States With No Capital Gains Tax in 2026: The Real List of 9 (Washington Isn't on It)

Nine states charge no tax on long-term capital gains in 2026: Alaska, Florida, Missouri, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. That list is not the familiar no-income-tax list. Washington belongs to the no-income-tax nine but taxes long-term gains at 7% to 9.9% through its capital gains excise tax, while Missouri keeps a regular income tax but became the first state to exempt individual capital gains 100%, starting with the 2025 tax year (Missouri HB 594). Federal capital gains tax at 0%, 15%, or 20% applies in every state.

Key takeaways:

• Zero state tax on long-term gains in 2026: AK, FL, MO, NV, NH, SD, TN, TX, WY
• Washington is the trap: no tax on wages, but a 7% excise on long-term gains above a $278,000 standard deduction (2025 amount, inflation-adjusted), rising to 9.9% on taxable gains over $1 million
• Missouri is the surprise: individual capital gains are 100% deductible from state income tax since 2025, per the Missouri Department of Revenue
• Federal rates of 0% / 15% / 20% plus the 3.8% net investment income tax (NIIT) follow you to every state
• Eight more states tax long-term gains at a discount, from North Dakota's effective 1.5% to Hawaii's 7.25%

Save this cheat sheet — the zero-tax states and key rates in one image.

Which States Have No Capital Gains Tax in 2026?

Eight of the nine zero-tax states get there the simple way: no individual income tax at all, so there is nothing for a capital gain to be taxed under. Those are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. The ninth, Missouri, still taxes wages and business income but lets individuals deduct 100% of the capital gains reported on their federal return.

Working with freelancers who relocate between states, I keep seeing 2024-era lists pasted into 2026 decisions: Washington still counted as tax-free, Missouri still missing. Both entries are wrong now, and the two corrections point in opposite directions.

Our companion guide to the states with no income tax covers the wage-income side, plus nexus, domicile, and the business taxes these states charge instead.

Run Your State Against a $50,000 Sale

A worked example. Hassan, a freelance developer in Austin, sells index funds he has held for four years at a $50,000 long-term gain. His taxable income puts him in the federal 15% capital gains bracket, so he owes $7,500 federal and $0 to Texas: $7,500 total, a 15% combined rate. A freelancer with the same sale in California's 9.3% bracket adds roughly $4,650 of state tax, and at California's 13.3% top rate the state's share reaches $6,650.

Washington: The No-Income-Tax State That Still Taxes Your Gains

Washington charges no tax on wages or business income, and its capital gains excise tax survives precisely because of that framing: the state supreme court upheld it in Quinn v. Washington (2023) as an excise on the act of selling, not an income tax. The label doesn't change the bill.

The 2026 mechanics, per the Washington Department of Revenue:

• 7% on long-term gains above a standard deduction of $278,000 (the 2025 amount, adjusted for inflation each year)
• 9.9% on taxable gains exceeding $1 million, after SB 5813 added a 2.9% surcharge retroactive to January 1, 2025
• Exempt entirely: all real estate, assets in retirement accounts, and certain family-owned small businesses, livestock, and timber
• The return and payment are due with your federal income tax return, typically April 15

The deduction does heavy lifting: a Washington founder selling startup stock at a $500,000 long-term gain owes 7% on $222,000, which is $15,540, while a $200,000 gain owes nothing. Short-term gains are not taxed by Washington at all, an inversion of the federal logic worth knowing before you time a sale.

Missouri: The Income-Tax State That Doesn't Tax Gains

Missouri's HB 594, signed in July 2025, made it the first state in the country to fully exempt individual capital gains while keeping a general income tax. Individuals deduct 100% of the capital gains reported on their federal return when computing Missouri adjusted gross income, effective for gains recognized on or after January 1, 2025, and the exemption covers both short-term and long-term gains. The Missouri Department of Revenue confirmed the exemption in its own announcement. Corporations don't get the deduction until Missouri's top individual rate falls to 4.5% or lower (it stands at 4.7%).

The nuance most summaries skip: the exemption applies to capital gains only. A Missouri retiree's IRA withdrawals are ordinary income and remain fully taxable, while the same retiree's brokerage sales are now state-tax-free.

Do You Still Pay Federal Capital Gains Tax in These States?

Yes, everywhere and unchanged. State residence never touches the federal side. For 2026, long-term gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on taxable income, per Rev. Proc. 2025-32:

The 3.8% Net Investment Income Tax (IRC §1411) stacks on top above $200,000 of MAGI (single) or $250,000 (joint), and short-term gains are taxed as ordinary income at up to 37%. The full federal picture, including holding-period rules and loss netting, is in our short-term vs long-term capital gains guide, and every sale still gets reported on Form 8949 and Schedule D no matter what your state charges. To model a specific sale with your own income, filing status, and state, use the capital gains tax calculator.

Every State's Top Rate on Long-Term Gains in 2026

Most states tax capital gains as ordinary income, so the top rate on a long-term gain is simply the state's top income tax rate. The exceptions get a note. Rates are the top 2026 rates from the Tax Foundation's 2026 state tax tables (data as of February 11, 2026); special capital gains treatments are verified against the state revenue departments cited under the table.

8 States That Tax Long-Term Gains at a Discount

Between the zero-tax nine and the ordinary-income states sits a middle tier that rewards holding periods:

• Arizona subtracts 25% of net long-term gains from income, and starting with the 2026 tax year the subtraction covers all assets rather than only those acquired after 2011. At the flat 2.5% rate, the effective rate lands at 1.875%, the lowest nonzero rate in the country.
• North Dakota excludes 40% of long-term gains: effective top rate 1.5%.
• Arkansas exempts 50% of net capital gain: effective top rate 1.95%.
• South Carolina deducts 44% of long-term gains: effective top rate 3.36%.
• New Mexico deducts the greater of $1,000 or 40% of net gain: effective top rate about 3.54%.
• Montana runs a separate rate table for net long-term gains, 3.0% and 4.1%, versus a 5.65% top ordinary rate.
• Wisconsin excludes 30% of long-term gains (60% for farm assets): effective top rate 5.36%.
• Hawaii caps capital gains at an alternative 7.25% rate while ordinary brackets climb to 11%.

Massachusetts runs the opposite split: long-term gains at a flat 5%, short-term gains at 8.5%, and a 4% surtax once total taxable income passes roughly $1 million.

Does Moving to a Zero-Tax State Before a Sale Work?

Sometimes, and only if the move is real and finishes before the gain does. The state where you are a tax resident on the date you sell generally taxes the gain from intangible assets like stock. Sell in March as a California resident and move to Texas in April, and the gain is California's. Establish Texas residency first, then sell, and it isn't.

Three timing rules decide close cases:

• Part-year residents split the year. California taxes gains you realize while a California resident; the date of sale, not December 31, controls.
• Installment sales follow their source. Sell a California business on an installment note and move to Nevada, and the installment gains from that California sale generally remain California-source income in future years.
• High-tax states audit big departures. California and New York routinely examine residency changes that precede large sales; a documented move with a day count beats a mailbox address. The full domicile checklist is in the no-income-tax states guide.

What a Zero-Tax State Does NOT Protect You From

• Federal tax. The 0%/15%/20% brackets, the 3.8% NIIT, and ordinary rates on short-term gains apply identically in all 50 states.
• Other states' source rules. A Texas resident selling a California rental property owes California nonresident tax on that gain, and California withholds 3⅓% of the sale price at closing. Real estate is taxed where it sits, not where you live.
• Washington's excise, if you live there. Stock gains above the deduction are taxed at 7% to 9.9% even though Washington has no income tax.
• Ordinary-income lookalikes. IRA and 401(k) withdrawals are ordinary income, not capital gains, so Missouri's exemption does nothing for them; in the eight no-income-tax states they escape anyway.
• Gift and inheritance mechanics. Gifted assets carry the giver's basis to the recipient, so a zero-tax state erases the state bill on the gain but not the federal one; the 2026 annual gift tax exclusion covers what the giver can transfer without filings.

Common Mistakes With State Capital Gains Planning

1. Treating Washington as Tax-Free for a Stock Sale

The excise-tax label convinces people the tax doesn't apply to them. A $700,000 long-term gain by a Seattle founder owes Washington $29,540 (7% of $422,000 after the $278,000 deduction) on top of federal tax.

2. Using a Pre-2025 List

Compilations that predate Missouri's HB 594 and Washington's SB 5813 misprice both states. Several syndicated 2026 lists still show Missouri taxing gains at 4.7%; the state's own revenue department says otherwise.

3. Selling Before the Move Finishes

Signing the brokerage sell order in March and the Texas lease in April leaves the gain in your old state. Complete the residency change, document it, then sell.

4. Forgetting the Property Stays Behind

Moving to Florida doesn't move your Denver rental. Colorado taxes the gain when you sell it, on a nonresident return, regardless of your new address.

Tracking Gains and What's Left After the Sale: How Jupid Helps

A sale that spans two states, a federal bill due in quarterly installments, and proceeds mixed into a business account: that's where clean records decide what you actually keep. Jupid connects to your bank, categorizes every transaction with 95.9% accuracy, and answers questions in WhatsApp or iMessage in real time: "how much of the June sale is set aside for taxes?" or "what did the brokerage transfer in this quarter?" The AI accountant works from your live data, so the state-by-state math in this guide meets your real numbers instead of estimates. Try Jupid.

Sources

• Tax Foundation: 2026 State Income Tax Rates and Brackets — top rates for all states (data as of February 11, 2026)
• Washington DOR: Capital gains tax and Special notice: New tiered rates — 7%/9.9% rates, $278,000 deduction, exemptions
• Missouri DOR: First State to Fully Exempt Capital Gains Tax — HB 594, 100% individual deduction
• New Hampshire DRA: Repeal of the Interest and Dividends Tax — effective January 1, 2025
• Montana DOR: 2025 Tax Rates and Deductions — 3.0%/4.1% long-term gain rates
• Minnesota DOR: Net Investment Income Tax — 1% on investment income over $1 million
• Arizona Legislature: SB 1331 summary — 25% subtraction expanded to all assets
• IRS Topic No. 409: Capital Gains and Losses and Rev. Proc. 2025-32 — 2026 federal brackets
• IRC §1(h) — capital gains rates; IRC §1411 — Net Investment Income Tax
• Quinn v. Washington (2023) — excise-tax framing upheld

This guide is for general educational purposes and does not constitute tax, legal, or accounting advice. State capital gains rules change frequently, several 2026 figures (including Washington's standard deduction) are inflation-adjusted after publication, and residency questions are fact-specific. For advice on a specific sale or move, consult a qualified tax professional familiar with both states involved.

Tax Year: 2026