California capital gains tax (2026)
West · Taxed as ordinary income · combined top long-term 37.1%
In California, the effective top rate on long-term capital gains is about 13.3%. Added to the federal top long-term rate of 23.8% (20% plus the 3.8% NIIT), the illustrative combined top long-term rate is 37.1% - ranking #1 of 51 states. Taxes all capital gains as ordinary income with no preferential rate; the top marginal rate reaches 13.3% (includes the 1% mental-health surcharge over $1M). One of the highest combined capital-gains burdens in the US. This is the top-bracket case, not what a typical filer pays, and not tax advice.
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
How California taxes capital gains
Taxes all capital gains as ordinary income with no preferential rate; the top marginal rate reaches 13.3% (includes the 1% mental-health surcharge over $1M). One of the highest combined capital-gains burdens in the US.
| Component | Rate |
|---|---|
| Federal long-term rate (top) | 20% |
| Net Investment Income Tax (NIIT) | 3.8% |
| Federal subtotal (top long-term) | 23.8% |
| California effective top long-term rate | 13.3% |
| Combined top long-term rate | 37.1% |
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
The federal subtotal of 23.8% applies only to top-bracket long-term gains; lower-income filers pay 0% or 15% federally. The California figure is the effective top long-term rate.
Worked example
On a $100,000 long-term gain for a top-bracket investor in California: the state takes roughly 13.3% (about $13,300), federal long-term tax is $20,000, and the 3.8% NIIT adds $3,800 - a combined estimate near $37,100, an effective rate close to 37.1%. Lower-income filers pay less federally (15% or 0%).
Estimate only. Use the calculator with your own numbers.
How California ranks
| Measure | California | Rank (1 = highest) |
|---|---|---|
| Combined top long-term rate | 37.1% | #1 of 51 |
| State effective top long-term rate | 13.3% |
States with a similar capital gains burden
| State | State treatment | Combined top long-term rate |
|---|---|---|
| California (this state) | Taxed as ordinary income | 37.1% |
| New York | Taxed as ordinary income | 34.7% |
| New Jersey | Taxed as ordinary income | 34.55% |
| District of Columbia | Taxed as ordinary income | 34.55% |
| Oregon | Taxed as ordinary income | 33.7% |
| Minnesota | Taxed as ordinary income | 33.65% |
Frequently asked questions
Does California tax capital gains?
Yes. Taxes all capital gains as ordinary income with no preferential rate; the top marginal rate reaches 13.3% (includes the 1% mental-health surcharge over $1M). One of the highest combined capital-gains burdens in the US. On top of the state tax you also owe federal capital gains tax (0/15/20% long-term) and, for higher earners, the 3.8% NIIT.
What is the capital gains tax rate in California in 2026?
California's effective top rate on long-term capital gains is about 13.3%. Combined with the top federal long-term rate of 23.8%, the illustrative combined top rate is 37.1% - the top-bracket case, not what most filers pay.
How does California compare with other states on capital gains?
On the illustrative combined top long-term rate, California ranks #1 of 51 (1 = highest). States are compared on their effective top long-term rate plus the federal 23.8% top. See the rankings for the full picture.
Are short-term capital gains taxed differently in California?
Generally short-term gains are taxed as ordinary California income (the headline rate), while any state preferential rate or exclusion usually applies only to long-term gains. Federally, short-term gains are ordinary income (up to 37%).
Keep exploring
Sources & accuracy
California treatment from Tax Foundation, 2026 state income tax rates and the state revenue department (find California's tax authority). Federal figures from the IRS. Data as of June 2026 for the 2026 tax year. Rates change and special rules have conditions - this is general information, not tax advice. Verify with the official source or a tax professional. See our methodology and disclaimer.
Last updated: 2026-06-21