States with no capital gains tax
A little more than a handful of states have no capital gains tax. Those include Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, and Wyoming. It's no coincidence that these eight are also states without personal income tax.
Countries like Switzerland, Singapore, the Cayman Islands, Monaco, New Zealand, Belize and Hong Kong have no capital gains taxes. This makes these countries attractive to investors and entrepreneurs.
While there is no state in the U.S. that doesn't have property taxes on real estate, some have much lower property tax rates than others. Here's how property taxes are calculated. The effective property tax rate is used to determine the places with the lowest and highest property taxes in the nation.
As a senior citizen, you probably will end up paying property taxes for as long as you are a homeowner. However, depending on the state you live in and often once you hit your 60s (usually around the ages of 61 to 65), you may be eligible for a property tax exemption.
Capital gains tax rates
A capital gains rate of 0% applies if your taxable income is less than or equal to: $47,025 for single and married filing separately; $94,050 for married filing jointly and qualifying surviving spouse; and. $63,000 for head of household.
Current tax law does not allow you to take a capital gains tax break based on your age. In the past, the IRS granted people over the age of 55 a tax exemption for home sales, though this exclusion was eliminated in 1997 in favor of the expanded exemption for all homeowners.
Families like the Waltons, Kochs, and Mars can avoid capital gains taxes forever by holding onto assets without selling, borrowing against their assets for income, and using the stepped-up basis loophole at inheritance.
Tax Havens in the no-tax category total 43 jurisdictions, including: Aruba, Bahamas, Barbados, Belize, Bermuda, Curaçao, Cayman Islands, Isle of Man, US Virgin Islands, Monaco, South Dakota, Delaware, Florida, Nevada, Texas, Washington State and Wyoming.
All states and the District of Columbia impose these taxes except Alaska, Delaware, Montana, New Hampshire and Oregon. The highest state sales taxes are in California (7.25%), Indiana, Mississippi, Rhode Island and Tennessee (7.0% in each).
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.
9 States That Don't Tax Any Income at All
Nine states have no state income tax on individual income at all. Eight of them – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming – don't tax wages, salaries, dividends, interest or any sort of income.
The following five states currently have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. We take a closer look at those states in this guide. A financial advisor can help you minimize your taxes over the long term.
Starting in 2025, single filers can qualify for the 0% long-term capital gains rate with taxable income of $48,350 or less, and married couples filing jointly are eligible with $96,700 or less. However, taxable income is significantly lower than your gross earnings.
To avoid paying capital gains taxes (and depreciation recapture), you can reinvest in a "like-kind" asset with a sales price of at least $500,000. The IRS allows virtually any commercial real estate property to qualify as 'like-kind” as long as you hold it for investment purposes.
Social Security and capital gains
Keep in mind that up to 85% of Social Security benefits can be subject to tax depending on your overall income, including capital gains. The calculation that determines how much of your Social Security benefits are taxable includes realized gains.
If it's your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.
What is the 36-month rule for capital gains tax? The 36-month rule refers to the exemption period before the sale of a property. Previously this was 36 months, but this has been amended recently and is now 9 months.
CGT 6-Year Rule
Allows temporary renting of PPOR for up to 6 years while still claiming main residence exemption. – Each 6-year absence period is treated individually. - No limit on number of times you can use this exemption. - Property must have been your main residence before renting out.
Sadly for investors, the answer is no, there are no states without property tax. This is because property tax is a useful way for local governments to fund public services such as schools, fire and police departments, infrastructure and libraries.
Since there is no age exemption to capital gains taxes, it's crucial to understand the difference between short-term and long-term capital gains so you can manage your tax planning in retirement.
Taxpayers 65 and older qualify for an additional standard deduction, reducing their taxable income. The extra deduction amount differs based on filing status and whether the taxpayer or spouse is blind. The IRS updates the deduction amounts annually for inflation, impacting tax filings.