Capital Gains Tax by State (2026) — and Why Your State Rate Decides How Much a §453 Sale Saves
The federal capital-gains rate is the same wherever you live. Your state rate is what changes the size of the check — and for most states, there's a surprise: no special capital-gains rate at all. The large majority tax a capital gain exactly like a paycheck — as ordinary income, at the top marginal rate. So the higher your state's income tax, the more a structured installment sale (which spreads the gain across years) is worth.
The three kinds of states
1. States that tax gains as ordinary income (most of them). No 0%/15% break — the gain stacks onto your income and pays the state's top marginal rate. These are where a §453 structured sale moves the needle most:
2. Nine states with no state tax on the gain at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Here the §453 benefit is federal only — still real (keeps you in lower federal brackets year to year, preserves deductions), just smaller.
3. Washington — the special case. No income tax, but a 7% excise on long-term capital gains above roughly $262,000 (2026, inflation-adjusted). It excludes real estate, retirement accounts, and certain small-business sales — so a home or rental sale escapes it, but a business or securities sale over the threshold does not.
(A dozen states — including Arizona, Arkansas, Montana, New Mexico, North Dakota, South Carolina, and Wisconsin — offer a partial capital-gains deduction or exclusion that lowers the effective rate below their top marginal rate. Confirm your state's exact treatment with your CPA.)
Why this matters for a structured sale
What is the tax bill on your sale going to be?
Send me the sale price and rough basis and I'll email you the actual number within one business day — plus the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation · the carrier compensates the broker, not you.
A §453 structured installment sale defers the federal gain identically in all 50 states. What differs is the state layer — and because most states tax the gain as ordinary income, spreading it across years also keeps each year in a lower state bracket, not just a lower federal one. The math:
- High-tax state (CA, NY, NJ, HI, OR, MN, MA): biggest win. You're deferring both a 20% federal + 3.8% NIIT layer and a 9–13.3% state layer, and the state layer often drops a bracket or two when spread.
- No-tax state (TX, FL, NV, WA-real-estate, etc.): federal-only win — still worth a look on larger deals, but the state savings aren't there.
For a state-specific breakdown, see the California capital-gains breakdown — the same logic applies to any state, scaled to its rate.
Frequently asked
Which states have no capital gains tax? Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming have no tax on capital gains as income — though Washington imposes a separate 7% excise on long-term gains over ~$262,000 (excluding real estate and retirement accounts).
Do most states give capital gains a lower rate like the federal 0/15/20%? No. Most states have no preferential capital-gains rate — they tax the gain as ordinary income at the same brackets that apply to wages. California is the highest at 13.3%.
Does a structured installment sale work in my state? Yes — the federal §453 deferral works in all 50 states. Your state's rate only determines how much extra you save on the state layer on top of the federal deferral.
Every state's deferral page
Find your state's specific capital-gains and §453 breakdown:
Alabama · Alaska · Arizona · Arkansas · Colorado · Connecticut · Washington DC · Delaware · Florida · Georgia · Hawaii · Idaho · Illinois · Indiana · Iowa · Kansas · Kentucky · Louisiana · Maine · Maryland · Massachusetts · Michigan · Minnesota · Mississippi · Missouri · Montana · Nebraska · Nevada · New Hampshire · New Jersey · New Mexico · New York · North Carolina · North Dakota · Ohio · Oklahoma · Oregon · Pennsylvania · Rhode Island · South Carolina · South Dakota · Tennessee · Texas · Utah · Vermont · Virginia · Washington · West Virginia · Wisconsin · Wyoming
More states
- Missouri capital gains tax — no tax on the gain — 100% subtraction
- Ohio capital gains tax — 2.75% flat
- Michigan capital gains tax — 4.05% flat
- Indiana capital gains tax — 3.0% flat, plus county tax
- Tennessee capital gains tax — no state income tax
- Nevada capital gains tax — no state income tax
- New Hampshire capital gains tax — no tax on gains
- Alaska capital gains tax — no state income tax
- South Dakota capital gains tax — no state income tax
- Wyoming capital gains tax — no state income tax
Find out what your sale is really going to cost you in tax — and what you can do about it
No retainer. The carrier compensates the broker — not you.
Find out what your tax bill actually looks like before you sell — including the parts your CPA may not raise until the return is already being prepared.
Most people find out what they owe after the sale closes, when nothing can be changed. A short conversation now tells you the number, which layers apply to your situation, and which options are still open while the sale is still in front of you.
- What you will actually owe — federal, the 3.8% surtax, recapture and your state
- Which of those layers you can still do something about
- Whether spreading the sale changes the number in your case
Hans Goldstein · 317-463-6659 · Goldstein & Co. LLC · This is an educational conversation, not tax advice. Bring your CPA in before you file.
Illustrative only — not tax, legal, or accounting advice. 2026 figures; state rates, thresholds, and capital-gains deductions change and vary by situation. Confirm your state's current treatment with your CPA.
Every state, with a calculator
Pick your state to run the four layers that actually decide the bill — federal brackets, the 3.8% net investment income tax, depreciation recapture and state tax.
The four layers on any state sale
Whatever your state charges, the same stack applies:
- Federal long-term capital gains at 0%, 15% or 20%, set by total taxable income for the year.
- Net investment income tax — an extra 3.8% once modified AGI passes $200,000 single, $250,000 married filing jointly, and only $125,000 married filing separately. Those thresholds have never been indexed for inflation, so more sellers cross them every year.
- Depreciation recapture at up to 25% on the real-property portion if the asset was ever a rental or business property. Under §453(i) recapture is recognised in the year of sale no matter how you structure payments.
- State tax, from 0% to 13.3% depending on where you live.
The net investment income tax is the layer sellers miss most often, because it is not part of the headline capital-gains rate and it appears nowhere on the bracket tables.
State-by-state rates and calculators
Run your specific numbers
The calculator runs your sale through real 2026 federal + state tax brackets and shows §453 savings vs lump sum side-by-side.
Run the calculator → 317-463-6659