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Texas Capital Gains Tax

Texas has no state capital gains tax. Residents pay only federal capital gains tax.

Why It Matters

Understanding how Texas taxes capital gains helps you estimate the true cost of selling investments, plan asset sales, and compare after-tax returns across states.

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How It Works

Texas does not tax capital gains. Your only obligation is federal: 0%, 15%, or 20% on long-term gains depending on income, plus 3.8% NIIT for high earners.

Example

Single filer • $10,000 long-term gain • $100,000 other income • 2025

Federal

$1,500

15.00% rate

Texas

$0

No state tax

Total

$1,500

15.00%

Resources

Texas Capital Gains Tax Information

Official Texas tax information relevant to capital gains, including rates, forms, and filing resources.

Source: Texas Tax Authority

Frequently Asked Questions

Do I still owe federal capital gains tax in Texas?

Yes. While Texas doesn't tax capital gains at the state level, you still owe federal capital gains tax on profits from selling investments, real estate, or other capital assets.

Does Texas tax capital gains?

No. Texas has no state-level capital gains tax. You pay only federal capital gains tax (0%, 15%, or 20% for long-term gains) plus the 3.8% NIIT if applicable.

What is the capital gains tax rate in Texas?

The state rate is 0%. Your combined rate is the federal rate only — up to 23.8% (20% + 3.8% NIIT) for high earners.

Key Terms

A tax-deferred swap of one investment property for another, allowing you to postpone paying capital gains tax.

Property you own for investment or personal use that can generate a capital gain or loss when sold.

The profit from selling a capital asset for more than you paid for it.

The loss from selling a capital asset for less than your cost basis.

The original value of an asset for tax purposes, usually the purchase price plus certain adjustments.

A category that determines your tax bracket thresholds, standard deduction, and eligibility for certain credits.

How long you owned an asset before selling it, which determines whether gains are taxed at short-term or long-term rates.

Long-Term Capital Gains

Profits from selling assets held for more than one year, taxed at preferential federal rates of 0%, 15%, or 20%.

Marginal Tax Rate

The tax rate applied to your next dollar of income — the highest bracket you've reached.

Modified Adjusted Gross Income

Your adjusted gross income (AGI) with certain deductions added back, used to determine eligibility for tax benefits and surtaxes like the NIIT.

Net Investment Income Tax

A 3.8% federal surtax on investment income for individuals with MAGI above $200,000 (single) or $250,000 (married filing jointly).

Short-Term Capital Gains

Profits from selling assets held for one year or less, taxed as ordinary income at rates up to 37%.

Step-Up in Basis

When an inherited asset's cost basis is reset to its fair market value at the date of the owner's death, eliminating all unrealized capital gains.

Your gross income minus deductions — the amount used to determine which tax bracket you fall into.

An IRS rule that disallows a capital loss deduction if you buy a substantially identical security within 30 days before or after the sale.

Next review: 2027-01-15 • Applies to tax year: 2025