STATE TAXES

Do I have to pay special capital gains taxes at the state level when I file my state income taxes?

Most states do not have a separate line on tax returns for "capital gains," as such. Instead, any income you make outside of normal payroll is calculated at the ordinary income rate. Please consult your tax adviser for further information.

Are there certain investments that provide tax exemptions on gains at the state level?

There are investments that offer tax benefits at the state level, if the investor is interested in holding tax-exempt municipal bonds in the state in which he resides. Municipal bonds originating in the state in which you live are free of state taxes.

Are there any deductions I may take that help me with my yearly state income taxes?

The IRS allows filers to deduct any state taxes paid during the filing year.

What federal tax form must I use to claim state income tax deductions?

The IRS requires Form 1040, Schedule A to itemize your deductions, including any state tax payments.

How many states impose a state tax on capital gains?

Nearly all states impose some sort of capital tax (although it might be called something else) on income generated from investments. The tax imposed may be as high as 13.5% (New York). Taxes paid on gains must be considered when investors compute their real rate of return on their investments.

What states have no income tax or capital gains tax?

The nine states with no state income tax or capital gains tax are Washington, Nevada, Alaska, Wyoming, South Dakota, Texas, Tennessee, Florida, and New Hampshire.

Which states' residents create the most capital gains from their investments?

California residents are responsible for investments that create approximately 13% of all capital gains. Investments made by New York residents are responsible for 12.5% of all capital gains.