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High Long-term Capital Gains Taxes: The Impact on Investors Across Different States

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As investors seek to grow their wealth through various avenues, one aspect that warrants consideration is the impact of long-term capital gains taxes imposed by different states across the U.S.

California, known for its high tax burdens on affluent individuals, stands out as the most expensive state for investors, with a steep capital gains tax rate of 13.3% on incomes exceeding $1 million.

New York follows closely behind with a significant 10.90% tax rate applying to both capital gains and earned income, particularly affecting individuals with incomes over $25 million.

Minnesota, on the other hand, aligns its tax rates for long-term capital gains with short-term gains and ordinary income, with an additional 1% tax for net investment income over $1 million, totaling a 10.85% top tax bracket.

New Jersey imposes a 10.75% tax rate on taxable incomes exceeding $1 million for single filers, dropping to 8.95% for those below half a million, but still taxing gains as low as $75,000.

Washington D.C. shares the fourth spot with New Jersey in terms of high long-term capital gains tax rates, set at 10.75% for incomes surpassing $1 million, while even lower-earning investors face tax rates not falling below 9%, affecting gains above $60,000 despite the bracket.

Oregon‘s long-term capital gains tax rate of 9.9% may seem lower, yet it kicks in for single filers with taxable income at $125,000 and above, with a minimum 6.75% tax on incomes over $3,750.

Massachusetts introduces a millionaire tax, charging an extra 4% surtax on earnings exceeding $1 million, with short-term gains subject to rates reaching 12.5%.

Vermont taxes long-term gains in alignment with regular income, ranging from 3.35% to 8.75%, although offering a $5,000 long-term capital gains tax exclusion.

In Hawaii, a flat 7.25% tax rate applies to all capital gains, comparatively lower than the 11% tax rate on earned incomes, where even earners with $25,000 income face higher tax rates than investors.

Maine imposes a 7.15% income tax rate on long-term capital gains exceeding $58,050 for individuals, negating preferential treatment for lower-income taxpayers with the lowest rate starting at 5.8%.

Washington, though not in the top 10 worst states for investors, taxes specific long-term gains exceeding $250,000, excluding real estate gains from the capital gains tax.

Rachel Adams

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