Capital Gains Tax by State: All 50 States Compared

A $500,000 long-term capital gain triggers a federal tax bill of roughly $119,000 before a single state touches it. Move that same gain across state lines and the spread is brutal: a California resident in the top bracket faces a combined marginal rate near 33%, while a Texas or Florida resident pays the federal portion and nothing more. The Tax Foundation pegs that California figure at 33% and the no-income-tax states at 25% — an eight-point gap that, on a $500,000 gain, is worth $40,000.

That gap is the entire story of capital gains taxation for high earners, and most state-by-state coverage flattens it into a colored map without doing the arithmetic. This analysis runs the numbers for all 50 states using 2025 rates, the most recent year with fully published federal and state schedules.

The numbers that matter

Sources: IRS Rev. Proc. 2024-40 (federal LTCG, 2025); IRS Topic No. 559 (NIIT); Tax Foundation, 2025 State Individual Income Tax Rates and combined capital gains analysis.

How the federal layer stacks before states enter

State rates mean nothing without the federal base they sit on. For 2025, long-term capital gains face three federal rates — 0%, 15%, and 20% — set by taxable income under the capital gains tax framework. The 20% rate applies to taxable income above $533,400 for single filers and $600,050 for married couples filing jointly, per IRS Rev. Proc. 2024-40. Below those thresholds, most $150k+ households land in the 15% band.

Then comes the NIIT. The net investment income tax adds 3.8% once modified adjusted gross income (MAGI) clears $200,000 for single filers or $250,000 for married couples filing jointly, per IRS Topic No. 559. These thresholds have never been indexed for inflation since the tax took effect in 2013, which means a growing share of upper-middle households now cross the 3.8% threshold through ordinary wage growth alone. For a $150k+ investor selling appreciated stock, NIIT is rarely optional — it almost always applies.

Stack the pieces and the federal ceiling reaches 23.8%: the 20% top LTCG rate plus the 3.8% NIIT. Every state figure below adds on top of that 23.8% federal layer, not in place of it. A resident of a no-income-tax state still pays the full 23.8%; the state column is pure incremental cost.

The four tiers of state treatment

States sort into four distinct buckets, and lumping them together — as a single national average does — hides where the real money moves.

Zero-tax states. Eight states levy no tax on capital gains at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming, and — for wage and most investment income — New Hampshire, which fully phased out its narrow interest-and-dividends tax in 2025. A resident here pays only the federal 23.8% top combined rate. The Tax Foundation assigns these states a top marginal capital gains rate of 25% once federal components are combined under its methodology.

The Washington outlier. Washington has no general income tax but enacted a standalone capital gains excise tax that took effect in 2022. For 2025, the Washington Department of Revenue applies 7% to taxable long-term gains above a standard deduction of $278,000, with an additional 2.9% surtax — total 9.9% — on the portion of gains exceeding $1 million. Real estate and retirement accounts are exempt. This makes Washington a zero-cost state for the typical investor with modest gains and a meaningful-cost state for anyone selling a business or a concentrated equity position.

Moderate-tax states. The bulk of the country taxes gains as ordinary income at top marginal rates between roughly 3% and 7%. A handful soften the blow with explicit capital gains relief that most maps ignore: New Mexico lets taxpayers deduct the greater of $1,000 or 40% of capital gains income; North Dakota allows a 40% deduction; and several states with federal-deductibility provisions effectively trim the headline rate. These deductions matter — a 5.9% New Mexico rate applied to 60% of the gain produces an effective state rate closer to 3.5%.

High-tax states. The top of the table is where $150k+ households feel the divergence. California leads at a 13.3% top marginal rate, treating all capital gains as ordinary income with no holding-period distinction and no preferential rate. Hawaii follows at 11%, then New Jersey at 10.75%, New York at 10.9% (before New York City’s local surcharge), Oregon at 9.9%, and Minnesota at 9.85%, per the Tax Foundation’s 2025 state rate tables. California’s position at the top is structural — it never created a separate capital gains category to begin with.

The combined marginal rate by state

Here is where the 50-state comparison earns its keep. The figures below combine the federal 20% top LTCG rate, the 3.8% NIIT, and each state’s top marginal rate, using the Tax Foundation’s combined-rate methodology for the highest-bracket taxpayer.

Sources: Tax Foundation, “How High Are Capital Gains Taxes in Your State?” (combined federal + state + local top marginal rates); IRS Rev. Proc. 2024-40 and Topic No. 559 for the 23.8% federal component. Combined rates reflect the highest-bracket taxpayer and include the 3.8% NIIT. New Jersey and Hawaii combined rates are approximate ranges where local and bracket-interaction effects vary.

The headline finding: the worst-case state resident pays roughly a third of every gain dollar in combined tax, while a no-tax state resident keeps 75 cents. On a seven-figure business sale, the residency decision alone is worth more than most people’s annual salary.

Finluxy After-Tax Gain Rate: what the haircut actually costs

Marginal rates are abstract. The Finluxy After-Tax Gain Rate makes the cost concrete by measuring net gain after all applicable taxes — federal LTCG plus NIIT plus state — against the original cost basis, then comparing it to the pre-tax gain rate. The difference is the tax haircut.

Consider an identical transaction in three states: stock bought at a cost basis of $100,000, sold for $400,000 after holding longer than one year. The pre-tax gain is $300,000, a pre-tax gain rate of 300% of cost basis. The investor is in the top federal bracket, so the 20% LTCG rate and 3.8% NIIT both apply. Only the state rate changes.

Methodology: Finluxy After-Tax Gain Rate = net gain after tax ÷ original cost basis × 100. Combined rate = federal 20% LTCG + 3.8% NIIT + state top marginal rate (MN 9.85%, CA 13.3%). Pre-tax gain rate = 300% in all three cases. Rates per IRS Rev. Proc. 2024-40, IRS Topic No. 559, and Tax Foundation 2025 state tables. State figures assume gains taxed as ordinary income at the top marginal rate; actual liability varies with total taxable income.

The pre-tax gain rate is 300% everywhere. The after-tax rate ranges from 228.6% in Texas to 188.7% in California — a tax haircut of 71.4 points versus 111.3 points. Same asset, same hold, same federal treatment. The only variable is a line on a driver’s license, and it costs the California resident $39,900 more than the Texan on a single sale.

The methodology behind these figures

What most coverage misses: the marginal-versus-effective trap

Nearly every state capital gains map shows top marginal rates. Almost none show that most $150k+ households don’t pay them. California’s 13.3% applies only to taxable income above $1 million for single filers; the rate on a couple earning $250,000 with a $200,000 gain is closer to 9.3%. The headline rate is a ceiling, not a typical bill.

This matters because the rate gap between states compresses dramatically at realistic income levels. The 8-point combined spread between California and Texas is a top-bracket figure. For a household with $300,000 of total taxable income, the effective state-rate gap narrows to roughly 6 to 7 points — still significant, but not the 13.3% the map implies. The data that drives relocation headlines describes a taxpayer most readers will never be. Understanding your actual after-tax return at your income level requires running your own marginal rate, not the state’s top one.

The second overlooked point: timing controls the rate more than geography for most investors. A gain held one day short of a year is taxed at ordinary federal rates up to 37% — a far larger penalty than any state spread. The short-term versus long-term cost gap dwarfs the interstate difference for anyone trading on shorter horizons.

Practical context for the $150k+ household

For high earners, the state capital gains comparison drives three concrete decisions. The first is realization timing relative to residency. Anyone contemplating a move — retirement to Florida, a job relocation out of California — should weigh whether to defer a large discretionary sale until after establishing residency in the lower-tax state. On a $1 million business sale, the difference between California and Nevada residency exceeds $130,000. That is a planning question worth solving before the sale closes, not after.

The second decision is loss timing. In high-tax states, the dollar value of tax-loss harvesting rises with the combined marginal rate, because each harvested loss offsets gain taxed at federal-plus-state rates. A harvested loss is worth 37 cents on the dollar to a top-bracket Californian and 24 cents to a Texan — making the same strategy meaningfully more valuable in high-tax states, subject to wash sale rule constraints.

The third is the interaction with concentrated positions and one-time liquidity events. The investors most exposed to the interstate spread are those with a single large gain — a business exit, an IPO lockup expiration, an inherited holding sold after a stepped-up basis reset. For these households, the holding-period and timing decision compounds with residency to produce six-figure swings. The figures here establish the ceiling and floor; the actual liability turns on filing status, total taxable income, and asset type, which is where a tax professional modeling your specific transaction earns their fee. Whether you hold real estate, equities, or digital assets subject to capital gains, the state layer is the one variable you can sometimes change — and the only one worth relocating for.