California Capital Gains Tax (2026)
California capital gains tax rate: Taxed as ordinary income at up to 13.3%
California offers no preferential rate for long-term capital gains — all gains are taxed as regular income. A California resident in the top bracket pays 13.3% state + up to 23.8% federal = 37.1% combined on long-term gains.
Federal Capital Gains Rates Still Apply to California Residents
All California residents also owe federal capital gains tax. Federal long-term capital gains rates are 0% (income up to ~$47,025 single), 15% (income up to ~$518,900 single), or 20% (above). High earners may also owe the 3.8% Net Investment Income Tax (NIIT).
Short-Term vs. Long-Term Capital Gains in California
Assets held less than one year are taxed as ordinary income at federal rates (10%–37%). Assets held over one year qualify for the preferential 0%/15%/20% federal rates. California offers no preferential rate for long-term capital gains — all gains are taxed as regular income. A California resident in the top bracket pays 13.3% state + up to 23.8% federal = 37.1% combined on long-term gains.
Planning Considerations for California Investors
- Tax-loss harvesting can offset gains at both state and federal levels
- Timing asset sales to control income year and bracket placement
- California taxes capital gains at Taxed as ordinary income at up to 13.3% — factor this into net-of-tax return calculations
- Qualified Opportunity Zone investments can defer federal and potentially state gains
Frequently Asked Questions
What is the capital gains tax rate in California?
California offers no preferential rate for long-term capital gains — all gains are taxed as regular income. A California resident in the top bracket pays 13.3% state + up to 23.8% federal = 37.1% combined on long-term gains. Federal rates (0%, 15%, 20% for long-term gains) also apply regardless of state.
Does California have a different rate for long-term vs. short-term capital gains?
California does not distinguish between short- and long-term capital gains — both are taxed as ordinary income at up to 13.3%. Only federal law provides preferential long-term capital gains rates.
How do I reduce capital gains tax in California?
Strategies include: holding assets over one year for federal long-term rates, tax-loss harvesting to offset gains, contributing to retirement accounts (401k, IRA), investing in Qualified Opportunity Zones, and timing sales across tax years. In California, capital gains are taxed at up to Taxed as ordinary income at up to 13.3%, so these strategies reduce both federal and state tax.
Is this capital gains tax calculator free for California?
Yes. Enter your gain amount, holding period, and annual income. The calculator applies both federal rates (0%/15%/20% long-term) and California's Taxed as ordinary income at up to 13.3% state rate to estimate your total tax owed.