Capital Gains Tax on Real Estate by State (2026 Table)

The table below shows the estimated top combined rate on a long-term real estate gain in each state for tax year 2026: the 20% top federal long-term capital gains rate plus the state's top effective rate on capital gains. It excludes the 3.8% net investment income tax (add it if your income exceeds the §1411 thresholds) and the 25% depreciation-recapture layer — the calculator handles both for your actual numbers.

Nine states apply no state tax to a real estate gain: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. (Washington's capital gains excise applies to stocks and bonds, not real estate.)

Source: NAS Investment Solutions, 2026 state rate compilation; state components reflect top marginal rates and state-specific capital-gains exclusions where applicable. Verify your situation with a CPA — brackets, exclusions, and local taxes vary. Reviewed July 2026; next scheduled review January 2027 (see methodology).

Why this matters for a 1031 exchange

The higher your combined rate, the larger the deferral a 1031 exchange buys. A $1M gain costs roughly $200,000 in federal-plus-state tax in Texas — and about $333,000 in California — before recapture and NIIT. Every dollar of that stays invested if you exchange. Compare your three paths →