Does Texas Tax Capital Gains?

Texas doesn’t have a capital gains tax, but you may have to pay federal capital gains taxes.

This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.

Does Texas have an income tax?

Texas has no personal income tax at all. This includes not having a capital gains tax.

While some states tax capital gains or other investment earnings but not earned income, Texas doesn’t have a similar tax. No income tax really means no capital gains taxes.

What is the Texas capital gains tax rate?

Since Texas has no capital gains tax, you generally won’t pay more than the 20% federal tax on long-term capital gains. If you have short-term capital gains, they may count as ordinary income for federal tax purposes.

Does Texas have capital gains tax when selling your house?

There are no Texas capital gains taxes when selling a home in Texas. However, you may have to pay capital gains tax at the federal level if your gain is worth at least $250,000 ($500,000 for joint filers).

Does Texas have capital gains tax when selling stocks?

Texas has no taxes on investment income, including both short-term capital gains tax and long-term capital gains. You won’t have to pay capital gains taxes to Texas.

Again, federal taxes may apply.

Out-of-State Residents

If you’re not a resident of Texas, you may have a capital gains tax liability to your home state if you sell a Texas property. Some states will tax their residents on their entire income regardless of where it was earned.

If you’re a Texas resident and sell a property located in another state, you may have to pay that state’s capital gains tax.

If you’re a former California resident who moved to Texas, it’s very important to make sure that you’ve broken your California residency before recognizing a large capital gain if you’re trying to avoid California taxable income. Even if you’ve taken steps to move, California may still consider you a resident. Talk to your tax advisor to make sure you can avoid capital gains tax.

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