What Is the California Capital Gains Tax Rate?
California does not have a tax rate that applies specifically to capital gains. Instead, capital gains are taxed at the same rate as regular income. Currently, individuals making $254,250 to $305,100 a year pay 10.3% in taxes, with the rate increasing to 13.3% for those making $1 million or more. The federal capital gains tax rate is 0% to 15% for most taxpayers, with higher earners paying as much as 20%.
In total, the marginal capital gains tax rate for California taxpayers is 33%. This includes the state income tax and the federal capital gains tax. This is the highest marginal capital gains tax rate in the United States. The average marginal capital gains tax rate for all 50 states is 28.7%.
A capital gain occurs when someone sells an asset for a more expensive price than when they bought the asset. For example, a person who buys a diamond for $1,000 and then sells it for $1,500 pays a capital gains tax on $500. Countries have various regulations and laws regarding capitals gains, and most countries in the world, including the United States, require their citizens to pay some sort of tax on their capital gains.