The most tax-friendly states for capital gains are those with no state income tax, which generally do not tax capital gains: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming, and New Hampshire. Missouri also recently eliminated its capital gains tax for individuals. Washington is an exception, imposing a 7% tax on high-level capital gains.
States with No Capital Gains Taxes
If you have a large number of assets there might be a benefit to reside in one of the following states. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.
The following states do not tax capital gains:
The "6-year rule" for Capital Gains Tax (CGT) in Australia allows you to treat a former main residence as tax-exempt for up to six years after you move out, even if you rent it out, enabling you to avoid CGT on any growth during that period. You qualify by moving out, choosing to treat it as your main home for tax, and can reset the rule by moving back in. If you rent it out for longer than six years, only the portion of the gain after the six-year mark becomes taxable.
Countries with no capital gains taxes are Monaco, Belgium, Andorra, Switzerland, the UK/Ireland/Malta/Cyprus (non-dom), the Netherlands, UAE, many Carribean islands etc. Countries like Bulgaria and Romania also have low taxes.
(KCTV) - Missouri is now the only state that has eliminated capital gains tax for individual filers after House Bill 594 went into effect. “Reducing or eliminating the tax on capital gains in Missouri is kind of revolutionary. I've not seen that done elsewhere before,” said Matt Goolsby, CEO of Market Advisory Group.
On a $100,000 capital gain, you'll likely pay 15% for long-term gains, resulting in about $15,000 in federal tax (plus potential state tax), but it could be 0% or 20% depending on your total taxable income and filing status, while short-term gains are taxed as ordinary income (potentially 22-24%).
To qualify for 0% capital gains tax, you must have long-term capital gains (assets held over a year) and your taxable income (after deductions) must fall below specific IRS thresholds, which change annually but are roughly <$48,350 for single filers and <$96,700 for married filing jointly for the 2025 tax year, allowing for higher total income when combined with deductions like the standard deduction. The key is keeping your adjusted gross income (AGI) low enough so that after subtracting deductions, your taxable income remains within these limits.
Many entrepreneurs search for jurisdictions where company profits can grow untaxed until they are actually paid out. Countries such as the United Arab Emirates, Singapore or the Cayman Islands are often listed as “no-capital-gains-tax jurisdictions”.
The 20% rule for capital gains refers to the highest federal tax rate for long-term capital gains, applying to higher income brackets when you sell investments (stocks, real estate) held for over a year, with lower rates of 0% and 15% for lower incomes, and even higher rates for special assets like collectibles. This rate kicks in for single filers earning over approximately $492,300 (2024) or $533,401 (2025), and higher for joint filers, making holding assets over a year a key tax strategy.
There are some countries in the world that do not charge any CGT rate at all. Among them are the Bahamas, Belgium, the Cayman Islands, Gibraltar, Hong Kong, Jersey, Guernsey, the Isle of Man, the Netherlands, New Zealand, Qatar, Saudi Arabia, Singapore, and the UAE.
A common way to defer or reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes on assets while they remain in the account.
For example, in 2025, a single filer won't pay any tax on long-term capital gains if their total taxable income is $48,350 or less. But an individual filer with income between $48,350 and $533,400 would pay a 15% long-term capital gains tax rate.
BIR Revenue Regulations No. 13-99 exempts citizens and resident aliens from capital gains tax on the sale of their principal residence, provided they fully utilize the proceeds to acquire or construct a new principal residence within 18 months and meet specific documentation requirements.
Capital gains tax on $100k depends on how long you held the asset: short-term gains (held 1 year or less) are taxed as ordinary income (10-37%), while long-term gains (held over a year) are taxed at lower rates (0%, 15%, or 20%) based on your total taxable income and filing status, with 15% often applying in this range, plus potentially a 3.8% Net Investment Income Tax (NIIT) if your income is high.
The "6-year rule" for Capital Gains Tax (CGT) in Australia allows you to treat a former main residence as tax-exempt for up to six years after you move out, even if you rent it out, enabling you to avoid CGT on any growth during that period. You qualify by moving out, choosing to treat it as your main home for tax, and can reset the rule by moving back in. If you rent it out for longer than six years, only the portion of the gain after the six-year mark becomes taxable.
LCGE has an exemption limit for qualified farm and fishing property or qualified small business corporation shares of $1,250,000. This amount is indexed to inflation. With LCGE, you're allowed to subtract your taxable amount from your profits. Note that the LCGE is a cumulative lifetime limit.
Three states, Kentucky, Mississippi, and Oklahoma, have legislated the end of their income taxes. While other states have repeatedly cut taxes in recent years and their leaders have suggested that the elimination of the tax be the goal, only these three have written the conditions of such an end into law.
Use the IRS primary residence exclusion, if you qualify. For single taxpayers, you may exclude up to $250,000 of the capital gains, and for married taxpayers filing jointly, you may exclude up to $500,000 of the capital gains (certain restrictions apply).