Texas Capital Gains Tax Rate (2026)
Texas capital gains tax overview
Texas has no individual income tax. Capital gains are not taxed at the state level — one of the most popular states for investors.
Federal + Texas combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Texas investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Texas State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 0% | 0% | 3.8% |
| 15% | 0% | 15% | 18.8% |
| 20% | 0% | 20% | 23.8% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Texas does not have an equivalent.
How Texas compares to other states
Texas is one of 8 states with no individual income tax. This group includes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming. Residents of these states pay only federal capital gains tax — a significant advantage for investors with large unrealized gains who have flexibility on where they live.
Tax-reduction strategies for Texas residents
With no state income tax, Texas residents already benefit from one of the most favorable environments for capital gains in the country. The primary levers are federal:
- Hold over 1 year for long-term federal rates (0/15/20%).
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving $4,000 in federal tax at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. With no state tax, this means zero total capital gains tax.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
Detailed Texas capital gains tax rules
Tax history and legal basis
Texas has never imposed a personal income tax. The state constitution (Article VIII, Section 24-a, added 2019) explicitly prohibits a state income tax, requiring a voter-approved constitutional amendment to change.
Exemptions and special treatment
All capital gains are fully exempt from state taxation. No filing required. Texas residents pay only federal capital gains tax. The constitutional prohibition makes this permanent absent a statewide vote.
Filing requirements
No state income tax return required. Texas residents report capital gains only on their federal return. Texas also has no estate or inheritance tax.
Recent changes and legislative updates
In 2019, Texas voters overwhelmingly approved a constitutional amendment banning a state income tax (Proposition 4, 74% in favor). This provides investors with constitutional certainty that capital gains will never be taxed at the state level. Texas funds government through property taxes (among the highest nationally at ~1.8% average), sales tax (6.25% state + up to 2% local), and oil/gas severance taxes.
Worked example: $50,000 capital gain in Texas
Here's exactly what a Texas resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Texas state tax (0%) | −$0 | No state income tax |
| Total tax owed | −$7,500 | Federal + state combined |
| You keep | $42,500 | 85.0% of your gain |
Because Texas has no state income tax, you keep $42,500 after federal tax — significantly more than residents of high-tax states like California (where state tax alone would cost ~$4,650 on this gain).
Frequently asked questions — Texas
Does Texas tax short-term and long-term gains differently?
No — Texas has no income tax, so neither type of gain is taxed at the state level. The difference between short-term and long-term only matters for federal purposes.
Do I need to file a Texas tax return if I only have capital gains?
No. Texas has no income tax, so there is no state return to file for investment income.
What if I moved to Texas mid-year?
Moving to Texas eliminates future state capital gains taxes, but gains realized while you were a resident of your prior state are taxable by that state. Most states use a prorated approach for part-year residents.