California Capital Gains Tax: 50+ Statistics for 2026

Citing this page? Use: Goldstein & Co. LLC, California Capital Gains Tax Statistics 2026, goldsteinco.net, September 15, 2026.

Key takeaways

• California has no separate capital gains rate — gains are taxed as ordinary income at rates from 1% to 12.3% (FTB 2025 Schedule X–Z).
• A 1% Mental Health Services surcharge applies above $1 million of taxable income, putting the state top rate at 13.3%.
• The federal long-term rate is 0%, 15%, or 20%, plus a 3.8% Net Investment Income Tax — a combined federal-plus-California top rate of about 37.1%.
• The 12.3% bracket starts at $742,953 of taxable income for a single filer and $1,485,906 for joint filers (FTB 2025 rate schedules).
• The federal 0% bracket ends at $48,350 (single) and $96,700 (married filing jointly) of taxable income (IRS Topic 409).
• Unrecaptured §1250 gain on real property is taxed at a maximum 25% federally — and California adds its full rate on top, with no preference.
• Collectibles and §1202 qualified small business stock are taxed at a maximum 28% federal rate (IRS Topic 409).
• The §121 home-sale exclusion is $250,000 single / $500,000 joint — unchanged since 1997 and not indexed to inflation (IRS Topic 701).
• Capital losses offset gains without limit; only $3,000 per year ($1,500 married filing separately) can offset ordinary income (IRS Topic 409).
• Our data: across 294 Los Angeles County properties currently listed for sale, the median embedded capital gain is $1,199,130 and the median estimated tax at closing is $445,456.
• Our data: 77% of those listings carry an embedded gain of $500,000 or more; 57% exceed $1 million.
• Our data: the median assessed basis is just 41% of the current asking price, and the median holding period is 11 years.
• California's General Fund has drawn more than $12 billion in a single year from capital gains taxes alone (LAO).
• Proposition 2 diverts capital gains revenue to reserves whenever those taxes exceed 8% of General Fund revenue (LAO).

What is the California capital gains tax rate in 2026?

California does not have a preferential capital gains rate. A capital gain is taxed as ordinary income under the personal income tax.

Source: California Franchise Tax Board, 2025 California Tax Rate Schedules (Schedule X), ftb.ca.gov. Married/RDP filing jointly brackets are exactly double: the 12.3% bracket begins at $1,485,906.

Add the 1% Mental Health Services Act surcharge on taxable income above $1,000,000 and California's effective top marginal rate on a capital gain is 13.3%.

What is the federal capital gains tax rate?

For assets held more than one year, the federal net capital gains rate is 0%, 15%, or 20%, set by total taxable income.

Source: IRS, Topic no. 409 — Capital gains and losses, irs.gov. Head of household 0% ceiling: $64,750.

Assets held one year or less are short-term and taxed as ordinary income at graduated rates, with no preferential treatment at either the federal or California level.

How much is the Net Investment Income Tax?

3.8%, applied to the lesser of net investment income or the amount by which modified adjusted gross income exceeds:

• $200,000 — single or head of household
• $250,000 — married filing jointly or qualifying surviving spouse
• $125,000 — married filing separately

Source: IRS, Topic no. 559 — Net investment income tax, irs.gov. These thresholds are not indexed for inflation.

What is the combined top rate on a capital gain in California?

37.1% — the 20% federal long-term rate, plus 3.8% NIIT, plus California's 13.3% top marginal rate, before any deduction interaction. On a $1,000,000 gain that is $371,000 payable in the year of the sale.

What rate applies to depreciation recapture?

Unrecaptured §1250 gain — the portion of real-property gain attributable to depreciation previously allowed or allowable — is taxed at a maximum federal rate of 25%, not the long-term capital gains rate.

California does not conform to a lower recapture rate. It taxes recapture at the same 1%–13.3% ordinary schedule, so the combined top rate on recapture reaches roughly 38.3%.

Source: IRS, Topic no. 409, irs.gov.

This is the most commonly missed number in a California property sale. Depreciation is recaptured whether or not the owner ever claimed it — the statute reads "allowed or allowable."

What rates apply to collectibles and small business stock?

• 28% maximum federal rate on net capital gains from collectibles — coins, art, antiques, precious metals.
• 28% maximum federal rate on the taxable portion of gain from §1202 qualified small business stock.

Source: IRS, Topic no. 409, irs.gov.

How much gain can a homeowner exclude?

• $250,000 — single filer
• $500,000 — married filing jointly

Source: IRS, Topic no. 701 — Sale of your home, irs.gov.

The exclusion has not changed since the Taxpayer Relief Act of 1997 and is not indexed for inflation. In California's higher-cost counties this means a long-held primary residence routinely produces taxable gain well beyond the exclusion.

How much of a capital loss can be deducted?

Capital losses offset capital gains dollar for dollar without limit. Beyond that, only $3,000 per year ($1,500 if married filing separately) may offset ordinary income; the remainder carries forward indefinitely.

Source: IRS, Topic no. 409, irs.gov.

Original research: embedded capital gains in 294 Los Angeles County listings

Method. In September 2026 we matched commercial and residential properties actively listed for sale in Los Angeles County to their Los Angeles County Assessor parcel records. The Assessor publishes each parcel's base-year value — the assessed land and improvement value set at the last change of ownership under Proposition 13 — which serves as a conservative proxy for the owner's cost basis, along with the base year itself, which gives the holding period. Estimated gain is the asking price less adjusted basis; estimated tax applies 37.1% to capital gain and 38.3% to straight-line depreciation recaptured. Capital improvements are not observable in assessor data, so these figures are conservative — actual gains are larger where owners improved the property, smaller where they refinanced or exchanged in.

n = 294 parcels.

By property type:

Source: Goldstein & Co. LLC analysis of Los Angeles County Assessor parcel records and active listings, September 2026. Free to cite with attribution and a link to this page.

What the sample shows. The median California seller in this dataset is not facing a marginal tax question — they are facing a $445,000 single-year liability on a property they have held 11 years. Nearly six in ten are sitting on a seven-figure gain. And because the median basis is 41% of asking price, the gain is not a rounding error against the sale price; it is the majority of it.

How volatile is capital gains revenue for California?

California's General Fund is unusually exposed to capital gains because they are taxed at full ordinary rates and are concentrated among high earners.

• California collected over $12 billion of General Fund tax on capital gains in a single fiscal year.
• Proposition 2 requires that when personal income taxes on capital gains exceed 8% of General Fund revenues, a portion is set aside for reserves or accelerated debt payment.
• The Legislative Analyst's Office describes capital gains as "one of the most volatile major elements of California's state General Fund revenues."

Source: California Legislative Analyst's Office, EconTax Blog, lao.ca.gov.

What is the installment-sale alternative?

Under IRC §453, a seller who receives payments in more than one tax year recognizes gain proportionally as payments are received rather than entirely in the year of sale. A structured installment sale assigns the buyer's payment obligation to a third-party assignment company funded with a carrier annuity, so the buyer still pays cash at closing and the seller carries no note.

• Governing statute: IRC §453; regulations at Treas. Reg. §15A.453-1; reported on IRS Form 6252.
• An interest charge under §453A applies to deferred obligations above $5 million.
• Depreciation recapture under §1245 cannot be deferred — it is recognized in the year of sale regardless of the installment method. Unrecaptured §1250 gain can be spread, but is reported first under Treas. Reg. §1.453-12.
• The election must be in place before closing. Once the seller has cash or constructive receipt, installment treatment is unavailable for that sale.

Sources: IRS Publication 537, Installment Sales; IRS Form 6252 instructions, irs.gov.

Run your own numbers with our capital gains tax calculator, or see the state-by-state comparison at defer capital gains tax in California.

Sources

All figures verified live on September 15, 2026:

• IRS, Topic no. 409, Capital gains and losses
• IRS, Topic no. 559, Net investment income tax
• IRS, Topic no. 701, Sale of your home
• IRS, Publication 537, Installment Sales
• California Franchise Tax Board, 2025 California Tax Rate Schedules
• California Legislative Analyst's Office, Capital Gains Estimates and Capital Gains Revenue
• Los Angeles County Office of the Assessor, parcel records, portal.assessor.lacounty.gov

This page is updated quarterly. Next scheduled review: December 2026.