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State-by-State Capital Gains Tax Rates for 2024

State-by-State Capital Gains Tax Rates for 2024

Estimated Reading Time: 8 minutes

No (capital) pain, no (capital) gain.

Most investors know that the federal capital gains tax is generally quite a bit lower than the comparable income tax rate. However, some may be surprised to learn that most U.S. states levy their own capital gains tax as well.

In this article, we’ll highlight the top capital gains tax rate for each U.S. state, including which states have the highest rates and which levy no capital gains tax at all.

 

Table of Contents

 

What is Capital Gains Tax?

Capital gains tax is a type of tax imposed on the profits earned from the sale of certain assets such as stocks, bonds, real estate, and precious metals. When you sell an asset for more than you paid for it, the difference between the sale price and the purchase price is considered a capital gain.

There are typically two types of capital gains tax rates: short-term and long-term. Short-term capital gains are derived from assets held for one year or less, while long-term capital gains come from assets held for more than one year. 

Long-term capital gains are generally taxed at a lower rate than short-term capital gains, so many investors hold onto their assets for at least a year to fall into a lower tax bracket.

 

2024 Federal Capital Gains Tax Brackets

Here’s breakdown of the 2024 federal long-term capital gains tax rates based on filing status:

Filing Status 0% 15% 20%
Single $0 to $47,025 $47,026 to $518,900 $518,901 or more
Married, filing jointly $0 to $94,050 $94,051 to $583,750 $583,751 or more
Married, filing separately $0 to $47,025 $47,026 to $291,850 $291,851 or more
Head of Household $0 to $63,000 $63,001 to $551,350 $551,351 or more

 

Most taxpayers will only pay a long-term capital gains tax of 0-15%. However, the above brackets only apply at the federal level. 

Depending on where you live, you may owe additional tax upon the sale of a profitable asset. Just as some states levy a state income tax, some levy their own capital gains tax as well. 

 

Which States Have the Highest Capital Gains Tax?

Most states’ long-term capital gains tax is identical or correlated to their state income tax.

For example, California treats all capital gains as ordinary income. It makes no difference whether you’ve held an asset for 60 days or 60 years. Upon the sale, you will be required to pay the state between 0% and 14.4% of your profit.

The states with the highest state capital gains tax in 2024 are as follows:

  • California (up to 14.4%)
  • Minnesota (up to 9.85%)
  • New Jersey (up to 10.75%)
  • New York (up to 10.9%)
  • Oregon (up to 9.9%)

 

Which States Do Not Tax Capital Gains?

There are only eight states that do not tax capital gains:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire* 
  • South Dakota
  • Tennessee
  • Texas
  • Wyoming

*While New Hampshire does not tax income or capital gains, it does tax investment income such as interest and dividends.

As you may have noticed, none of these states have an income tax. Rather than raising revenues through income or capital gains taxes, these states may have higher property, corporate, or sales taxes.

 

2024 Capital Gains Tax By State 

Now that we’ve highlighted the states that tax capital gains the most and least, here are the long-term capital gains tax rates for all 50 states in 2024:

 

Alabama

Taxes capital gains at the same rate as income, up to 5%.

Alaska

Does not tax income nor capital gains.

Arizona

Taxes capital gains at the same rate as income, a flat 2.5%.

Arkansas

Taxes capital gains at the same rate as income, up to 5.5%. However, 50% of capital gains may be exempt from income tax, reducing the effective capital gains tax rate to 2.75%.

California

Taxes capital gains at the same rate as income, up to 14.4%.

Colorado

Taxes capital gains at the same rate as income, a flat 4.55%.

Connecticut

Taxes all capital gains at a flat rate of 7%.

Delaware

Taxes capital gains at the same rate as income, up to 6.6%.

Florida

Does not tax income nor capital gains.

Georgia

Taxes capital gains at the same rate as income, up to 5.75%.

Hawaii

Taxes capital gains at a lower rate than income, up to 7.25%.

Idaho 

Taxes capital gains at the same rate as income, up to 5.8%.

Illinois

Taxes capital gains at the same rate as income, a flat 4.95%.

Indiana

Taxes capital gains at the same rate as income, a flat 3.05%.

Iowa

Taxes capital gains at the same rate as income, up to 6%.

Kansas

Taxes capital gains at the same rate as income, up to 5.7%.

Kentucky

Taxes capital gains at the same rate as income, a flat 4.5%.

Louisiana

Taxes capital gains at the same rate as income, up to 4.25%.

Maine

Taxes capital gains at the same rate as income, up to 7.15%.

Maryland

Taxes capital gains at the same rate as income, up to 5.75%.

Massachusetts

Taxes long-term capital gains at the same rate as income, a flat rate of 5%. However, Massachusetts levies a higher rate of 8.5% for short-term capital gains.

Michigan

Taxes capital gains at the same rate as income, at a flat rate of 4.05%.

Minnesota

Taxes capital gains at the same rate as income, up to 9.85%.

Mississippi

Taxes capital gains at the same rate as income, up to 4.7%.

Missouri

Taxes capital gains at the same rate as income, up to 4.95%.

Montana

Taxes capital gains separately from ordinary income, up to 4.1%.

Nebraska

Taxes capital gains at the same rate as income, up to 6.64%.

Nevada

Does not tax income nor capital gains.

New Hampshire

Does not tax most forms of income nor capital gains. However, New Hampshire does tax investment income such as interest and dividends at a flat rate of 3%. This tax is scheduled to be repealed on January 1, 2025.

New Jersey

Taxes capital gains at the same rate as income, up to 10.75%.

New Mexico

Taxes capital gains at the same rate as income, up to 5.9%. However, New Mexico allows taxpayers to deduct up to $1,000 or 40% of their capital gains income, whichever is greater.

New York

Taxes capital gains at the same rate as income, up to 10.9%.

North Carolina

Taxes capital gains at the same rate as income, a flat rate of 4.75%.

North Dakota

Taxes capital gains at the same rate as income, up to 2.5%. However, North Dakota allows taxpayers to deduct up to 40% of their capital gains income.

Ohio

Taxes capital gains at the same rate as income, up to 3.75%.

Oklahoma

Taxes capital gains at the same rate as income, up to 4.75%. However, Oklahoma allows taxpayers to deduct 100% of any capital gains resulting from:

  • The sale of Oklahoma property owned for at least five consecutive years, or
  • The sale of stock in an Oklahoma company or partnership held for at least two consecutive years.

Oregon

Taxes capital gains at the same rate as income, up to 9.9%.

Pennsylvania

Taxes capital gains at the same rate as income, a flat rate of 3.07%.

Rhode Island

Taxes capital gains at the same rate as income, up to 5.99%.

South Carolina

Taxes capital gains at the same rate as income, up to 6.4%. However, South Carolina allows taxpayers to deduct up to 44% of their long-term capital gains.

South Dakota

Does not tax income nor capital gains.

Tennessee

Does not tax income nor capital gains.

Texas

Does not tax income nor capital gains.

Utah

Taxes capital gains at the same rate as income, a flat rate of 4.65%.

Vermont

Taxes capital gains held for less than three years at the same rate as income, up to 8.75%. If an asset has been held longer than three years, up to 40% of the capital gain may be excluded. However, this exclusion amount cannot exceed $350,000 or 40% of federal taxable income.

Virginia

Taxes capital gains at the same rate as income, a flat rate of 5.75%.

Washington

Only taxes capital gains above $250,000, up to 7%.

West Virginia

Taxes capital gains at the same rate as income, up to 5.12%.

Wisconsin

Taxes capital gains at the same rate as income, up to 7.65%. However, Wisconsin allows taxpayers to deduct up to 30% on their long-term capital gains. This deduction rises to 60% if the capital gain resulted from a profit on farm assets.

Wyoming

Does not tax income nor capital gains.

 

Please note: This list of state capital gains tax is heavily simplified. For example, many states offer capital gains tax exemptions for certain types of income. 

It’s essential to verify the latest tax laws or consult with a tax professional before filing your taxes to ensure you’re paying the correct amount.

 

How to Reduce Capital Gains Taxes

Here are four strategies you may use to potentially lower your capital gains tax liability:

 

Relocate to a Lower Tax State

While lower taxes should not be your only reason for moving, relocating to a state with low or nonexistent capital gains tax could significantly reduce your tax liability. Of course, it's essential to consider various factors before making such a significant decision, including the cost of living, job opportunities, quality of life, and personal preferences.

 

Qualify for the Home Sale Exemption 

The government levies many policies to encourage homeownership, including a potential capital gains exemption. If you sell a home that you’ve owned and used as your primary residence for two of the last five years, you may be able to exclude up to $250,000 of the sale from any capital gains calculation. This amount doubles to $500,000 if you’re married, filing jointly.

 

Carry Losses Over

Offset capital gains with capital losses by subtracting total losses from gains. Excess losses can be used to offset ordinary income, up to $3,000 per year ($1,500 for married filing separately), with any remaining losses carried forward to future tax years.

 

Utilize Tax-Advantaged Accounts

Consider devoting more of your funds to a 401(k), IRA, or 529 college savings accounts. Investments sold within a retirement account are generally exempt from capital gains tax. Plus, in some cases, you may even be able to reduce your current tax bill by contributing to one of these accounts.

In most IRAs and 401(k)s, you can access publicly traded securities like stocks, bonds, and mutual funds. However, what if you want to access the private markets with your retirement funds and potentially lower your capital gains tax liability?

You could open a self-directed IRA (SDIRA).

 

Consider an SDIRA to Reduce Capital Gains Tax

An SDIRA is nearly identical to an IRA from a bank or brokerage. Rather than being limited to the public markets, you’re able to invest in any asset the IRS allows, like real estate, private equity, promissory notes, and precious metals.

Not only are you able to reduce your tax liability, you’re able to gain diversification from the public markets and leverage unique expertise.

Depending on your filing status and income, this could lead to a substantial improvement in your take-home earnings. If you live in a state that levies a significant capital gains tax like California or New York, the savings could be even greater.

However, in order to fully benefit from the tax advantages of an SDIRA, you must follow the IRS rules. For instance, you must ensure that all income generated by the IRA flows directly back to the IRA, and you must avoid transactions with disqualified persons such as a spouse, direct descendant, and yourself.

To learn more about SDIRAs, download our SDIRA Basics Guide. Inside, we’ve included an overview of the IRS rules and regulations you need to comply with to fully benefit from the tax advantages of these accounts.

Self-Directed IRAs: The Basics Guide Learn about your investment options, Self-Directed IRA rules, and much more! Download Now

 

Explore More Tax Tips

Making the most of your investment portfolio goes beyond buying low and selling high (though that’s certainly a large part). 

Tax knowledge is crucial.

That's why we've curated an extensive collection of tax-related blog articles and informative webinars over the years. 

Learn how to defer a required minimum distribution or prepare for medical expenses with 16 Ways to Lower Your Tax Bill. Then, explore how opportunity zones and 1031 exchanges can offer serious tax advantages in 7 Tax Benefits of Real Estate Investing.

Want to stay up-to-date with the latest tax news and changes? Sign up for Insights, our monthly newsletter. We’ll send timely updates and practical tips straight to your inbox so you can navigate the dynamic tax landscape and make informed decisions.

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