Capital Gains Tax by State: A Full Breakdown

California taxes capital gains at 13.3%. Nine states charge nothing at all. Where you live when you sell stock, a rental property, or a business can determine whether you keep or hand over a five-figure check to your state government.

How State Capital Gains Taxes Actually Work

Most states do not have a separate capital gains tax rate. They tax investment profits as ordinary income, using the same brackets that apply to wages. That means your state income tax rate is your capital gains rate.

A handful of states offer preferential treatment, taxing capital gains at a lower rate than earned income. A smaller group, including Florida, Texas, and Nevada, have no income tax at all, which means no state-level capital gains tax by default. If you want to see how those states compare on overall tax burden, our States With No Income Tax in 2026 breakdown covers the full picture.

States With the Highest Capital Gains Taxes

California sits at the top with a 13.3% rate on capital gains, the highest in the country. The state treats all capital gains as ordinary income, so high earners pay the full top marginal rate on every dollar of investment profit.

New York is second at 10.9%. Oregon charges 9.9%. Minnesota tops out at 9.85%. New Jersey hits 10.75% at the highest bracket. Combined with the federal long-term capital gains rate of 20% plus the 3.8% net investment income tax for high earners, a California resident selling a large asset faces a combined marginal rate above 37%.

Here are the top 10 states by capital gains tax rate for 2026:

| State | Top Capital Gains Rate | |---|---| | California | 13.30% | | New Jersey | 10.75% | | New York | 10.90% | | Oregon | 9.90% | | Minnesota | 9.85% | | Vermont | 8.75% | | Wisconsin | 7.65% | | Iowa | 6.00% | | Maine | 7.15% | | Idaho | 5.80% |

States With No Capital Gains Tax

Nine states charge zero state capital gains tax because they have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Washington is a partial exception. The state passed a 7% capital gains tax in 2022 that applies to gains above $250,000 on long-term assets like stocks and bonds. Real estate is explicitly excluded. That law survived a state Supreme Court challenge in 2023 and remains in effect for 2026.

North Dakota is worth mentioning separately. The state taxes capital gains as income but caps the top rate at 2.5%, making it one of the most favorable states for investors who do not want to relocate entirely. Michigan applies a flat 4.25% rate. Those looking to minimize taxes in retirement will find relevant comparisons in our Best States for Retirees to Avoid Taxes guide.

What the 20% Federal Rate Means and How State Taxes Stack On Top

The federal long-term capital gains rate maxes out at 20% for single filers earning above $518,900 in 2026. Most middle-income filers pay 15%. Short-term gains, on assets held less than one year, are taxed as ordinary income at rates up to 37%.

The 3.8% net investment income tax also applies to investment profits for individuals earning above $200,000 ($250,000 for joint filers). That pushes the federal ceiling to 23.8% before any state tax is added.

For a California resident in the top bracket selling $500,000 in long-term gains, the combined federal and state tax bill approaches $185,000. The same transaction in Florida costs nothing at the state level and caps out around $119,000 federally. That $66,000 difference is why high-net-worth individuals pay close attention to residency before triggering large taxable events.

You can use our state tax calculator to estimate your total burden across federal, state, and local taxes for any given income and gain amount.

Does the Big Beautiful Bill Change Capital Gains Taxes?

The Big Beautiful Bill, passed by the House in 2026, does not restructure federal capital gains rates. The current 0%, 15%, and 20% brackets remain intact under the proposed framework. The bill focuses primarily on income tax cuts and estate tax adjustments. State capital gains taxes are unaffected by federal legislation regardless.

Key Takeaways

• California's 13.3% capital gains rate is the highest in the country. Combined with the 23.8% federal ceiling, top earners face a marginal rate above 37% on investment profits.
• Nine states charge no capital gains tax because they have no income tax. Washington is the exception, taxing gains above $250,000 at 7%.
• The difference between living in California and Florida when selling $500,000 in long-term gains can exceed $66,000 in a single transaction.

Compare your current state against lower-tax alternatives using our full state-by-state tool at liveordiehere.com.