Capital Gains Tax By State

Capital gains tax refers to the tax paid on the profit made from the sale of an asset like a property, stock, or valuable artwork, when the sale price surpasses the original purchase price. This tax can be categorized into two distinct types: short-term and long-term capital gains tax. As the labels indicate, these are differentiated based on the period an asset was held before being sold. The implications of these taxes can be severe, making an understanding of the capital gains tax landscape across the United States invaluable for individuals and businesses. The rate of capital gains tax varies across different states. While the Federal Government sets the base rate, states have the authority to levy additional taxes on top of the base rate, contributing to notable disparities across the nation.

• The highest capital gains tax can be found in California, with an astounding rate of 13.30%. Following on the higher end, are states like New York, and New Jersey, with rates at 10.90% and 10.75% respectively.
• On the other end of the scale, several states like Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming impose no state capital gains tax at all.
• The majority of states have their capital gains tax rate in the range of 4% - 7%, resulting in a modest impact on overall tax liability stemming from assets sales.
• Despite its high personal income tax, Arizona has one of the lowest capital gains tax rates at just 2.5%.
• Variations in capital gains taxes are not limited to a specific region. For instance, states with no tax on capital gains span from Florida in the Southeast to Alaska in the Northwest.