2025 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%, while 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. 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 will be taxed at 0%, 15% and 20%.

Here’s what the tax brackets look like for long-term capital gains for 2025:

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 will look like for long-term capital gains for 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 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

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

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.

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 2.9% and 14.4%. 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, and the rate reaches as high as 10.75%.

New York

New York taxes capital gains as income, and the rate reaches 10.9%.

Oregon

Oregon taxes capital gains as income, and the rate reaches as high as 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 3.90%.

Colorado

Colorado taxes capital gains as income and the rate reaches 4.40%.

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 5.19%.

Idaho

Idaho taxes capital gains as income. The rate reaches 5.30%.

Iowa

The state taxes capital gains as income, but recently lowered income taxes to a flat rate of 3.80%.

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 3.00%.

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 4.00%.

Louisiana

Taxes capital gains as income. The rate reaches 3.00%.

Maryland

Taxes capital gains as income and the rate reaches 6.50%.

Massachusetts

Taxes capital gains 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 12%.

Michigan

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

Mississippi

Taxed as income and reaches 4.40%.

Missouri

Taxed as income and the rate reaches 4.70%.

Montana

Taxed as income, and the highest income tax rate is 5.90%. But qualifying credits for long-term capital gains can lower this rate.

Nebraska

Taxed as income, and the rate reaches 5.20%.

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 2.50%.

Ohio

Taxed as income and the rate reaches 3.125%.

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 6.20%.

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 9.9%.

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%.

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.