States With No Capital Gains Tax in 2026, and the Fine Print

The eight states with no tax on individual capital gains

Each of these states has no broad personal income tax in 2026, so long-term and short-term gains of resident individuals go untaxed at the state level. The legal basis differs, and that matters for how durable the rule is:

Constitutional bans (Florida, Nevada, Texas) take a public vote to undo; statutory absences can change in any session. Federal tax still applies everywhere: 0%, 15% or 20% on long-term gain (Rev. Proc. 2025-32, 2026) plus the 3.8% NIIT where it reaches the gain. See the long-term capital gains guide and capital gains tax by state for the full map.

Missouri: no tax on capital gains, but not on recapture

Missouri lets individuals subtract 100% of federally reported capital gains from Missouri adjusted gross income on Form MO-A (RSMo 143.121), effective for the 2025 tax year per the Missouri DOR announcement. The DOR's own FAQ also says the subtraction is first claimed on the 2026 return, so the start year is stated two ways; a 2026 sale is covered under either reading.

The limits are specific. Trusts filing as fiduciaries and pass-through entities paying entity-level tax cannot claim it; capital losses are not subtracted; corporations get a version only after the top individual rate falls to 4.5% or lower. And the subtraction follows the capital gain line of Form 1040, so Section 1245 recapture, which Form 4797 reports as ordinary income, stays taxable at Missouri's 4.7% top rate for 2026. In our example that is $14,100 of Missouri tax on a sale that would owe nothing in Texas. Details on the Missouri page.

Washington: no income tax, but a capital gains excise

Washington is often listed as a no-income-tax state, yet it taxes long-term capital gains of individuals through an excise: 7% on gains above an inflation-indexed standard deduction ($278,000 for 2025; the 2026 figure was not yet published by the DOR as of October 2026), plus 2.9% on taxable gains above $1 million starting in 2025 (RCW 82.87.040). Real estate is exempt, including interests in entities to the extent the gain comes from real estate (RCW 82.87.050). Depreciation recapture and interest are not in the base.

That split shows up clearly in the engine. A Washington owner selling business assets in our example owes $141,478 of excise, while a Washington couple selling a rental building for a $1,900,000 gain owes $0 to the state. Washington also passed SB 6346 (signed March 30, 2026), a 9.9% tax on high incomes scheduled to start in 2028 with a credit for capital gains excise paid; it does not change 2026 sales and may face legal challenges. See the Washington page.

One sale, four states: the worked comparison

Take one owner-operator selling business assets for a $2.3 million gain: $300,000 of equipment recapture and $2,000,000 of goodwill and other long-term gain, with $250,000 of other income, filing jointly in 2026. The federal piece is identical everywhere; the state piece is not.

The gap between Texas and California, $274,239, is why sellers ask about moving. But the table assumes the gain is taxable only where the seller lives, which holds for stock and many intangible assets but not for real estate or a business with a footprint in another state.

Entity-level taxes that still bite on a business sale

No personal income tax does not mean no tax on the business. When an entity sells its assets, three of these states can still take a share at the entity level:

• Texas franchise (margin) tax. For 2026 and 2027 reports the rate is 0.75%, or 0.375% for retail and wholesale, with a no tax due threshold of $2,650,000 of total revenue (Texas Comptroller). Total revenue is tied to specified lines of the federal return (TTC 171.1011), so asset sale gain in the entity can push a company over the threshold in its final year. LLCs, corporations and most partnerships are taxable entities; a sole proprietorship not organized to limit liability is not.
• Tennessee franchise and excise tax. The excise tax is 6.5% of Tennessee taxable income and the franchise tax is 0.25% of Tennessee net worth, minimum $100 (Tennessee DOR, 2026). Corporations, LLCs, limited partnerships and business trusts pay; gain on an asset sale inside the entity is excise tax income. Family-owned entities earning mainly passive income can qualify for the FONCE exemption.
• New Hampshire Business Profits Tax and Business Enterprise Tax. BPT is 7.5% of taxable business profits for periods ending on or after Dec. 31, 2023 (RSA 77-A:2) and reaches proprietorships as well as entities (RSA 77-A:1); BET is 0.55% of the enterprise value tax base (RSA 77-E:2). Gain on business assets is business profit even though the owner pays no personal tax on it.

Allocation and deal form drive these numbers: a stock sale leaves the entity tax with the buyer's company, an asset sale puts it on the seller's final return. See asset sale vs stock sale.

Real property is taxed where it sits

Moving to Florida does not move a California rental. States tax nonresidents on gain from real property located in the state, and many enforce it with withholding at closing. California, for example, generally requires the buyer to withhold 3 1/3% of the sales price or an elected rate on the gain for individual sellers on sales over $100,000, including on the principal of each installment payment (FTB Form 593 instructions, 2026). California also treats installment gain on California real property as California-source wherever the seller lives when payments arrive (FTB Publication 1031, 2025).

Tangible business assets and apportioned business income follow the same logic; gains on stock and personal goodwill tend to follow residence.

Moving before a sale

For a seller of stock or other intangibles, becoming a resident of one of these states before the sale can remove the state layer, but residency is a facts test: domicile, days, home, family, licenses, business ties, and the timing of the deal relative to the move. High-tax states audit departures in big gain years, and a signed letter of intent before the move is a common problem. The state residency change before a sale analysis walks through the tests.

To compare staying put, moving and the deferral paths on your own numbers, get the Big Sale Tax Analysis.

Run your own numbers

Frequently asked questions