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 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 come from assets held for under a year.

Based on filing status and taxable income, long-term capital gains for tax years 2025 and 2026 are taxed at 0%, 15% and 20%.

Here’s what the tax brackets look like for long-term capital gains for 2025 (meaning they will apply to the taxes you file in 2026):

Tax Rate	Individuals	Married Filing Jointly	Head of Household	Married Filing Separately
0%	$0 – $48,350	$0 – $96,700	$0 – $64,750	$0 – $48,350
15%	$48,350 – $533,400	$96,700 – $600,050	$64,750 – $566,700	$48,350 – $300,000
20%	$533,400+	$600,050+	$566,700+	$300,000+

And here’s what the tax brackets are for long-term capital gains in 2026:

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%	$49,450 – $545,500	$98,900 – $613,700	$66,200 – $579,600	$49,450 – $306,850
20%	$545,500+	$613,700+	$579,600+	$306,850+

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 how capital gains are taxed. The following states do not tax capital gains:

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Wyoming

The reason for this is many of these states do not have an income tax.

New Hampshire, however, specifically taxes investment income (including interest and dividends from investments) only, but not wages.

Although Washington state does not levy a state income tax on wages, it does impose a 7% capital gains tax on profits above an annual threshold for high earners. The state also maintains one of the highest combined state and local sales tax rates in the country.

States That Tax Capital Gains

A majority of U.S. states have an additional capital gains tax rate between 2.90% and 14.40%. The rates listed below are for 2025, which are the taxes you’ll file in 2026.

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 12.30%.

Hawaii

Hawaii taxes 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%.

Minnesota

The state also taxes capital gains as income, with a rate that reaches a maximum of 9.85%.

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 taxes short-term capital gains as income, as well as long-term capital gains that a taxpayer holds for up to three years. Taxpayers 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 in Vermont 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

Capital gains are taxed as income, with the rate reaching 5%.

Arizona

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

Arkansas

Arkansas axes capital gains as income, and the rate reaches around 3.90%.

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, and the rate reaches 5.19%.

Idaho

Idaho taxes capital gains as income. The rate is up to 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 3% applies.

Kansas

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

Kentucky

Kentucky taxes capital gains as income at a flat rate of 4%.

Louisiana

Louisiana taxes capital gains as income. The rate reaches 3%.

Maryland

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

Massachusetts

In Massachusetts, capital gains are taxed as income. Long-term capital gains are usually taxed at a flat rate of about 5%, but there are some types of capital gains that the state taxes at a rate of 12%.

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 4.40%.

Missouri

Capital gains are taxed as income in Missouri. The rate reaches 4.70%.

Montana

Capital gains are taxed as income, with the highest income tax rate in Montana set at 5.90%. That said, qualifying credits for long-term capital gains can lower this rate.

Nebraska

Taxed as income, capital gains may face a rate of up to 5.20% in Nebraska.

New Mexico

The state taxes capital gains as income (allowing a deduction of 40% of capital gains income or $1,000, 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 4.75%.

North Dakota

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

Ohio

Ohio taxed capital gains as income, and the rate reaches 3.125%.

Oklahoma

Oklahoma taxes 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

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 6.20%.

Utah

Utah taxes capital gains as income at a flat rate of 4.55%.

Virginia

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

Washington

Washington State taxes capital gains up through the first $1 million at a rate of 7%. Gains in excess of $1 million are taxed at a rate of 9.90%. 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 4.82%.

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 years 2025 and 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, meaning 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.

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

Finding a financial advisor who can help with tax planning doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. 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.