---
title: Capital Gains Tax Rate Treatment
description: Capital gains tax rates differ by investment type and state. This blog will explore the different types of capital gains taxes.
image: https://www.realized1031.com/hubfs/Images/photo/abstract/people-analyzing-financial-statements-AS-288436344.png
---

[![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/)

- [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap)
- [Our Process](https://www.realized1031.com/how-realized-works)
- [Financial Advisors](https://www.realized1031.com/advisor)
- [Resources](https://www.realized1031.com/resources)

- [The Company](https://www.realized1031.com/about-us)
- [Articles](https://www.realized1031.com/blog)

[Register](https://www.realized1031.com/marketplace)

[Log In](https://www.realized1031.com/login)

- Better Business Bureau Rating: **A+**
- [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333)
- [Call](tel:1-877-797-1031) **(877) 797-1031**

# Capital Gains Tax Rate Treatment On The Way In And Out

Posted Jan 10, 2020

![people-analyzing-financial-statements-AS-288436344](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/people-analyzing-financial-statements-AS-288436344.png?width=650&name=people-analyzing-financial-statements-AS-288436344.png)

Here at Realized, we can help you complete a 1031 exchange to defer your capital gains tax bill and create a tax-efficient investment portfolio. One risk that you face when you defer your capital gains tax bill is that the capital gains tax rate may be different than it is now when it does come time to pay the bill.

In addition to deferment of capital gains, investors will generally find capital gains tax rates are lower and more straightforward than tax rates on income. Capital gains tax rates differ by investment type and state. Let’s take a look at the different types of capital gains taxes.

### Brief History of Capital Gains Tax Rates 

Capital gains were first taxed when the income tax was imposed in 1913. From 1998-2003, the maximum long-term capital gains rate was 20%. Since 2003, the maximum long-term capital gains rate has been 15%, with the exception of the 39.6% rate introduced in 2013, bringing back the maximum 20% capital gains rate for that bracket.

A risk for investors who are deferring capital gains taxes, whether by 1031 exchange or another method, is that capital gains tax rates may increase once the deferral ends. This will create a net overall increased tax bill. 

For 2019, the capital gains tax rates are 0%, 15%, and 20%.

### Examples of Long-Term Capital Gains Rates

Short-term capital gains are taxed at your ordinary-income tax rate. Consider the scenarios below: 

Scenario 1 — John is married and files jointly. His income is $500,000 per year. Because he files married and has an income that is above $488,851, his capital gains rate is 20%.

Scenario 2 — Carly files her taxes as single. Her income is $60,000 per year. Because she is filing single and her income is between $39,376 and $434,550, her federal capital gains rate is 15%.

Scenario 3 — Keith files his taxes as single. His income is $35,000 per year. Because he is filing single and his income is between $0 and $39,375, his federal capital gains rate is 0%.

The above two examples demonstrate the rate federal capital gains are taxed at based on income. 

### Additional Medicare Tax

The [Additional Medicare Tax](https://www.irs.gov/businesses/small-businesses-self-employed/questions-and-answers-for-the-additional-medicare-tax) or Medicare surtax is paid above certain thresholds based on an individual’s filing status. The tax is paid on the aggregate of wages, compensation, and any self-employment income. The rate of the Additional Medicare Tax is 0.9%.

| Filing Status | Threshold Amount |
| --- | --- |
| Married filing jointly | $250,000 |
| Married filing separate | $125,000 |
| Single | $200,000 |
| Head of household (with qualifying person) | $200,000 |
| Qualifying widow(er) with dependent child | $200,000 |

To see how the Additional Medicare Tax works, let’s look at an example. Mike’s combined wages subject to Medicare are $210,000. Mike’s excess amount is $10,000, which is taxed against the Additional Medicare Tax. The amount owed is 0.009 x $10,000 = $90.

For some, the [Net Investment Income Tax (NIIT)](https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax) will apply. It can apply to certain net investment income of individuals, trusts, and estates. The NIIT rate is 3.8%. The NIIT thresholds are the same ones listed in the above table. 

### State Tax Rates

States have different capital gains tax rates. Rates can vary widely from state to state. Outside of states with no tax rate, California clocks in with the highest capital gains tax rate at 13.3% while North Dakota comes in with the lowest rate at 2.90%.

These states do not have state capital gains taxes:

- Alaska
- Florida
- New Hampshire
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming

Federal capital gains tax rates are applied on top of state taxes; however, it isn’t always a simple addition to figure out the combined rate. The easiest way to see the [combined rate for state taxes and capital gains taxes is to click here](https://www.realized1031.com/capital-gains-tax-rate).

Capital gains are taxes on investment profits. There are different capital gains depending on the investment type and state. Unlike income taxes, which are progressive, capital gains taxes are static — there is generally one tax rate that applies to a particular gain.

As with any investment decision, a 1031 exchange contains several risks, including potentially facing a higher capital gains rate when you end up paying the tax bill. With that being said, the exchange process can be an excellent way to defer your capital gains tax bill and potentially maximize the value of your investments. 

Download The Capital Gains Tax Calculator

[![Cap Gains Calculator For Investors](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg "Estimate the cap gains tax owed ...") ](https://www.realized1031.com/blog/capital-gains-tax-rate-treatment-on-the-way-in-and-out#blogform)

Download Calculator

---

 

---

### Cap Gains Calculator For Investors

![Download The Capital Gains Tax Calculator](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg)

Estimate the cap gains tax owed after selling an asset or property

By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received.

Search

### [Why Realized](https://www.realized1031.com/why-realized)

- [Wealth Management](https://www.realized1031.com/the-wealth-management-gap)
- [Why Realized](https://www.realized1031.com/why-realized)
- [Our Process](https://www.realized1031.com/how-realized-works)
- [Scenarios](https://www.realized1031.com/scenarios)
- [Private Client Program](https://www.realized1031.com/private-client)
- [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services)

### [The Company](https://www.realized1031.com/about-us)

- [The Team](https://www.realized1031.com/about-us)
- [FAQ](https://www.realized1031.com/frequently-asked-questions)
- [Testimonials](https://www.realized1031.com/testimonials)
- [Press](https://www.realized1031.com/press)
- [Careers](https://www.realized1031.com/careers)

### [Partners](https://www.realized1031.com/partners)

- [Financial Advisors](https://www.realized1031.com/advisor)
- [Broker Dealers](https://www.realized1031.com/partners/broker-dealers)
- [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents)
- [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants)

### [Resources](https://www.realized1031.com/resources)

- #### Learn
  
    - [Articles](https://www.realized1031.com/blog)
    - [Glossary of Terms](https://www.realized1031.com/glossary)
    - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate)
- #### Watch
  
    - [Video Library](https://www.realized1031.com/videos)
    - [Webinar Archive](https://www.realized1031.com/webinars)
- #### Read
  
    - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust)
    - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic)
    - [1031 Exchange](https://www.realized1031.com/1031-exchange)
    - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary)
    - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones)

#### Realized

- 500 W 13th Street  
  Austin, TX 78701
- (877) 797-1031

##### [Contact Us](https://www.realized1031.com/contact-us)

- [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/)
- [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/)
- [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1)

- [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick)
- [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org)

SECURITIES DISCLOSURE

Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333).

Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.

Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.

This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com.

- [Terms & Conditions](https://www.realized1031.com/terms-and-conditions)
- [Privacy Policy](https://www.realized1031.com/privacy-policy)
- [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf)
- [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf)
- [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf)
-  

© 2026 Realized Holdings, Inc.

```json
{
  "@context" : "http://schema.org/",
  "@type" : "BlogPosting",
  "articleBody" : "Here at Realized, we can help you complete a 1031 exchange to defer your capital gains tax bill and create a tax-efficient investment portfolio. One risk that you face when you defer your capital gains tax bill is that the capital gains tax rate may be different than it is now when it does come time to pay the bill. In addition to deferment of capital gains, investors will generally find capital gains tax rates are lower and more straightforward than tax rates on income. Capital gains tax rates differ by investment type and state. Let’s take a look at the different types of capital gains taxes. Brief History of Capital Gains Tax Rates Capital gains were first taxed when the income tax was imposed in 1913. From 1998-2003, the maximum long-term capital gains rate was 20%. Since 2003, the maximum long-term capital gains rate has been 15%, with the exception of the 39.6% rate introduced in 2013, bringing back the maximum 20% capital gains rate for that bracket. A risk for investors who are deferring capital gains taxes, whether by 1031 exchange or another method, is that capital gains tax rates may increase once the deferral ends. This will create a net overall increased tax bill. For 2019, the capital gains tax rates are 0%, 15%, and 20%. Examples of Long-Term Capital Gains Rates Short-term capital gains are taxed at your ordinary-income tax rate. Consider the scenarios below: Scenario 1 — John is married and files jointly. His income is $500,000 per year. Because he files married and has an income that is above $488,851, his capital gains rate is 20%. Scenario 2 — Carly files her taxes as single. Her income is $60,000 per year. Because she is filing single and her income is between $39,376 and $434,550, her federal capital gains rate is 15%. Scenario 3 — Keith files his taxes as single. His income is $35,000 per year. Because he is filing single and his income is between $0 and $39,375, his federal capital gains rate is 0%. The above two examples demonstrate the rate federal capital gains are taxed at based on income. Additional Medicare Tax The Additional Medicare Tax or Medicare surtax is paid above certain thresholds based on an individual’s filing status. The tax is paid on the aggregate of wages, compensation, and any self-employment income. The rate of the Additional Medicare Tax is 0.9%. Filing Status Threshold Amount Married filing jointly $250,000 Married filing separate $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying widow(er) with dependent child $200,000 To see how the Additional Medicare Tax works, let’s look at an example. Mike’s combined wages subject to Medicare are $210,000. Mike’s excess amount is $10,000, which is taxed against the Additional Medicare Tax. The amount owed is 0.009 x $10,000 = $90. For some, the Net Investment Income Tax (NIIT) will apply. It can apply to certain net investment income of individuals, trusts, and estates. The NIIT rate is 3.8%. The NIIT thresholds are the same ones listed in the above table. State Tax Rates States have different capital gains tax rates. Rates can vary widely from state to state. Outside of states with no tax rate, California clocks in with the highest capital gains tax rate at 13.3% while North Dakota comes in with the lowest rate at 2.90%. These states do not have state capital gains taxes: Alaska Florida New Hampshire Nevada South Dakota Tennessee Texas Washington Wyoming Federal capital gains tax rates are applied on top of state taxes; however, it isn’t always a simple addition to figure out the combined rate. The easiest way to see the combined rate for state taxes and capital gains taxes is to click here. Capital gains are taxes on investment profits. There are different capital gains depending on the investment type and state. Unlike income taxes, which are progressive, capital gains taxes are static — there is generally one tax rate that applies to a particular gain. As with any investment decision, a 1031 exchange contains several risks, including potentially facing a higher capital gains rate when you end up paying the tax bill. With that being said, the exchange process can be an excellent way to defer your capital gains tax bill and potentially maximize the value of your investments.",
  "articleSection" : [ "Capital Gains" ],
  "author" : {
    "@type" : "Person",
    "email" : "marketing@realized1031.com",
    "image" : "",
    "name" : "The Realized Team",
    "url" : "https://www.realized1031.com/blog/author/the-realized-team"
  },
  "dateModified" : "2020-12-02T22:30:09+0000",
  "datePublished" : "2020-12-02T22:30:09+0000",
  "description" : "Capital gains tax rates differ by investment type and state. This blog will explore the different types of capital gains taxes.",
  "headline" : "Capital Gains Tax Rate Treatment On The Way In And Out",
  "image" : {
    "@type" : "ImageObject",
    "height" : 434,
    "url" : "https://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/people-analyzing-financial-statements-AS-288436344.png",
    "width" : 650
  },
  "mainEntityOfPage" : "https://www.realized1031.com/blog/capital-gains-tax-rate-treatment-on-the-way-in-and-out",
  "name" : "Capital Gains Tax Rate Treatment On The Way In And Out",
  "publisher" : {
    "@type" : "Organization",
    "address" : {
      "@type" : "PostalAddress",
      "addressCountry" : "USA",
      "addressLocality" : "Austin",
      "addressRegion" : "TX",
      "postalCode" : "78701",
      "streetAddress" : "500 W 13th Street "
    },
    "logo" : {
      "@type" : "ImageObject",
      "height" : 60,
      "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png",
      "width" : 296
    },
    "name" : "Realized"
  },
  "thumbnailUrl" : "https://cdn2.hubspot.net/hubfs/733513/Images/photo/abstract/people-analyzing-financial-statements-AS-288436344.png"
}
```