States with the highest capital gains tax
California has the highest combined top long-term capital gains rate, roughly 37.1% - a state effective rate of 13.3% stacked on the federal top of 23.8% (20% + 3.8% NIIT). It is followed by other high-income-tax states. These are top-bracket figures; most investors pay less because they fall in lower federal and state bands. Not tax advice.
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
Top 15 states by combined capital gains tax
| # | State | State effective rate | Treatment | Combined top long-term |
|---|---|---|---|---|
| 1 | California | 13.3% | Taxed as ordinary income | 37.1% |
| 2 | New York | 10.9% | Taxed as ordinary income | 34.7% |
| 3 | New Jersey | 10.75% | Taxed as ordinary income | 34.55% |
| 4 | District of Columbia | 10.75% | Taxed as ordinary income | 34.55% |
| 5 | Oregon | 9.9% | Taxed as ordinary income | 33.7% |
| 6 | Minnesota | 9.85% | Taxed as ordinary income | 33.65% |
| 7 | Hawaii | 7.25% | Special rate 7.25% | 31.05% |
| 8 | Maine | 7.15% | Taxed as ordinary income | 30.95% |
| 9 | Washington | 7% | 7% LTCG tax above deduction | 30.8% |
| 10 | Connecticut | 6.99% | Taxed as ordinary income | 30.79% |
| 11 | Delaware | 6.6% | Taxed as ordinary income | 30.4% |
| 12 | Maryland | 6.5% | Taxed as ordinary income | 30.3% |
| 13 | Rhode Island | 5.99% | Taxed as ordinary income | 29.79% |
| 14 | Virginia | 5.75% | Taxed as ordinary income | 29.55% |
| 15 | Kansas | 5.58% | Taxed as ordinary income | 29.38% |
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
Combined = federal 23.8% + state effective top long-term rate. Top-bracket illustration.
Frequently asked questions
Which state has the highest capital gains tax?
California has the highest combined top long-term capital gains rate, around 37.1% - its state effective rate of 13.3% on top of the federal 23.8%. California taxes all gains as ordinary income with no preferential rate. This is the top-bracket case.
Why are these rates so high?
These states tax capital gains as ordinary income at high top marginal rates and add no preferential long-term rate. Layered on the federal 20% plus the 3.8% NIIT, the top-bracket combined rate can exceed a third of the gain. Most investors fall below the top bracket and pay less.
Does the combined rate apply to everyone in these states?
No. The combined figure is the worst-case top-bracket illustration. Lower-income filers pay 0% or 15% federally and a lower state marginal rate, so their effective combined rate is far below the headline.
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Last updated: 2026-06-21