Many investors know to expect to pay federal capital gains tax when they sell appreciated stocks, mutual funds, cryptocurrency, investment property, or other assets. But state taxes are often an afterthought, even though those levies can significantly impact your total tax bill.
Most states tax capital gains as ordinary income, while others have special rules, exemptions, or separate capital gains taxes. So, depending on where you live and how much you earn, your gains may escape state tax altogether or be taxed at rates as high as 10% or more.
