2026 Capital Gains Tax Rates By State

Capital gains taxes apply when you sell investments or assets for a profit, and the amount you owe depends on how long you held them and your income level. Long-term gains are taxed at preferential federal rates of 0%, 15% or 20%. Meanwhile, short-term gains follow ordinary income tax rates. Some states also levy capital gains taxes.

A financial advisor can help you estimate your potential tax exposure and explore strategies to help manage after-tax returns.

An Overview of Federal Capital Gains Taxes

Capital gains taxes vary depending on how long an investor has owned the asset before selling it. Long-term capital gains come from assets held for over a year, whereas short-term capital gains are from assets held for one year or less.

Based on filing status and taxable income, long-term capital gains for tax years 2026 are taxed at 0%, 15% and 20%. Here are the tax brackets for long-term capital gains for 2026 (meaning they will apply to the taxes you file in 2027):

Tax Rate	Individuals	Married Filing Jointly	Head of Household	Married Filing Separately
0%	$0 – $49,450	$0 – $98,900	$0 – $66,200	$0 – $49,450
15%	$49,451 – $545,500	$98,901 – $613,700	$66,201 – $579,600	$49,451 – $306,850
20%	$545,501+	$613,701+	$579,601+	$306,851+

Short-term gains, on the other hand, are taxed as ordinary income based on your personal income tax bracket.

After federal capital gains taxes are reported through IRS Form 1040, state taxes may also apply.

States That Don’t Tax Capital Gains

Some states also have their own rules regarding capital gains taxes. The following states do not impose an individual income tax on capital gains:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Wyoming

Washington state does not impose a traditional individual income tax. However, it does impose a separate tax on certain long-term capital gains and therefore is not among the list of states without capital gains tax.

The state applies a 7% tax to the first $1 million of taxable Washington capital gains, and a 9.9% rate to taxable Washington capital gains above $1 million. An inflation-adjusted standard deduction applies before the calculation of these rates. Certain assets, including real estate and assets held in qualifying retirement accounts, are excluded from the tax.

New Hampshire previously taxed investment income (including interest and dividends from investments), but the state fully phased out the tax in 2025.

States That Tax Capital Gains

A majority of states tax at least some capital gains, but their approaches differ. Some treat gains as ordinary income. Others, meanwhile, provide special rates, deductions or exclusions.

The rates below reflect rules in effect as of 2026 and generally show the highest applicable individual income tax rate or the special capital gains rate. Actual tax liability can be lower depending on income, filing status, the asset sold and state-specific adjustments.

States With the Highest Capital Gains Tax Rates

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

California

California taxes capital gains as ordinary income. The highest rate reaches 13.30%.

Hawaii

Hawaii taxes long-term capital gains at a lower rate than ordinary income. The highest rate reaches 7.25%.

Maine

Maine taxes capital gains as income. The rate reaches a maximum of 7.15% plus 2% of the portion of the gain that exceeds the applicable amount.

Minnesota

Minnesota taxes capital gains as income, with a rate that reaches a maximum of 9.85%. In addition, it imposes a 1% net investment income tax on net investment income exceeding $1 million. Capital gains can be included in net investment income for purposes of this tax.

New Jersey

The state of New Jersey taxes capital gains as income. The rate reaches as high as 10.75%.

New York

New York taxes capital gains as income, with the rate reaching 10.90%.

Oregon

Oregon taxes capital gains as income, with a maximum rate of 9.90%.

Vermont

Vermont generally taxes capital gains as income but provides a capital gains exclusion. Taxpayers can generally choose between excluding the first $5,000 of adjusted net capital gain or, for certain qualifying assets held more than three years, 40% of the eligible gain. The 40% exclusion does not apply to several categories of assets, including publicly traded stocks and bonds and residential real estate, and is subject to limits. Vermont’s top individual income tax rate reaches 8.75%.

Wisconsin

Wisconsin taxes capital gains as regular income. Long-term capital gains can apply a deduction of 30% (or 60% for capital gains from the sale of farm assets). The capital gains tax rate reaches 7.65%.

Capital Gains Tax Rates in Other States

As for the other states, capital gains tax rates are as follows (as of 2026):

Alabama

Capital gains are taxed as income, with the rate reaching 5.00%.

Arizona

In Arizona, capital gains are taxed as income. The rate reaches 2.50%.

Arkansas

Arkansas taxes capital gains as income, and the rate reaches around 3.70%.

Colorado

Colorado taxes capital gains as income. The rate reaches 4.40%.

Connecticut

Connecticut’s capital gains tax is 6.99%.

Delaware

In Delaware capital gains are taxed as income, with a rate of up to 6.60%.

Georgia

Georgia taxes capital gains as income at a flat rate of 5.19%.

Idaho

Idaho taxes capital gains as income. The rate is a flat 5.30%.

Iowa

While Iowa taxes capital gains as income, it recently lowered income taxes to a flat rate of 3.80%.

Illinois

Illinois taxes capital gains as income, and the rate is a flat rate of 4.95%.

Indiana

Indiana taxes capital gains as income. A flat rate of 2.95% applies.

Kansas

Kansas taxes capital gains as income. The rate reaches 5.58% at maximum.

Kentucky

Kentucky taxes capital gains as income at a flat rate of 3.50%.

Louisiana

Louisiana taxes capital gains as income. It has a flat rate of 3.00%.

Maryland

Maryland taxes capital gains as income, with the rate up to 6.50%.

Massachusetts

In Massachusetts, most long-term capital gains are taxed at 5%. Short-term capital gains are generally taxed at 8.50%. Meanwhile, long-term gains from collectibles are subject to a 12% rate with a 50% deduction. For 2026, an additional 4% surtax applies to taxable income above $1,107,750.

Michigan

In Michigan, capital gains are taxed as income at a flat rate of 4.25%.

Mississippi

Capital gains in Mississippi are taxed as income, with an upper rate of 4.00%.

Montana

Capital gains are taxed as income in Montana, with the highest income tax rate set at 5.90%. However, long-term capital gains are taxed at lower rates of 3.00% or 4.10%, depending on your income bracket.

Nebraska

Taxed as income, capital gains may face a rate of up to 4.55% in Nebraska.

New Mexico

The state taxes capital gains as income, though it allows a deduction of 40% of capital gains income or $2,500, whichever is higher. The rate reaches 5.90%.

North Carolina

The state of North Carolina taxes capital gains as income and at a flat rate of 3.99%.

North Dakota

In North Dakota, capital gains are taxed as income, with a deduction of up to 40% of capital gains income. The rate reaches a maximum of 2.50%.

Ohio

Ohio taxed capital gains as income, and the rate is a flat 2.75%.

Oklahoma

Oklahoma taxes as capital gains, and the rate reaches 4.50%. There is a 100% capital gains deduction available for income from particular kinds of investments.

Pennsylvania

Capital gains in Pennsylvania are taxed as capital gains income at a flat rate of 3.07%.

Rhode Island

Rhode Island taxes capital gains as capital gains income. The maximum rate that may apply is 5.99%.

South Carolina

South Carolina taxes capital gains as income (with a 44% deduction available on long-term gains). The rate reaches 6.40%.

Utah

Utah taxes capital gains as income at a flat rate of 4.45%.

Virginia

Virginia taxes capital gains as income, with the rate reaching 5.75%.

Washington

Washington imposes a tax on certain long-term capital gains rather than a broad individual income tax. After the applicable annual standard deduction, the first $1 million of taxable Washington capital gains is taxed at 7%. Taxable gains above $1 million are taxed at an effective 9.9% rate on that portion. Certain assets are excluded, including real estate and assets held in qualifying retirement accounts.

West Virginia

The state taxes capital gains as income. The rate reaches 4.58%.

Additional Federal Surtaxes That Can Apply to Capital Gains

In addition to standard federal capital gains rates, some taxpayers may owe an extra federal surtax on investment income. The Net Investment Income Tax (NIIT) applies a 3.80% tax to certain investment income, including capital gains, once modified adjusted gross income (MAGI) exceeds specific thresholds.

For tax year 2026, the NIIT generally applies to single filers with MAGI above $200,000 and married couples filing jointly with MAGI above $250,000. The tax is assessed on the lesser of net investment income or the amount by which MAGI exceeds the threshold. As such, not all gains may be subject to the surtax.

Net investment income includes capital gains, dividends, interest, rental income and passive business income. It does not include distributions from qualified retirement accounts, such as 401(k)s or IRAs, nor wages or self-employment income.

Because the NIIT is calculated separately from regular capital gains taxes, it can raise the effective tax rate on investment sales for higher-income taxpayers. Reviewing whether this surtax applies can help clarify total federal tax exposure when reporting capital gains.

How to Estimate State Capital Gains Tax on a Sale

A state’s highest income tax rate does not necessarily equal the rate you will pay on an entire capital gain. Rather, your calculation can depend on the size of the gain, other taxable income, residency, deductions and whether the state gives long-term gains favorable treatment.

Suppose an investor realizes a $40,000 long-term gain and lives in a state that taxes capital gains as ordinary income. If $15,000 of the gain falls within a 4% state income tax bracket and the remaining $25,000 falls within a 5% bracket, the simplified state tax attributable to the gain would be:

($15,000 × 4%) + ($25,000 × 5%) = $600 + $1,250 = $1,850

Applying 5% to the entire $40,000 would instead produce $2,000, overstating the tax by $150 under these assumptions. A state with a flat income tax would work differently. Meanwhile, a state with a capital gains deduction or exclusion could reduce the amount subject to tax before the rate applies.

Residency can also matter when the asset is connected to another state. For example, a nonresident who sells real estate located in a state with an income tax may have taxable income sourced to that state even though the seller lives elsewhere. Residents can also have reporting obligations for gains earned outside their home state, with credits potentially available for tax paid to another jurisdiction.

Bottom Line

Taxes can be complex, especially when capital gains are involved. Because both federal and state rules may apply, it’s important to understand whether your state taxes capital gains, and at what rate, before you file your return.

Tips for Navigating Tax Planning

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SmartAsset’s free capital gains calculator can help you estimate both short- and long-term capital gains taxes.