State Tax on Selling a Rental Property, by State

The example sale

Every row is the same sale, so the only thing that changes from row to row is the state. A single filer with $90,000 of other income bought a rental in June 2016 for $300,000, paid $6,000 in buying costs, spent $20,000 on improvements and sells it in November 2026 for $500,000, paying 6% in selling costs. Depreciation is estimated the way the IRS requires for residential rental property: 80% of the cost is treated as the building and recovered over 27.5 years with the mid-month convention. That leaves a gain of $236,727.27, of which $92,727.27 comes from depreciation.

Federal tax on that gain is $48,034.18 in every state: depreciation recapture at ordinary rates up to 25%, the 0%, 15% or 20% rate on the rest, and the 3.8% net investment income tax where income is high enough. The table shows only what the state adds. The rental property capital gains tax calculator works through the federal part line by line.

How each state's tax is calculated

The state tax comes from the same engine as the calculator and the state pages, using each state's rules as of October 2026. The seller is assumed to live in the state where the rental is. The gain is stacked on top of the $90,000 of other income and taxed with the state's own deductions, exemptions and brackets, so the state tax shown is the difference the sale makes to the seller's state income tax. The effective state rate is that tax divided by the $236,727.27 gain.

The rule type column groups the states into four kinds of treatment:

• No tax (10 states): Alaska, Florida, Missouri, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Most have no personal income tax; Washington's capital gains tax exempts real estate, and Missouri lets individuals deduct the whole gain.
• Exclusion (9): Arizona, Arkansas, Idaho, New Mexico, North Dakota, Oklahoma, South Carolina, Vermont and Wisconsin. Part of the gain, or a fixed amount, is left out before the regular rates apply, sometimes only after a minimum holding period. Arizona, for example: 25% of a long-term gain is subtracted if the property was bought after 2011; the rest is taxed at 2.5%.
• Special rate (3): Hawaii, Massachusetts and Montana. The gain has its own rate or a cap. Hawaii: Long-term gains are taxed at Hawaii's rates but never above 7.25%.
• Brackets (29): every other state taxes the gain as ordinary income at its regular rates.

On this sale, Oregon takes the most, $23,256.03 (9.82% of the gain), and among states that tax it North Dakota takes the least, $2,769.71. A different price, income or holding period changes the order, especially in states with exclusions or holding periods, so use the calculator for your own sale.

What the table leaves out

Transfer and recording taxes are paid on the sale price, not the gain, so they are not in the state tax column. Where our state pages document one, the note column summarizes it; the Washington page, for example, explains its real estate excise tax. Local taxes on the gain aren't included. Selling as a nonresident, where some states withhold tax at closing, and each state's treatment of depreciation recapture are explained on the state pages. Minnesota's extra 1% tax on net investment income above $1,000,000 doesn't apply to this sale. A 1031 exchange would defer the federal tax and, in most states, the state tax too.

How we keep it current

The numbers are computed when the site is built, from the same code the calculator runs, so the table, the CSV and the state pages always agree; a test checks that they do. State rules are reviewed after each legislative session, and federal amounts each fall when the IRS publishes the next year's figures. Our testing methodology explains how each state's rule is checked against an independent model and its primary source, which is cited on that state's page.

Cite this data

Suggested citation:

Passbion, "State Tax on Selling a Rental Property, by State," 2026, https://passbion.com/data/state-tax-on-selling-a-rental (updated October 5, 2026).

Free to reuse under CC BY 4.0 — please credit Passbion and link to this page.

The link, https://passbion.com/data/state-tax-on-selling-a-rental, lets readers check the method and see the latest update.