Capital Gains Tax in California (2026)
California has no special capital gains rate — the state taxes your gain as ordinary income, 1% to 13.3%, stacked on top of the federal 0/15/20% tax and the 3.8% NIIT. Run the combined number below.
Reviewed & updated · 2026 tax-year figures · Federal + California state
California does not have a preferential long-term capital gains rate. Under Cal. Rev. & Tax. Code §17041, both short- and long-term gains are taxed as ordinary income at 1%–12.3%, plus a 1% Mental Health Services Tax on taxable income over $1M (§17043) — a 13.3% top rate. That state tax is added on top of the federal capital gains tax (0/15/20% long-term under IRC §1(h)) and the 3.8% NIIT (§1411). A top-bracket Californian can face a combined rate above 37% on a long-term gain.
Net proceeds $174,800$26,200
Show our work federal + CA, step by step
Estimates only, for the 2026 tax year. Not tax advice. California bracket thresholds and standard deductions are inflation-indexed each year by the FTB; the figures used here are marked est. as projected 2026 amounts, owner-verifiable against the final FTB release.
How does California tax capital gains?
California is one of the states that gives capital gains no break at all. Under Cal. Rev. & Tax. Code §17041, a capital gain is simply part of your taxable income and is taxed at the same graduated rates as wages — 1% at the bottom to 12.3% at the top. There is no equivalent of the federal 0/15/20% long-term schedule and no distinction between short-term and long-term at the state level. Whether you held the asset a week or a decade, California taxes the whole gain as ordinary income.
On top of the 12.3% top bracket, §17043 adds a 1% Mental Health Services Tax on the slice of taxable income above $1,000,000. That is what produces California's widely quoted 13.3% top marginal rate — and a large one-time gain (selling a business, a long-held property, or a block of RSUs) is exactly the kind of event that can push a household over that $1M line for a single year.
How does California stack on top of federal?
The two systems run in parallel and the amounts are added — California does not replace or absorb the federal tax. For a long-term gain, you owe:
- Federal: 0%, 15%, or 20% depending on where the gain stacks on your taxable income, under IRC §1(h);
- Federal NIIT: an extra 3.8% on net investment income once MAGI passes $200,000 (single) / $250,000 (joint), under IRC §1411; and
- California: your marginal state rate, 1%–13.3%, on the full gain under R&TC §17041/§17043.
Add those together and a top-bracket Californian with a long-term gain can pay roughly 20% + 3.8% + 13.3% ≈ 37.1%. A short-term gain is worse, because the federal side jumps to ordinary rates (up to 37%) instead of 20%. The calculator above computes each layer separately and shows you the exact bands.
What are the 2026 California income-tax brackets? (est.)
These are the marginal brackets California applies to your gain, shown for a single filer. Married-filing-jointly brackets are roughly double these thresholds; head-of-household has its own schedule. All figures are projected 2026 amounts (est.), owner-verifiable against the FTB rate tables.
| Taxable income (single, est.) | Marginal rate |
|---|---|
| $0 – $10,756 | 1% |
| $10,756 – $25,499 | 2% |
| $25,499 – $40,245 | 4% |
| $40,245 – $55,866 | 6% |
| $55,866 – $70,606 | 8% |
| $70,606 – $360,659 | 9.3% |
| $360,659 – $432,787 | 10.3% |
| $432,787 – $721,314 | 11.3% |
| $721,314+ | 12.3% |
| Taxable income over $1,000,000 | +1% (13.3% top) · §17043 |
How this calculator works & where the numbers come from
No black box. The federal side uses the same unit-tested engine as our main calculator: net gain = proceeds − basis; classify by holding period; for long-term gains, subtract the standard deduction and stack the gain across the 0/15/20% bands per IRC §1(h); add 3.8% NIIT where modified AGI crosses the §1411 threshold; short-term gains are computed as the true marginal difference in ordinary tax. The California side takes the same taxable gain (after any §121 exclusion, since California conforms), subtracts the California standard deduction from your ordinary income, and stacks the gain across the California marginal brackets under R&TC §17041, adding the 1% §17043 tax on any taxable income over $1,000,000. The two results are summed.
CHECK
Primary sources (linked, not just named)
- Cal. R&TC §17041 — imposition of tax
- Cal. R&TC §17043 — 1% Mental Health Services Tax
- FTB — tax rates & tables
- 26 U.S.C. §1(h) — federal capital gains rates
- 26 U.S.C. §1411 — 3.8% NIIT
- 26 U.S.C. §121 — home-sale exclusion
- IRS Topic No. 409 — Capital Gains and Losses
- IRS Publication 550 — Investment Income
California capital gains tax, answered
Does California have a separate capital gains tax rate?
No. California has no preferential capital gains rate. Under R&TC §17041, a capital gain — short-term or long-term — is taxed as ordinary income at the state's marginal rates of 1% to 12.3%, plus the 1% Mental Health Services Tax on taxable income over $1M (§17043), for a 13.3% top rate. The federal short/long distinction does not exist at the California level.
How much is capital gains tax in California for 2026?
Your California tax equals the gain taxed at your marginal state rate (1%–13.3%), added to the federal capital gains tax. Federally, a long-term gain is taxed at 0/15/20% (IRC §1(h)) plus 3.8% NIIT for high earners. A mid-income Californian might pay roughly 15% federal + ~9.3% state; a top earner can pay near 20% + 3.8% + 13.3% ≈ 37% combined. Use the calculator above for your exact figure.
How does California capital gains tax stack on top of federal?
They are computed separately and summed. The federal side taxes long-term gains at 0/15/20% and adds 3.8% NIIT for high earners; short-term gains are ordinary income. California ignores the holding period and taxes the entire gain as ordinary income at 1%–13.3%. Your total tax is federal + NIIT + California.
What is the extra 1% California tax over $1 million?
R&TC §17043 imposes an additional 1% Mental Health Services Tax on taxable income above $1,000,000. Stacked on the 12.3% top bracket, it produces California's 13.3% top marginal rate. A single large capital gain can push a household over the $1M threshold for one year, so the calculator applies this 1% automatically once your income plus gain crosses that line.
Does the 3.8% federal NIIT apply to Californians?
Yes — the NIIT is federal and applies in every state. Once modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), the 3.8% surtax under IRC §1411 hits the lesser of your net investment income or the amount over the threshold. It is added to your federal capital gains tax and is entirely separate from California state tax.
Does California conform to the $250k/$500k home-sale exclusion?
Yes. California generally conforms to the IRC §121 exclusion. Up to $250,000 of gain ($500,000 married filing jointly) on a primary residence is excluded for both federal and California purposes if you owned and used the home for two of the last five years. Only gain above the exclusion is taxed by California, as ordinary income. See our home-sale hub for the mechanics.
More state hubs are coming
California is the first of our state hubs — the template we'll clone across all 50 states and D.C. Every state page combines the same unit-tested federal engine with that state's own rules, so you always see the full combined number, not just half of it. Until your state's page is live, the main Capital Gains Tax Calculator lets you fold any state's top marginal rate into your federal receipt.