In this article, we will take a look at 10 states with the lowest to highest capital gains tax rates. If you want o read our detailed analysis of capital gains taxes and the overall tax structure of different states, go directly to read States With the Lowest to Highest Capital Gains Tax Rate.
10. Washington:
Capital Gains Tax as of 2023: 7.00%
Washington imposed a state-level capital gains tax on January 1, 2022, at 7% on income above $250,000 annually. However, the supreme court recently ruled that the state’s capital gains tax is constitutional. The ruling also states that the tax on capital gains is an excise tax. The first tax payments were made on April 18 and according to The Department of Revenue’s data of April 20, the tax has generated over $838 million in revenues in just two days. This has beat the department’s projections of revenues of $500 million by a wide range.
9. Maine:
Capital Gains Tax as of 2023: 7.15%
In Maine, capital gains are taxed as ordinary income with rates ranging from 5.8% to 7.15%. According to the state’s official document, there was a $68 million increase in resident capital gains liability in the tax year 2022.
8. Hawaii:
Capital Gains Tax as of 2023: 7.25%
Hawaii’s capital gains tax rate currently stands at 7.25%, which is below the state’s income tax rate of 11%. Recently, the state’s legislature has proposed a new bill that suggests that its capital gains should be taxed at the same rate as ordinary income. Through this change, the state would be able to generate nearly $132 million in revenues in the next fiscal year, the figure that would rise to approximately $187 million within six years.
7. Wisconsin:
Capital Gains Tax as of 2023: 7.65%
Capital gains are taxed as ordinary income in Wisconsin with tax brackets ranging from 0% to 7.65%. However, the state allows a 30% deduction on net gains for long-term assets and a 60% deduction for farm assets.
6. Vermont:
Capital Gains Tax as of 2023: 8.75%
In Vermont, capital gains are generally taxed as ordinary income and range from 3.35% to 8.75% for most individuals. The state allows you to exclude up to 40%of adjusted net capital gains from the sale of assets held for over three years. This exclusion amount is capped at $35,000.
5. Minnesota:
Capital Gains Tax as of 2023: 9.85%
Minnesota includes all net capital gains income in taxable income with the same tax rates as applied to other income. The state’s tax brackets range from 5.35% for a single filer earning below $27,230 to 9.85% for one earning at least $171,221.
4. Oregon:
Capital Gains Tax as of 2023: 9.9%
Oregon taxes capital gains as ordinary income. This means that the tax rate for net capital gains is currently set at 9.9%. The state’s capital gains income was deemed controversial in the past as it was apparently driving inequality among its residents. According to a report by the Oregon Center for Public Policy, the top 55% of the residents took over $84.5% of all capital gains income in 2020, compared with just 15.5% taken by the bottom 95% of the residents.
3. New Jersey:
Capital Gains Tax as of 2023: 10.75%
The New Jersey capital gains taxes are the same as the state’s income tax rates and it does not have a separate tax rate specifically for capital gains. The income tax ranges between 1.4% o 10.75%, depending on income level. A single person earning a taxable income of less than $20,000 will be taxed at 1.4% and that over $1 million is subject to a tax of 10.75%.
2. New York:
Capital Gains Tax as of 2023: 10.9%
New York also taxes capital gains as ordinary income with rates up to 10.9%. These rates have grown from 8.82% in 2021.
1. California:
Capital Gains Tax as of 2023: 13.3%
In California, capital gains are generally taxed as ordinary income, subject to the state’s income tax rates. This means that the tax rate can be as high as 13.3%, depending upon overall income and tax bracket. For example, there is an additional 1% surtax on incomes above $599,013.
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