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2024 CAPITAL GAINS TAX RATES BY STATE

Updated on December 14, 2023
Written by Nadia Ahmad, CEPF®

Edited by Jeff White, CEPF®

Share

Investors must pay capital gains taxes on the income they make as a profit from
selling investments or assets. The federal government taxes long-term capital
gains at the rates of 0%, 15% and 20%, depending on filing status and income.
And short-term capital gains are taxed as ordinary income. Some states will also
tax capital gains. A financial advisor could help you figure out your tax
liability and create a tax plan to maximize your investments.




HAVE QUESTIONS ABOUT YOUR TAXES?

A financial advisor may be able to help. Match with an advisor serving your area
today.

Get Started Now


AN OVERVIEW OF CAPITAL GAINS TAXES

Capital gains vary depending on how long an investor had owned the asset before
selling it. Long-term capital gains come from assets held for over a year.
Short-term capital gains come from assets held for under a year.

Based on filing status and taxable income, long-term capital gains for tax year
2023 and 2024 will be taxed at 0%, 15% and 20%. Short-term gains 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 be
applicable.


STATES THAT DON’T TAX CAPITAL GAINS

The following states do not tax capital gains:

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

This is because many of these states do not have an income tax. New Hampshire
specifically taxes investment income (including interest and dividends from
investments) only, but not wages.


STATES THAT TAX CAPITAL GAINS



A majority of U.S. states have an additional capital gains tax rate between 2.9%
and 13.3%. The rates listed below are for 2023, which are taxes you’ll file in
2024.


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
13.3%

Hawaii

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

Iowa

Taxes capital gains as income and the rate reaches 6%.

Maine

Taxes capital gains as income. The rate reaches 7.15% at maximum.

Minnesota

Taxes capital gains as income and the rate reaches a maximum of 9.85%.

New Jersey

New Jersey taxes capital gains as income and the rate reaches 10.75%.

New York

New York taxes capital gains as income and the rate reaches 8.82%.

Oregon

Oregon taxes capital gains as income and the rate reaches 9.9%.

Vermont

Vermont taxes short-term capital gains as income, as well as long-term capital
gains that a taxpayer holds for up to three years. They are allowed to deduct up
to 40% of capital gains (at a maximum of $350,000 and not exceeding 40% of
federal taxable income) on long-term assets held over three years. The capital
gains tax rate reaches 8.75%.

Wisconsin

Wisconsin taxes capital gains as 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:

Alabama

Taxes capital gains as income and the rate reaches 5%

Arizona

Taxes capital gains as income and the rate reaches 2.5%

Arkansas

Taxes capital gains as income and the rate reaches around 5.50%.

Colorado

Colorado taxes capital gains as income and the rate reaches 4.55%.

Connecticut

Connecticut’s capital gains tax is 6.99%.

Delaware

Taxes capital gains as income and the rate reaches 6.60%.

Georgia

Taxes capital gains as income and the rate reaches 5.75%.

Idaho

Idaho taxes capital gains as income. The rate reaches 5.80%.

Illinois

Taxes capital gains as income and the rate is a flat rate of 4.95%.

Indiana

Taxes capital gains as income and the rate is a flat rate of 3.15%.

Kansas

Kansas taxes capital gains as income. The rate reaches 5.70% at maximum.

Kentucky

Taxes capital gains as income. The rate is a flat rate of 4.5%.

Louisiana

Taxes capital gains as income. The rate reaches 4.25%.

Maryland

Taxes capital gains as income and the rate reaches 5.75%.

Massachusetts

Taxes capital gains as income. Long-term capital gains are usually taxed at a
flat rate of about 9% but there are some types of capital gains that the state
taxes at 12%.

Michigan

Taxed as income and at a flat rate of 4.25%.

Mississippi

Taxed as income and reaches 5%.

Missouri

Taxed as income and the rate reaches 4.95%.

Montana

Taxed as income and the highest income tax rate is 6.90%, but with a 2% capital
gains credit, this rate is technically 4.9%.

Nebraska

Taxed as income and the rate reaches 6.64%.

New Mexico

The state taxes capital gains as income (allowing a deduction of 40% of capital
gains income or $1,000, whichever is higher) and the rate reaches 5.9%.

North Carolina

Taxed as income and at a flat rate of 4.75%.

North Dakota

Taxed as income (with a deduction allowed of 40% of capital gains income) and
the rate reaches 2.90%.

Ohio

Taxed as income and the rate reaches 4.80%.

Oklahoma

Taxed as capital gains and the rate reaches 4.75%. There is a 100% capital gains
deduction available for income from particular kinds of investments.

Pennsylvania

Taxed as capital gains income at a flat rate of 3.07%.

Rhode Island

Taxed as capital gains income and reaching 5.99%.

South Carolina

South Carolina taxes capital gains as income (with a 44% deduction available on
long-term gains) and the rate reaches 6.4%.

Utah

Taxes capital gains as income at a flat rate of 4.95%.

Virginia

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

Washington

Washington State taxes capital gains at a rate of 7%. However, real estate,
retirement savings, livestock and timber are exempt from this tax.

West Virginia

The state taxes capital gains as income. The rate reaches 6.5%.


BOTTOM LINE



Taxes can be difficult if you’re not an expert and capital gains taxes can be
tricky when investing, especially when you have to figure out both federal and
state taxes. Be sure to understand whether your state taxes capital gains – and
to what extent – before filing your tax return.


TIPS FOR NAVIGATING TAX PLANNING

 * Finding a financial advisor doesn’t have to be hard. SmartAsset’s free
   tool matches you with up to three vetted financial advisors who serve your
   area, and you can interview your advisor matches at no cost to decide which
   one is right for you. If you’re ready to find an advisor who can help you
   achieve your financial goals, get started now.
 * SmartAsset’s free capital gains calculator can help you estimate both short-
   and long-term capital gains taxes.

Photo credit: ©iStock.com/Doucefleur, ©iStock.com/deepblue4you,
©iStock.com/undrey

Nadia Ahmad, CEPF®Nadia Ahmad is a Certified Educator in Personal Finance
(CEPF®) and a member of the Society for Advancing Business Editing and Writing
(SABEW). Her interest in taxes and grammar makes writing about personal finance
a perfect fit! Nadia has spent ten years working as a seasonal income tax
assistant, researching federal, state and local tax code and assisting in
preparing tax returns. Nadia has a degree in English and American Literature
from New York University and has served as an instructor/facilitator for a
variety of writing workshops in the NYC area.
Was this content helpful? Yes No

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