetts | 5.0% | Ordinary income rate (8.5% on short-term CG) |
| Michigan | 4.25% | Flat income tax rate |
| Minnesota | 9.85% | Ordinary income rate — third highest |
| Mississippi | 4.7% | Flat income tax rate (phasing down) |
| Missouri | 4.7% | Ordinary income rate |
| Montana | 5.9% | Ordinary income rate |
| Nebraska | 5.84% | Ordinary income rate |
| Nevada | 0% | No income tax |
| New Hampshire | 0% | No income tax (interest/dividends tax fully repealed 2025) |
| New Jersey | 10.75% | Ordinary income rate — second highest |
| New Mexico | 5.9% | Ordinary income rate |
| New York | 10.9% | Ordinary income rate (plus NYC up to 3.876%) |
| North Carolina | 4.5% | Flat income tax rate |
| North Dakota | 2.5% | Ordinary income rate |
| Ohio | 3.5% | Ordinary income rate |
| Oklahoma | 4.75% | Ordinary income rate |
| Oregon | 9.9% | Ordinary income rate |
| Pennsylvania | 3.07% | Flat income tax rate |
| Rhode Island | 5.99% | Ordinary income rate |
| South Carolina | 6.4% | Ordinary income rate (CG exclusion available) |
| South Dakota | 0% | No income tax |
| Tennessee | 0% | No income tax |
| Texas | 0% | No income tax |
| Utah | 4.55% | Flat income tax rate |
| Vermont | 8.75% | Ordinary income rate |
| Virginia | 5.75% | Ordinary income rate |
| Washington | 7%* | *CG tax on long-term gains above $262,000 only (2026) |
| West Virginia | 4.82% | Ordinary income rate (phasing down) |
| Wisconsin | 7.65% | Ordinary income rate (30% exclusion available) |
| Wyoming | 0% | No income tax |
| Washington DC | 10.75% | Ordinary income rate |
Note on Washington State: Washington enacted a 7% capital gains excise tax in 2022 that was upheld by the state Supreme Court in 2023. It applies only to long-term capital gains above $262,000 (2026 threshold, inflation-adjusted) and excludes real estate, retirement accounts, and certain small business sales. This is unique — it is not an income tax but a capital gains excise tax.
At the federal level, long-term capital gains (assets held more than 12 months) are taxed at preferential rates that are lower than ordinary income rates. The 2026 federal long-term capital gains tax brackets are:
| Taxable Income (Single) | Taxable Income (MFJ) | Federal LT CG Rate |
|---|---|---|
| $0 – $48,350 | $0 – $96,700 | 0% |
| $48,351 – $533,400 | $96,701 – $600,050 | 15% |
| Above $533,400 | Above $600,050 | 20% |
Short-term capital gains (assets held 12 months or less) are always taxed as ordinary income at federal rates — up to 37% for the highest earners in 2026.
High earners also face a 3.8% Net Investment Income Tax on capital gains. The NIIT applies when modified adjusted gross income (MAGI) exceeds $200,000 for single filers or $250,000 for married couples filing jointly. There is no inflation adjustment to these thresholds — they have been fixed since 2013, meaning more taxpayers are captured each year.
Combined, a high-earning California investor faces: 20% federal + 3.8% NIIT + 13.3% California = 37.1% total on long-term capital gains. By contrast, a high earner in Texas or Florida faces: 20% federal + 3.8% NIIT + 0% state = 23.8% total — a difference of 13.3 percentage points.
Assume a single filer with $120,000 in wages sells stock with a $50,000 long-term capital gain. MAGI is $170,000.
| Scenario | Federal CG Tax | State CG Tax | Total Tax on $50K Gain |
|---|---|---|---|
| Texas / Florida (no state tax) | $7,500 (15%) | $0 | $7,500 |
| Arizona (2.5% flat) | $7,500 (15%) | $1,250 | $8,750 |
| Colorado (4.4% flat) | $7,500 (15%) | $2,200 | $9,700 |
| Oregon (9.9%) | $7,500 (15%) | $4,950 | $12,450 |
| New York (10.9%) | $7,500 (15%) | $5,450 | $12,950 |
| California (13.3%) | $7,500 (15%) | $6,650 | $14,150 |
At $50,000 in gains, the difference between living in Texas versus California is $6,650 in state tax alone — and this gap grows proportionally with larger gains.
Top 5 highest state CG rates: California (13.3%), New Jersey (10.75%), New York (10.9%), Washington DC (10.75%), Oregon (9.9%)
Zero state CG tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming. Washington applies 7% only above $262,000.
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