Capital Gains Tax by State: 2026 Data – Complete Founder’s Guide

Last updated: September 2026

State capital gains rates in 2026 range from 0% in eight states with no individual income tax to 13.3% in California. On a $50 million taxable long-term gain, that gap can mean $6.65 million in state tax. Federal rates stay the same wherever you sell, which makes your state of residence one of the biggest variables you can control when protecting wealth after an exit.

Our research team compiled 2026 rate schedules and QSBS rules for all 50 states and Washington, D.C. We then modeled the tax outcomes for venture-backed founders with eight- and nine-figure exits. The breakdown starts with a summary of state rates, grouped by treatment, before examining the details that determine what founders actually keep.

Most states tax capital gains as ordinary income, so a founder’s exit can push the gain into the state’s top bracket. The table below summarizes how all 50 states and Washington, D.C. treat long-term capital gains in 2026, grouped by type of treatment:

The table reflects state-level rates only. Notable local layers founders should factor in: New York City adds up to 3.876% (14.776% combined). Portland-area residents can owe Multnomah County’s Preschool for All tax (up to 3%) plus Metro’s Supportive Housing Services tax (1%) on top of Oregon’s 9.9%, a combined top marginal rate of 13.9%. Maryland counties add up to 3.3%, and Maryland separately imposes a 2% surcharge on net capital gains for taxpayers with federal AGI above $350,000, subject to statutory exemptions.

Key Insights:

• California’s 13.3% top rate leads the nation among state-level rates, with New York close behind at 10.9% (14.776% combined for NYC residents). A top-bracket Portland founder faces a higher combined marginal rate (13.9%) than California once local taxes are included.

• North Dakota’s 40% capital gains exclusion produces a 1.5% top statutory rate on gains, among the lowest of any taxing state. Effective rates on very large exits vary by structure: Arkansas excludes 50% of net capital gain and fully exempts net capital gain above $10 million in a tax year, which can produce a far lower effective rate on an eight- or nine-figure exit.

• Missouri is now the only income-tax state with an effective 0% rate on long-term gains, thanks to its 100% capital gains deduction for individuals.

• Minnesota’s 9.85% top rate rises to an effective 10.85% on investment income above $1 million due to the state’s net investment income surtax.

• Maine’s new 2% high-income surcharge (income over $1 million single, $1.5 million joint and heads of household) takes effect for 2026, creating a 9.15% top rate.

Section 1202 can eliminate federal tax on $15 million or more of gain per issuer. Whether you get the same break on your state return depends on where you live. Our analysis below shows which states follow federal QSBS treatment and which ones do not in 2026:

All states not listed above either conform to the federal exclusion or impose no individual income tax on capital gains.

Key Insights:

• New Jersey and Oregon traded places this year: New Jersey now honors the exclusion while Oregon taxes the full gain on 2026 sales.

• A California founder with a $30 million qualifying QSBS gain owes the state $3,990,000 even when the federal bill is zero. This assumes the full $30 million is federally excluded, which requires sufficient exclusion capacity, for example through the 10-times-basis limitation.

Our data models the 2026 state tax bill on a $50 million taxable long-term gain for a founder in the top tax bracket. Taxable gain, not gross transaction proceeds, drives the tax; a $50 million exit with basis or structuring produces a smaller taxable gain. The dollar figures assume the full $50 million is taxable at the state level, meaning no QSBS exclusion applies, either because the stock does not qualify or because the gain exceeds the founder’s exclusion capacity.

For qualifying QSBS, states that conform tax only the portion above the federal exclusion, while non-conforming states such as California and Oregon tax the full gain either way. We focus on states with large founder and startup populations, plus states that have major differences in state tax treatment. A separate column shows whether each state also taxes gain covered by the federal QSBS exclusion.

For simplicity, figures for graduated-rate states apply the state’s top marginal rate to the full gain. In most graduated-rate states, actual liability will be modestly lower after lower brackets are applied; New York is an exception, because its tax benefit recapture applies the 10.9% top rate to all taxable income once taxable income exceeds $25 million. The California figure includes the 1% Mental Health Services Tax. The Washington figure reflects the capital gains excise computation using the 2025 standard deduction of $278,000; the 2026 indexed amount had not been published at the time of writing, and the $1 million rate tier applies to taxable Washington capital gains after applicable deductions, not gross proceeds. These are planning estimates, not fully modeled tax-return liabilities.

Key Insights:

• The same $50 million gain costs $7,388,000 for a Manhattan founder and $0 for one in Austin or Miami.

• QSBS flips the ranking: New York exempts excluded gain entirely while California collects 13.3% on every dollar of it. A New York founder with $50 million of qualifying QSBS gain and a $15 million exclusion would owe state tax only on the remaining $35 million, roughly $3.8 million instead of $5.45 million.

Federal and state tax rules changed over the past year, with some changes applying retroactively. The table below highlights the changes that matter most to founders:

Key Insights:

• Stock acquired after July 4, 2025 earns a 50% exclusion after only a 3 year hold, while pre-OBBBA stock still needs more than 5 years for any benefit. Because the clock starts at acquisition, the earliest ordinary post-OBBBA acquisitions can use the 3-, 4-, and 5-year tiers is 2028, 2029, and 2030, respectively.

• Oregon’s addback removes $1,485,000 of state savings on a fully excluded $15 million gain for founders selling in 2026. For a 2026 sale, a fully excluded $15 million gain relies on legacy-stock rules, such as sufficient basis under the 10-times-basis limitation, since the new $15 million cap applies only to post-OBBBA stock that cannot yet meet its holding requirements.

• Washington considered a QSBS addback (SB 6229) in the 2026 session, but the bill failed, so federally excluded gain remains outside the state’s capital gains excise.

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