Tax

How do US states tax stocks and dividends?

The federal tax is only half the picture: most states tax capital gains and dividends too, usually as ordinary income at the state's normal rates, with no lower rate for long-term gains. A handful of states have no personal income tax — Florida, Texas, Nevada, South Dakota, Wyoming, Alaska, Tennessee, New Hampshire — and Washington has no wage tax but its own 7 % capital gains tax on long-term gains above a yearly deduction ($278,000 for 2025). Where you live on the day you sell is what counts.

Tax is national. This page describes the federal rules in the United States for tax year 2026. Most states add their own income tax on top, so there is never one single US rate. If you live and pay tax in another country, the rules are different — see the flags below.

How it works

Same gain, taxed twice. A $3,000 long-term gain: 15 % federal, then your state — roughly 4.4 % in Colorado, 5.75 % in Georgia, up to 13.3 % in California, 0 % in Texas.
No long-term discount. Almost no state distinguishes short-term from long-term; the gain is simply income.
Residence, not the exchange. A New Yorker buying a Texas company pays New York tax. Moving states mid-year splits the year.
Washington is different. No income tax, but since 2022 a 7 % excise tax on long-term gains from stocks, bonds and similar assets above the deduction (higher rate on very large gains from 2025). Retirement accounts and real estate are exempt.
Cities too, sometimes. New York City and a few others add a local income tax on top.
Rules change every year. Always check your own state's department of revenue.

The worked example

You sell shares with a $10,000 long-term gain. Federal at 15 %: $1,500. Living in Florida: nothing more. Living in Colorado (flat state income tax, 4.4 % in recent years — check tax.colorado.gov for the current rate): about $440 more. Living in California with $150,000 of income: roughly $930 more. Same shares, same sale.

Figures for 2026 from irs.gov (Rev. Proc. 2025-32 and IR-2025-111), checked September 2026. Your state may tax the same income again. Kiggo does not calculate your tax — your broker reports to you on Form 1099, and the IRS, your state and a tax professional decide.

Kiggo says: State tax is the second bill nobody mentions in the ads — and the reason two neighbours across a state line keep different amounts of the same gain.

The typical beginner's mistake

Reading "long-term gains are taxed at 15 %" and forgetting the state entirely. In a high-tax state the real rate on a long-term gain can be 25 % or more.

How you see it in Kiggo

Kiggo does not know your state and does not calculate your tax. The 13 US tax pages describe federal rules; your state's department of revenue is the source for the rest.

Related terms

Capital gains tax Qualified dividends

Frequently asked questions

Which states have no income tax on investments?

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming have no broad personal income tax. Washington has no income tax but a separate capital gains tax. Check each state's revenue department, as rules change.

What is Washington's capital gains tax?

7 % on long-term gains from stocks, bonds and similar assets above a standard deduction ($278,000 for 2025, adjusted yearly), with a higher rate on very large gains. Real estate and retirement accounts are exempt. Source: dor.wa.gov.

Do states give a lower rate for long-term gains?

Almost none do. Most tax gains as ordinary income. A few give partial exclusions; check your state.

Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-22.

Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.