1031 Examples: Capital Gains State Tax Rates

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State Capital Gains State Tax Rate State Exemptions of Federally Taxable Capital Gains
Alabama

5

All gains are taxable and all losses deductible in the year incurred. Net loss deduction is not limited. No excess loss carryover.

Alaska

0

None

Arizona

4.54

None

Arkansas

7

30% of long-term capital gain

California

13.3

None, although definitions and bases for capital assets may differ from federal definitions and rules.

Colorado

4.63

Qualified Colorado taxpayers may subtract gains from sale of (1) real or tangible personal property located in Colorado at the time of sale and (2) stock or ownership interest in a Colorado company, limited liability, or partnership. Assets must have been acquired on or after May 9, 1994 and the taxpayer must have held the asset for at least five uninterrupted years before the sale.

Connecticut

6.7

Gains/losses from the sale of Connecticut state and local bonds are subtracted/added back (see above).

DC

8.95

  • 4 percent on the first
  • $10,000 of taxable income.
  • 6 percent on taxable income
  • between $10,001 and $40,000.
  • 8.5 percent on taxable income of
  • $40,001 and above.
Delaware

6.75

None

Florida

0

None

Georgia

6

None

Hawaii

7.3

For tax years 2008 through 2013, 100% of any gain from sale of leased fee interest in units within a condominium, cooperative, or planned unit development to an association of the apartment owners.

Idaho

7.4

60% of gain from sale or exchange of qualified property located in Idaho at the time of the sale up to the amount of net capital gain from all property included in federal taxable income. The exclusion applies to gains from sales of:

  • Real property held for at least five years
  • Tangible personal property used for at least 12 months by a revenue-producing enterprise in Idaho
  • Cattle and horses held for at least 12 months for breeding, draft, dairy, or sporting purposes by an owner deriving more than 50% of his gross income from Idaho farming or ranching

Breeding livestock other than cattle or horses held for at least 12 months by an owner deriving more than 50% of his gross income from Idaho farming or ranching

Timber held by an owner for at least 24 months

Net capital gains the IRS treats as ordinary income are excluded. Allowable deduction is reduced, but not below zero, by the amount of any federal capital gains deduction related to the property.

Illinois

5

None

Indiana

3.4

None

Iowa

8.98

100% of capital gains resulting from sale of:

  • Real property used in a business in which the taxpayer materially participated for 10 years and which has been held for at least 10 years immediately before the sale
  • A business, including all or substantially all (at least 90%) of its tangible personal property or service, in which the taxpayer materially participated for 10 years, and which has been held for at least 10 years immediately before the sale. (Sale to a lineal descendant eliminates the requirement for the taxpayer’ s material participation. )
  • Cattle and horses held for at least 12 months for breeding, draft, dairy, or sporting purposes by an owner deriving more than 50% of his gross income from farming or ranching. (Sale to a lineal descendant eliminates the 50% income requirement. )

Breeding livestock other than cattle or horses held for at least 12 months by an owner deriving more than 50% of his gross income from farming or ranching. (Sale to a lineal descendant eliminates the 50% income requirement. )

Timber held by an owner for at least 24 months

Sales of these items through partnerships, S corporations, and limited liability companies qualify if owners meet requirements for ownership and material participation. Sales by C corporations qualify except when due to liquidation. Shareholders must meet ownership and participation requirements.

Kansas

4.8

None

Kentucky

6

Gains from sales of:

  • Kentucky Turnpike Bonds
  • Property taken by eminent domain
Louisiana

6

None

Maine

8.0

Gains from:

  • Fishing operations when contributed to a capital commission fund
  • Investments in the Northern Maine Transmission Corporation
  • Sales of bonds issued relative to the Maine Waste Management and Recycling Program
  • Gains from ownership shares of a partnership, S corporation, or other pass-through entity that is a financial institution subject to the Maine franchise tax
  • Gains on sale of multifamily affordable housing certified by the Maine State Housing Authority
Maryland

5.8

  • Gains from sales or exchange of Maryland state or municipal bonds
  • Capital gains distributions of a dependent child that the parent has elected to include in the parent’ s federal AGI
Massachusetts

5.3

None, although definitions and bases for capital assets may differ from federal definitions and rules.

Michigan

4.35

  • Taxpayers aged 65 or over may subtract up to $ 9,420 in interest, dividends, and capital gains income ($ 18,840 for joint filers). The maximum must be reduced by the pensions subtraction claimed.
  • All income, including capital gains, received by qualifying residents of Renaissance Zones, is exempt from tax. (Capital gains income may have to be prorated. )
Minnesota

9.9

Gain from sale of farm property, if insolvent at the time of sale.

Mississippi

5

None

Missouri

6

  • 25% of gain from sale of qualifying federally subsidized housing project to a nonprofit or governmental organization
  • Gains from sales of bonds issued by the Missouri Higher Education Loan Authority
Montana

6.9

  • Capital gains from qualifying small business investment companies (SBICs) providing Montana employment opportunities
  • 40% of capital gain from installment sales of capital assets entered into before January 1, 1987
  • 100% of capital gain up to $ 50,000 from qualifying sale of at least 80 acres to a beginning farmer at 9% interest or less on a long-term contract
  • 100% of federally taxable gain from liquidation of a corporation to the extent the gain is included in the liquidating corporation’ s gross income for Montana corporate license tax
Nebraska

6.84

Once-in-a-lifetime exclusion for gain from sale or exchange of stock in one “qualified” corporation acquired because of employment with, or while employed by, the corporation. A qualified corporation is one that has been doing business actively in Nebraska for at least three years and whose shareholders meet certain qualifications.

Nevada

0

None

New Hampshire

0

None

New Jersey

8.97

  • Capital gains from sale of New Jersey state or municipal bonds or notes
  • Capital gains from a New Jersey Qualified Investment Fund (a regulated investment company that invests at least 80% of its assets in federal or New Jersey state or municipal bonds)
  • Capital losses may only be netted against capital gains. Net capital losses are not deductible from ordinary income.
New Mexico

4.9

50% of federally taxable net capital gains or $ 1,000, whichever is greater. (Taxpayers claiming a tax credit provided in the Venture Capital Investments Act are not eligible for this exclusion. )

New York

8.82

100% of federally taxable gain from sale of qualifying “new business investment” issued before 1988 and held for at least six years

North Carolina

5.8

None

North Dakota

3.2

30% of federally taxable net long-term capital gain, including gain from a mutual fund

Ohio

5.4

Federally taxable gains from sale of Ohio public obligations

Oklahoma

5.25

100% of gains from sale of:

  •  
  • Real or tangible personal property located in Oklahoma and owned for at least five uninterrupted years prior to sale
  • Stock or ownership interest in an Oklahoma-headquartered company, limited liability company, or partnership if the stock or interest was owned for at least two uninterrupted years prior to sale
  • Qualifying Oklahoma state and local government obligations
  • 50% of capital gain from sale to the state of Oklahoma of any historic 19th century battle site designated as a National Historic Landmark
Oregon

9.9

Gain on sale of depreciable property with a different basis for federal and Oregon purposes

Pennsylvania

3.07

Gain on sales of Pennsylvania state and municipal direct obligations originally issued before February 1, 1994

(Note: Pennsylvania does not distinguish between long-term and short-term gain, does not allow carryover of losses from one tax year to the next, and does not allow a loss from one class of income to offset a gain from another or a loss from one spouse to offset gains by the other. )

Rhode Island

5.99

Profit or gain for writers, composers, and artists living in defined Economic Development Zone in specified cities and creating artistic works while a zone resident.

South Carolina

7

44% of net long-term capital gain (assets held for at least one year)

South Dakota

0

100% of qualified capital gains if:

  • The gain occurs on or after January 1, 2003
  • At least 70% of the proceeds are used within 12 months of the date the gain is recognized to purchase qualifying stock in a Utah small business corporation, and
  • The taxpayer did not have an ownership interest in the Utah small business corporation that issued the qualifying stock.
Tennessee

0

40% of federally taxable net capital gain

  • Tax credit for investing capital gain in eligible venture capital business equal to 3% of the gain invested
  • Credit equal to 7% of gain from sale of a mobile home park to a group made up of a majority of the park tenants or to a nonprofit organization representing such a group
Texas

0

Gain on the sale or exchange of real property or easement to real property which results in the property or easement being devoted to open space

Utah

5

None

Vermont

8.95

60% of gain from sale of:

  • Business or farming assets to a qualified relative if the taxpayer held the asset for at least 12 months
  • Corporate or trust shares if (a) there are no more than 15 shareholders or beneficiaries, with groups of certain taxpayer relatives counted as one shareholder or beneficiary; (b) the corporation has no more than two share classes; and (c) all shareholders and beneficiaries are natural persons
Virginia

5.75

Gain on the sale or exchange of real property or easement to real property which results in the property or easement being devoted to open space

Washington

0

 
West Virginia

6.5

No state income tax

Wisconsin

7.75

30% of gain from sale of:

  • Business or farming assets to a qualified relative if the taxpayer held the asset for at least 12 months
  • Corporate or trust shares if (a) there are no more than 15 shareholders or beneficiaries, with groups of certain taxpayer relatives counted as one shareholder or beneficiary; (b) the corporation has no more than two share classes; and (c) all shareholders and beneficiaries are natural persons
Wyoming

0

No state income tax