What is the capital gains tax rate in Florida?

Florida does not have a state-level capital gains tax for individuals or corporations. This is due to the fact that there is no state income tax in Florida, so capital gains do not incur any taxation at the state level but are always subject to federal tax through the IRS.

Federal taxes on capital gains depend on the holding period and the taxpayer's income bracket. The IRS categorizes capital gains into two types:

1. Short-term capital gains: Gains derived from an asset held for one year or less are taxed as ordinary income, that is, like federal income tax and currently falling within a 10% to 37% spectrum based on the total taxable income of the taxpayer.
2. Long-term capital gains (assets held for more than one year) are taxed at preferential federal rates, typically 0%, 15%, or 20%, depending on taxable income:
• 0% Rate: Applies if your taxable income is up to $47,025 for single filers or $94,050 for married couples filing jointly.
• 15% Rate: Applies if your taxable income is between $47,025 and $518,900 for single filers, or between $94,050 and $583,750 for married couples filing jointly.
• 20% Rate: Applies if your taxable income exceeds $518,900 for single filers or $583,750 for married couples filing jointly.

Additionally, the Net Investment Income Tax (NIIT) of 3.8% may apply to individuals with modified adjusted gross income (MAGI) exceeding $200,000 (single) or $250,000 (married joint).

Since Florida does not levy capital gains taxes, it is often a favorable jurisdiction for business owners, investors, and retirees looking to reduce their overall tax burden.