States With No Capital Gains Tax
Nine states have no personal income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming, and Washington (note: WA has a 7% tax on gains over $250,000 from financial assets). In these states, only federal capital gains tax and NIIT apply.
State + federal maximum combined capital gains rates — 2025
| State | Capital Gains Rate | Combined with Federal 20%+NIIT 3.8% |
|---|---|---|
| Texas / Florida | 0% | 23.8% |
| Washington (financial assets >$250K) | 7% | 30.8% |
| New York + NYC | 14.78% combined | 38.58% |
| California | 13.3% | 37.1% |
| Oregon | 9.9% | 33.7% |
| New Jersey | 10.75% | 34.55% |
| Minnesota | 9.85% | 33.65% |
| Illinois | 4.95% | 28.75% |
| Pennsylvania | 3.07% | 26.87% |
How State Capital Gains Are Typically Calculated
The majority of states that have income taxes treat capital gains as ordinary income — there is no preferential rate at the state level. States simply apply their income tax brackets to capital gains along with other income. A few exceptions: Wisconsin excludes 30% of net long-term capital gains; South Carolina has a long-term capital gains deduction; Colorado has a minor exclusion. Most states default to full ordinary income treatment.
California applies its regular income tax rates (up to 13.3%) to all capital gains — short or long-term. Combined with federal (20%) and NIIT (3.8%), California investors face a maximum 37.1% combined capital gains rate. This makes California one of the most expensive states in the country for realized investment gains.
Moving Before a Capital Gain: What You Need to Know
- Relocating from a high-tax to a low-tax state before selling can save significantly
- Must be a genuine domicile change: new driver’s license, voter registration, primary residence, majority of time spent
- California and New York aggressively audit high-income movers who realize large gains shortly after relocation
- Part-year resident returns may split gains between states based on time spent in each
- Minimum safe period: Most practitioners recommend 2+ years of genuine residence before a large gain realization
- Document everything: utility bills, lease, professional address changes, social connections in new state
When State Capital Gains Tax Exceeds Federal
For lower-income investors in the 0% federal long-term capital gains bracket, the state capital gains tax can actually exceed the federal tax. An Oregon investor with $40,000 in income who realizes $20,000 in long-term capital gains owes 0% federal but approximately 9.9% state on those gains — a state-only bill. This counterintuitive situation affects retirees using the 0% bracket strategy in high-tax states.
Calculate State + Federal Capital Gains Tax
Select your state to see the combined federal, NIIT, and state capital gains tax on your investment sale.