State Tax on a Capital Gain Runs From 0% in Missouri to 13.3% in California

Missouri's state tax on a stock-sale gain is now $0: RSMo §143.121 subtracts 100% of income reported as a federal capital gain, for every tax year from 2025 on (the returns filed in 2026). California taxes the same gain as wages, at up to 13.30% for 2026. Every other state sits somewhere between those poles, in one of four regimes: most fold gains into ordinary income, nine give gains a defined discount, eight tax nothing, and Washington taxes large gains despite having no income tax at all.

The federal layer is the same in every state

For tax year 2026, a single filer's long-term gains (assets held more than one year) are taxed at 0% up to $49,450 of taxable income, 15% up to $545,500, and 20% above that, per Revenue Procedure 2025-32. Short-term gains are ordinary income, taxed at up to 37.00%. 26 U.S.C. §1411 adds the 3.8% net investment income tax on the lesser of net investment income or modified AGI above $200,000 single and $250,000 joint, and those thresholds are not indexed for inflation, so each year they reach further down the income ladder.

TaxMath's P3 reference filer ($185,000 of wages plus a $15,000 long-term gain, single, standard deduction) pays 15% of the gain federally, $2,250, and no NIIT at all. Modified AGI lands exactly on the $200,000 line, and §1411 taxes only the excess; the very next dollar of gain would be the first to cost 18.8 cents.

Most states treat a gain as more wages

The default state rule is no rule: a capital gain, long or short, is simply more taxable income. In the highest-rate states that puts long-term gains at these 2026 marginal ceilings, shown with the federal 23.8% ceiling (20% plus NIIT) added on:

California's top figure has a two-part mechanism: the rate schedule ends at 12.3%, and R&TC §17043 adds 1% on taxable income over $1,000,000, the mental health services tax voters enacted as Proposition 63 in 2004. New York City residents pay the city's own income tax of up to 3.876% on top of the state's, the widest state-plus-local stack in the table above.

Minnesota grew a second layer in 2023 that most coverage still misses. Minn. Stat. §290.033 imposes a 1% state net investment income tax on net investment income above $1,000,000, in force since tax year 2024. The threshold is the same for every filing status, and capital gains count, so a large Minnesota sale pays 10.85% at the margin, not the 9.85% in the rate table.

Marginal rates state the ceiling, not a typical bill. On the portion of a gain above $1 million, each additional dollar costs 13.3 cents of California tax and 0 cents of Texas tax; a filer who never reaches the top bracket sees a smaller spread on every dollar.

Missouri exempts the whole gain, and nine states discount it

Missouri's subtraction, enacted as HB 594 and codified at RSMo §143.121.3(14), is the first full individual capital gains exemption in a state that still taxes wages. It covers 100% of income reported as a capital gain for federal purposes, short-term included, unconditionally for individuals from tax year 2025; the matching corporate subtraction waits until Missouri's top corporate rate falls to 4.5%.

Nine more states give a long-term gain a discount of their own design:

Montana's schedule has a catch the summary rate hides: the 3.0% band is reduced by ordinary taxable income before any gain reaches it. For 2026 that band ends at $47,500 for a single filer, per HB 337's widened brackets, so a filer whose ordinary taxable income reaches $47,500 pays 4.1% on every dollar of gain.

Run the P3 filer's $15,000 long-term gain across the map and the spread is concrete. Wages fill the brackets first; the figures are the 2026 state tax attributable to the gain.

Two of these rates are still provisional for 2026: Arkansas's 3.7% top rate is enacted law (Act 2 of the 2026 First Extraordinary Session, retroactive to January 1) awaiting DFA-published tables, and Colorado's 4.40% is the permanent statutory rate, subject to a TABOR surplus trigger certified each September.

Colorado sits in this table at its full flat rate because its capital gain subtraction, C.R.S. §39-22-518, no longer reaches a portfolio. For tax years 2022 and later it applies only to gains farmers recognize on Colorado agricultural real property, acquired between May 9, 1994 and June 3, 2009, held at least five uninterrupted years, capped at $100,000, and claimable only by filers required to attach IRS Schedule F.

The TaxMath calculator does not yet apply these nine departures; it walks gains through each state's ordinary brackets. The figures above come from the statutes and forms cited, not from the engine, and the corrections log records what changed.

Eight states tax neither wages nor gains

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming levy no personal income tax and no tax on capital gains, so the federal 23.8% ceiling is the whole ceiling. Three of the eight got there in ways worth pinning down. New Hampshire's last personal income tax, the tax on interest and dividends, was repealed effective January 1, 2025; it never touched wages or gains. Tennessee's Hall tax reached only interest from bonds and notes and dividends from stock, never capital gains, before its repeal for tax years beginning in 2021. And Texas closed the door behind itself: Article VIII §24-a of its constitution bans an individual income tax (added November 2019), and a new §24-b bans any tax on realized or unrealized capital gains of an individual, family, estate, or trust (added November 4, 2025).

Washington taxes the gain without an income tax

Washington's line in the 2026 income tax tables reads 0.00%, and it still collects on big sales. RCW 82.87.040 imposes a 7% excise on long-term gains from stocks, bonds, and other capital assets above an annually adjusted deduction, plus 2.9% more (9.9% total) on the portion of taxable gains over $1,000,000, the second tier applying to gains realized from 2025 on. The deduction is $278,000 for 2025 gains and belongs to the household: one per individual, married couple, or domestic partnership, with no doubling for joint filers. Real estate and retirement accounts are exempt outright.

The arithmetic on a $500,000 stock gain realized in 2025: $500,000 − $278,000 leaves $222,000 of Washington capital gains, and 7% × $222,000 is $15,540, reported on the return due in April 2026. As of September 1, 2026, the Department of Revenue has not published the deduction for 2026 gains. Washington also enacted a 9.9% tax on income over $1 million starting in 2028, with a repeal initiative on the November 2026 ballot; that story has its own article.

Massachusetts charges a premium for the short hold

Massachusetts taxes a short-term gain at a premium over its own wage rate: 8.5% on gains from assets held one year or less, against the flat 5% that wages and long-term gains pay. The 8.5% dates to Chapter 50 of the Acts of 2023, which cut it from 12% for tax years beginning in 2023. Long-term collectibles gains still pay 12%, softened by a 50% deduction.

On top of every class sits the 4% surtax voters approved in November 2022. It applies to total taxable income, capital gains included, above a threshold that is indexed annually: $1,000,000 for 2023, then $1,053,750, $1,083,150, and $1,107,750 for 2026. A single large sale can cross it in a year when ordinary income never would. Selling a business for $5 million in 2026 puts $3,892,250 above the threshold, and 4% of that is $155,690 of surtax on top of the 5% base.

Moving first and selling second

Realizing a gain after a move to a lower-tax state works only if the move is real, and the state being left decides what "real" means. New York's residency tests are the strict template: domicile continues until it is abandoned and replaced, and a filer who keeps a permanent place of abode in the state and spends 184 or more days there remains a statutory resident, with any part of a day counting as a day. Timing matters inside a single state, too. An installment sale that holds each year's taxable income under Massachusetts's $1,107,750 surtax line, or each year's gains under Washington's deduction, changes the bill without changing the address.

The 2026 numbers still in motion

Three figures on this page are dated claims rather than settled ones: Washington's deduction for 2026 gains, unpublished as of September 1, 2026; Arkansas's DFA tables for the retroactive 3.7% rate; and Colorado's 4.40%, which September's TABOR revenue certification could trim for 2026. When they land, the rate tables behind every computed figure here move, and this page moves with them. To price a specific sale, put both states through the comparison with your own numbers; the walk above prices exactly one gain, for exactly one filer, which is the only way two states can be compared honestly.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.