Question 1

What is the capital gains tax rate for 2025?

Accepted Answer

For 2025, long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on your taxable income. Single filers pay 0% up to $47,025, 15% up to $518,900, and 20% above that. Short-term gains (one year or less) are taxed as ordinary income at your marginal rate, which can be as high as 37%.

Question 2

What is the Net Investment Income Tax (NIIT)?

Accepted Answer

The NIIT is an additional 3.8% tax on investment income, including capital gains, for taxpayers with modified adjusted gross income above $200,000 (single) or $250,000 (married filing jointly). It applies on the lesser of your net investment income or the amount by which your MAGI exceeds the threshold.

Question 3

Which states have no capital gains tax?

Accepted Answer

Nine states have no state income tax and therefore no capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington (for short-term gains), and Wyoming. Washington state does impose a 7% tax on long-term gains above $270,000.

Question 4

How do I calculate capital gains tax on real estate?

Accepted Answer

For real estate, your capital gain is the sale price minus your cost basis (purchase price plus improvements). If you lived in the home for at least 2 of the last 5 years, you may exclude up to $250,000 of gain ($500,000 married filing jointly) from tax under the primary residence exclusion. Any remaining gain is taxed at long-term capital gains rates if you owned the property for more than one year.

Question 5

Does California have a special capital gains tax rate?

Accepted Answer

No. California taxes capital gains at the same rates as ordinary income, with a top rate of 13.3% — the highest state capital gains rate in the country. Unlike the federal government, California gives no preferential treatment to long-term gains.

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