By Stephen Milner · UtilityForge · Last reviewed: May 2026
California's capital gains tax rate for 2025 is 1% to 13.3%, applying to all gains regardless of holding period. California is one of the few states that taxes long-term capital gains at the same rate as wages and salaries, with no preferential schedule.
A California resident who holds a stock for two years before selling pays the same state tax rate as one who holds it for two weeks. This tool applies both the federal IRS rate schedule and the California Franchise Tax Board (FTB) ordinary income brackets to your specific income and gain, so you can see the full combined bill before you sell.
Most states that tax capital gains apply a lower rate to long-term gains or exempt them entirely. California does neither. Under California Revenue and Taxation Code Section 17024.5, California does not conform to the federal preferential capital gains treatment. All capital gains, regardless of holding period, are included in California taxable income and taxed at the same progressive rates as ordinary income.
This surprises many investors who correctly plan their federal tax around the 0%, 15%, and 20% long-term brackets, then discover the state adds a second bill at full ordinary income rates on top.
California's income tax has nine regular brackets plus a Mental Health Services Tax surcharge. All capital gains are taxed at these rates, stacked on top of other income.
| Rate | Single / MFS / HOH | Married Filing Jointly |
|---|---|---|
| 1% | $0 to $10,756 | $0 to $21,512 |
| 2% | $10,756 to $25,499 | $21,512 to $50,998 |
| 4% | $25,499 to $40,245 | $50,998 to $80,490 |
| 6% | $40,245 to $55,866 | $80,490 to $111,732 |
| 8% | $55,866 to $70,606 | $111,732 to $141,212 |
| 9.3% | $70,606 to $360,659 | $141,212 to $721,318 |
| 10.3% | $360,659 to $432,787 | $721,318 to $865,574 |
| 11.3% | $432,787 to $721,314 | $865,574 to $1,442,628 |
| 12.3% | Over $721,314 | Over $1,442,628 |
| +1% MHST | Income over $1,000,000 | Income over $1,000,000 |
Source: California Franchise Tax Board (FTB), 2024 tax year. 2025 brackets adjust slightly for inflation.
The 13.3% top rate comes from combining the 12.3% top bracket with the 1% Mental Health Services Tax imposed by Proposition 63, which applies to taxable income above $1,000,000. This makes California's personal income tax rate the highest of any US state.
California applies capital gains tax using the same income-stacking approach as the federal government. Your other income fills the lower brackets first, and the capital gain sits on top and is taxed at the rate that applies to the combined level.
Example: A single California filer earns $200,000 in wages and has a $100,000 long-term capital gain. California stacks the gain on top, producing $300,000 in total taxable income. The $100,000 gain falls entirely in the 9.3% bracket (which covers $70,606 to $360,659 for single filers). California tax on the gain: $9,300. Federal long-term capital gains tax at 15%: $15,000. Combined: $24,300, an effective combined rate of 24.3% on the gain.
Without the stacking calculation it is easy to underestimate your total tax.
For a California resident with total income above $1,000,000:
| Tax | Rate |
|---|---|
| Federal long-term capital gains | 20.0% |
| Net Investment Income Tax (NIIT) | 3.8% |
| California income tax (top bracket) | 12.3% |
| California Mental Health Services Tax | 1.0% |
| Maximum combined rate | 37.1% |
For short-term gains at the highest income levels, the combined maximum reaches approximately 54.1%: 37% federal ordinary income rate plus 13.3% California plus 3.8% NIIT.
This tool estimates combined federal and California state capital gains tax for the 2025 tax year. It covers stocks, ETFs, mutual funds, bonds, and other capital assets subject to standard capital gains treatment.
It does not account for: the Section 121 primary residence exclusion ($250,000 single, $500,000 married filing jointly), depreciation recapture on rental property (taxed at a maximum federal 25% rate), collectibles (maximum 28% federal rate), or installment sale income spreading. For those situations, and for large or complex transactions, consult a California-licensed CPA or tax attorney.
No. California taxes all capital gains, short-term and long-term, as ordinary income at the same rates as wages. Under California Revenue and Taxation Code Section 17024.5, California does not conform to federal capital gains tax treatment. There is no 0%, 15%, or 20% preferential schedule in California. Rates range from 1% to 13.3% depending on total taxable income. Holding an asset for more than a year saves on federal tax but provides zero California tax benefit.
California capital gains are taxed as ordinary income at progressive rates from 1% to 12.3%, plus a 1% Mental Health Services Tax (Proposition 63) on income above $1,000,000, bringing the top effective rate to 13.3%. The rate that applies to your gain depends on your total California taxable income. Your other income fills the lower brackets first, and the gain is taxed at the rate that applies to the portion it occupies. Use the calculator above to find your specific rate.
For a California resident with income above $1,000,000, the maximum combined rate on long-term capital gains is approximately 37.1%: 20% federal long-term rate, plus 3.8% Net Investment Income Tax (NIIT), plus 12.3% California income tax, plus 1% California Mental Health Services Tax. For short-term gains at the highest income levels, the combined maximum approaches 54.1% (37% federal ordinary income rate + 13.3% California + 3.8% NIIT).
California's 13.3% rate has two components. The base rate of 12.3% applies to taxable income over $721,314 for single filers, and over $1,442,628 for married couples filing jointly. An additional 1% Mental Health Services Tax, created by Proposition 63 in 2004, applies to taxable income above $1,000,000 for all filing statuses. The two components combine to 13.3% for high earners. Since California taxes capital gains as ordinary income, both components apply to capital gains the same as wages.
Yes, if you are a California resident at the time of the sale. California taxes residents on all income regardless of the source location. A California resident who sells Apple stock through a New York brokerage owes California income tax on any gain. The location of the asset or brokerage does not matter; residency at the time of the sale determines California tax liability.
Yes, but California conforms to the federal Section 121 primary residence exclusion. Single filers can exclude up to $250,000 of gain; married couples filing jointly can exclude up to $500,000. If your gain falls within the exclusion, no California tax is owed on that amount. Any gain above the exclusion threshold is taxable in California as ordinary income, with no preferential treatment even for homes held for decades. For example, a single filer with a $400,000 home sale gain excludes $250,000 and owes California income tax on the remaining $150,000 at the applicable bracket rate.
Several strategies can reduce exposure: (1) Tax-loss harvesting: realising capital losses in the same year offsets gains dollar for dollar in California, just as at the federal level. (2) Installment sales: spreading a large gain across multiple tax years may reduce the marginal CA rate applied to each portion. (3) Section 1031 exchanges: California conforms to federal like-kind exchange rules for real property, deferring the gain. Note that California has a claw-back rule if you later move out of state with an open exchange. (4) Charitable remainder trusts: allow deferral and income spreading for large one-time gains. (5) Timing: if your income will be significantly lower in a future year, deferring a sale may reduce your CA marginal rate. Each strategy has specific rules and tradeoffs. Consult a California-licensed CPA or tax attorney before acting on any of these.
California has a much smaller standard deduction than the federal version: $5,202 for single filers and $10,404 for married filing jointly in 2024, versus $14,600 and $29,200 federally. This means California taxable income is often higher than federal taxable income for the same filer. When using this calculator, enter your California taxable income, which may differ from your federal taxable income if you have different deductions at the state level. If unsure, use your federal taxable income as a close approximation, and note that actual CA taxable income may be slightly higher.