Tax season is here once again, and many American stock traders filling out federal Schedule D forms are probably wondering why they made so many trades in 2014.
However, the federal forms are just the beginning for residents of these 10 states, who are likely asking themselves another question: “Where did all my profits go?”
Here’s a list of the 10 states with the highest marginal tax rates on trading profits, according to the Tax Foundation:
10. Idaho: Idaho barely cracks the top 10 with a state capital gains tax rate of 7.4 percent. However, the combined state and federal capital gains tax rate for Idaho residents is 29.4 percent.
9. Iowa: Iowa residents pay 9.0 percent state tax on capital gains and 29.6 percent when combined with federal rates.
8. Maine: Maine residents pay 8.0 percent state capital gains tax. The state’s combines state and federal rate is 29.8 percent.
7. Maryland: While Maryland’s 5.8 percent state capital gains tax might not look so bad on the surface, its unfavorable capital gains tax provisions result in an overall 30.3 percent combined federal and state capital gains tax rate.
6. Vermont: Vermont is the next state in line with a 9.0 percent state rate and a 30.4 combined federal and state rate for its residents.
5. New Jersey: New Jersey’s state and combined capital gains rates are identical to Vermont’s: 9.0 and 30.4 percent respectively.
4. Minnesota: Minnesota’s state rate of 9.9 is tied for second highest in the country, and residents pay a combined rate of 30.9 percent on capital gains in the state.
3. Oregon: Oregon also sports a 9.9 percent state rate, but its combined rate of 31.0 percent puts it in the top three overall.
2. New York: Residents of the Empire State pay 8.8 percent state tax on capital gains and a 31.5 percent combined rate.
1. California: It may come as no surprise that California tops the list of states with the highest capital gains tax. However, the margin of victory is quite impressive: California residents pay 13.3 percent state tax on capital gains and a 33.0 combined state and federal rate.
Capital Gains Tax Havens
While all Americans are subject to the federal tax on capital gains, residents of nine states do not have to pay any state capital gains tax whatsoever.
Those nine states include: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
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