Are capital gains exempt from state income taxes?
August 22, 2025
The rules vary by state. For example, Washington, which has no states income tax, imposes a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets (there are some exemptions). Missouri, which has an income tax, exempts capital gains—from personal investments, sales of business interests and farmland, etc.—from personal income taxes. Corporations in Missouri can exempt capital gains when the individual tax rate in the state falls to 4.5% or less. #IdeaoftheDay
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