2024 Capital Gains Tax Rates by State (2024)

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Capital Gains Taxes

Investors are required to pay capital gains taxes on the income they make from selling investments or assets. The federal government taxes long-term capital gains at rates of 0%, 15%, and 20%, depending on filing status and income. Short-term capital gains are taxed as ordinary income. Some states also impose taxes on capital gains.

Long-term vs. Short-term Capital Gains

The distinction between long-term and short-term capital gains is based on how long an investor has owned the asset before selling it. Long-term capital gains come from assets held for over a year, while short-term capital gains come from assets held for under a year.

Federal Capital Gains Tax Rates

For tax year 2023 and 2024, long-term capital gains are taxed at rates of 0%, 15%, and 20%, depending on filing status and taxable income. Short-term gains are taxed as ordinary income based on the individual's personal income tax bracket. After reporting federal capital gains taxes through IRS Form 1040, state taxes may also apply.

States That Don't Tax Capital Gains

Several states do not tax capital gains. These states include Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, and Wyoming. It's important to note that some of these states do not have an income tax, while others may only tax specific types of investment income.

States That Tax Capital Gains

The majority of U.S. states have additional capital gains tax rates ranging from 2.9% to 13.3%. The specific rates vary by state and may change over time. Here are some examples of states with higher capital gains tax rates:

• California: California taxes capital gains as ordinary income, with the highest rate reaching 13.3%.
• Hawaii: Hawaii taxes capital gains at a lower rate than ordinary income, with the highest rate reaching 7.25%.
• Iowa: Iowa taxes capital gains as income, with the rate reaching 6%.
• Maine: Maine taxes capital gains as income, with the rate reaching 7.15% at maximum.
• Minnesota: Minnesota taxes capital gains as income, with the rate reaching a maximum of 9.85%.
• New Jersey: New Jersey taxes capital gains as income, with the rate reaching 10.75%.
• New York: New York taxes capital gains as income, with the rate reaching 8.82%.
• Oregon: Oregon taxes capital gains as income, with the rate reaching 9.9%.
• Vermont: Vermont taxes short-term capital gains as income, as well as long-term capital gains held for up to three years. The state allows a deduction of up to 40% of capital gains on long-term assets held over three years, with the capital gains tax rate reaching 8.75%.
• Wisconsin: Wisconsin taxes capital gains as income, with long-term capital gains eligible for a deduction of 30% (or 60% for farm assets). The capital gains tax rate reaches 7.65%.

Capital Gains Tax Rates in Other States

There are many other states with varying capital gains tax rates. Here are a few examples:

• Alabama: Taxes capital gains as income, with the rate reaching 5%.
• Arizona: Taxes capital gains as income, with the rate reaching 2.5%.
• Arkansas: Taxes capital gains as income, with the rate reaching around 5.50%.
• Colorado: Colorado taxes capital gains as income, with the rate reaching 4.55%.
• Connecticut: Connecticut's capital gains tax rate is 6.99%.
• Delaware: Taxes capital gains as income, with the rate reaching 6.60%.
• Georgia: Taxes capital gains as income, with the rate reaching 5.75%.
• Idaho: Idaho taxes capital gains as income, with the rate reaching 5.80%.
• Illinois: Taxes capital gains as income, with a flat rate of 4.95%.
• Indiana: Taxes capital gains as income, with a flat rate of 3.15%.
• Kansas: Kansas taxes capital gains as income, with the rate reaching 5.70% at maximum.
• Kentucky: Taxes capital gains as income, with a flat rate of 4.5%.
• Louisiana: Taxes capital gains as income, with the rate reaching 4.25%.
• Maryland: Taxes capital gains as income, with the rate reaching 5.75%.
• Massachusetts: Taxes capital gains as income, with long-term capital gains usually taxed at a flat rate of about 9%, but some types of capital gains are taxed at 12%.
• Michigan: Taxed as income, with a flat rate of 4.25%.
• Mississippi: Taxed as income, with the rate reaching 5%.
• Missouri: Taxed as income, with the rate reaching 4.95%.
• Montana: Taxed as income, with the highest income tax rate at 6.90%, but with a 2% capital gains credit, the effective rate is 4.9%.
• Nebraska: Taxed as income, with the rate reaching 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). The rate reaches 5.9%.
• North Carolina: Taxed as income, with a flat rate of 4.75%.
• North Dakota: Taxed as income, with a deduction allowed of 40% of capital gains income. The rate reaches 2.90%.
• Ohio: Taxed as income, with the rate reaching 4.80%.
• Oklahoma: Taxed as capital gains, with the rate reaching 4.75%. There is a 100% capital gains deduction available for income from specific types of investments.
• Pennsylvania: Taxed as capital gains income at a flat rate of 3.07%.
• Rhode Island: Taxed as capital gains income, with the rate reaching 5.99%.
• South Carolina: South Carolina taxes capital gains as income, with a 44% deduction available on long-term gains. 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, certain assets like real estate, retirement savings, livestock, and timber are exempt from this tax.
• West Virginia: The state taxes capital gains as income, with the rate reaching 6.5%.

Navigating tax planning and understanding capital gains taxes can be complex. It's advisable to consult a financial advisor who can help you determine your tax liability and create a tax plan to maximize your investments.

Please note that the information provided is based on the search results and may not be exhaustive or up to date. It's always a good idea to consult official sources or a tax professional for the most accurate and current information.