State Investment Tax Comparison (2026)
Direct answer
In 2026, 9 states have no tax on investment income at all, while the other states tax it as ordinary income — from 3.07% (Pennsylvania) up to 13.3% (California). A $10,000 long-term capital gain costs from $0 to about $1,330 in state tax depending on your state. Use the full 50-state table for exact figures.
Investment income — interest, dividends, and capital gains — is taxed under each state's personal income tax (if it has one). The comparison below groups all states by treatment. For per-state detail, rates, and a worked example, open any state guide or the full comparison table.
8
States with no tax on investment income
1
State taxing only cap gains over $270k (WA)
41
States taxing investment income as ordinary income
Frequently asked questions
Which states have no tax on investment income?
Nine states have no state personal income tax, so they do not tax interest, dividends, or capital gains: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming. Washington is the exception — it taxes long-term capital gains above $270,000 at 7% but exempts interest and dividends.
How are capital gains taxed at the state level?
Most states tax long-term capital gains as ordinary income at the same rates as wages — there is no special low state rate. The federal government gives preferential long-term capital-gains rates, but your state bill follows that state's own rules.
What is the highest state tax on investment income?
California has the highest top marginal rate at 13.3%, so a large capital gain is taxed most heavily there. New York (10.9%), New Jersey (10.75%), and the District of Columbia (10.75%) are also high. The lowest is 3.07% in Pennsylvania (flat).
Does this include federal tax?
No. These guides show only state tax on investment income. Federal capital-gains rates (0%, 15%, or 20% for most long-term gains in 2026, plus the 3.8% Net Investment Income Tax above thresholds) apply on top and are separate.
Source: Tax Foundation — State Individual Income Tax Rates and Brackets, 2026 (https://taxfoundation.org/data/all/state/state-income-tax-rates-2026, retrieved 2026-08-11).
Educational only — not tax advice. State rates change yearly; confirm with your state revenue department or a qualified tax professional. Content reviewed for accuracy by Priya Nair, CFP®.