State Capital Gains Tax on Collectibles
The IRS caps long-term collectibles gains at 28% — but your state adds its own layer. Seven states offer exclusions, deductions, or lower rates that apply to collectibles, and nine more have no income tax at all. Here’s the complete breakdown.
Nine states have no income tax on collectible gains (AK, FL, NV, NH, SD, TN, TX, WA, WY). Seven more offer capital gains exclusions that reduce your rate (AZ, AR, MT, ND, OK, SC, WI). The highest combined state + federal rate is 45.1% (California). Use our calculator to see your state's impact.
Why Your State Matters
Most collectors focus on the federal 28% rate — and stop there. That’s a mistake. State income tax can add anywhere from 0% to 13.3% on top of your federal bill, and the variation is enormous. A collector in California selling a $50,000 gold coin faces a combined rate north of 40%, while the same sale in Arizona could be taxed at under 30% combined.
What many collectors don’t realize is that several states offer specific exclusions or reduced rates for capital gains that can dramatically lower your state tax on collectibles. These aren’t obscure loopholes — they’re statutory provisions that apply broadly to long-term capital gains, including gains from selling coins, cards, art, gold, and other collectibles. Understanding your cost basis is critical too — every dollar of basis reduces both your federal and state taxable gain.
Nine States With No Income Tax
The simplest case: these states don’t tax income at all, so collectibles gains are state-tax-free.
| State | Notes |
|---|---|
| Alaska | No state income tax |
| Florida | No state income tax |
| Nevada | No state income tax |
| New Hampshire | No tax on earned income or capital gains |
| South Dakota | No state income tax |
| Tennessee | No state income tax (Hall Tax on investment income repealed 2021) |
| Texas | No state income tax |
| Wyoming | No state income tax |
Washington has no traditional income tax, but imposes a 7% capital gains excise tax on long-term gains exceeding $270,000 (threshold indexed for inflation). The Washington Supreme Court upheld this tax in March 2023, ruling it is an excise tax, not an income tax. If your collectibles gains exceed $270,000 in a single year, Washington is not tax-free.
States That Reduce Capital Gains Tax on Collectibles
These states offer statutory exclusions, deductions, or separate rate schedules that reduce the effective tax rate on long-term capital gains — including collectibles. The key legal principle: most of these states define their benefits using “net long-term capital gain” under IRC Section 1222, which includes collectibles gains. The federal 28% rate cap is a separate mechanism under IRC Section 1(h) that only affects the rate, not the classification of collectibles as long-term capital gains.
Arizona
Effective rate: ~1.875%Mechanism: 25% subtraction of net long-term capital gains from Arizona gross income.
Statute: ARS §43-1022(22)(c)
How it works: Arizona’s flat income tax rate is 2.5%. The 25% subtraction reduces the taxable amount of long-term capital gains by one quarter, yielding an effective rate of approximately 1.875% on collectibles gains.
2026 update: Prior to 2026, the subtraction applied only to assets acquired after December 31, 2011. Starting in tax year 2026, this acquisition-date restriction is removed — all long-term capital gains qualify regardless of when the asset was purchased.
Applies to collectibles? Yes. The statute uses “net long-term capital gain” as defined under IRC §1222(7), which includes collectibles. No carve-out exists.
Arizona separately provides a 100% subtraction for gains from exchanging one kind of legal tender for another (ARS §43-1022). “Legal tender” includes “specie” — coins with precious metal content. This effectively makes qualifying gold and silver coin transactions tax-free at the state level. Other collectibles (art, cards, stamps) still receive the 25% subtraction.
Arkansas
Effective rate: ~1.95%Mechanism: 50% exclusion of net long-term capital gains from Arkansas taxable income.
Statute: Arkansas Code §26-51-815
How it works: Arkansas excludes half of all net long-term capital gains from state taxable income. With a top marginal rate of 3.9% (as of 2025), the effective maximum rate on long-term capital gains is approximately 1.95%.
Additional provision: Net capital gain exceeding $10 million in a single tax year is fully exempt from Arkansas income tax.
Applies to collectibles? Yes. The exclusion applies to “net long-term capital gain” as defined under IRC provisions adopted by Arkansas. No distinction is made between collectibles and other long-term gains.
Montana
Effective rate: 3.0% – 4.1%Mechanism: Separate, lower tax rate schedule for net long-term capital gains.
Statute: MCA §15-30-2103
How it works: Montana does not apply its ordinary income rates (top rate 5.65% for 2026 under HB 337) to long-term capital gains. Instead, it uses a separate two-bracket schedule:
- 3.0% on the first bracket of net long-term capital gains
- 4.1% on amounts above the bracket threshold
Applies to collectibles? Yes. MCA §15-30-2103 defines “net long-term capital gains” as that term is defined in IRC Section 1222. Since collectibles gains are part of net long-term capital gain under IRC §1222(7), the lower rates apply.
South Carolina
Effective rate: ~3.5%Mechanism: 44% deduction from South Carolina taxable income for net capital gain.
Statute: S.C. Code §12-6-1150
How it works: South Carolina allows taxpayers to deduct 44% of their net capital gain from state taxable income. With a top marginal rate of approximately 6.2–6.4% (the rate has been declining under recent reform), the effective maximum rate on long-term capital gains is approximately 3.5% (56% of the top rate).
Applies to collectibles? Yes — confirmed. The statute explicitly states: “Net capital gain is as defined in Internal Revenue Code, Section 1222 and related sections.” Under IRC §1222, net capital gain includes all long-term gains, including collectibles. South Carolina does not reference the IRC §1(h) rate distinctions.
Wisconsin
Effective rate: ~5.4%Mechanism: 30% exclusion of capital gains on assets held more than one year.
Statute: Wisconsin Statutes §71.05(6)(b)9
How it works: Wisconsin excludes 30% of long-term capital gains from state taxable income. With a top marginal rate of 7.65%, the effective maximum rate on qualifying long-term capital gains is approximately 5.36%. Farm assets receive a larger 60% exclusion.
Applies to collectibles? Most likely yes. The statute excludes gains “for which the federal tax treatment is determined under section 406 of P.L. 99-514” (the Tax Reform Act of 1986). That provision addressed the repeal of the General Utilities doctrine and certain installment sales — not the collectibles rate, which was established by the Taxpayer Relief Act of 1997. However, this is an area where professional confirmation is advisable.
North Dakota
Effective rate: ~1.5% (if held 3+ years)Mechanism: 40% exclusion of net long-term capital gains from North Dakota taxable income.
Statute: N.D. Cent. Code §57-38-30.3
How it works: North Dakota excludes 40% of qualifying net long-term capital gains. With a top rate of approximately 2.5%, the effective rate drops to approximately 1.5% on qualifying gains.
Unlike the federal one-year requirement for long-term treatment, North Dakota requires assets to be held for more than three years to qualify for the 40% exclusion. Collectibles held between one and three years receive federal long-term treatment but do not qualify for the North Dakota exclusion.
Applies to collectibles? Likely yes. The exclusion references “net long-term capital gain” under IRC §1222, which includes collectibles, and does not carve them out. The three-year holding period is the primary qualifying condition.
Hawaii
Flat rate: 7.25% on all gainsMechanism: Flat 7.25% rate on all capital gains (both short-term and long-term).
How it works: Hawaii’s top ordinary income tax rate is 11%. Capital gains are taxed at a flat 7.25% regardless of holding period, providing a significant benefit for taxpayers in higher brackets.
Applies to collectibles? Yes. The 7.25% rate applies to all capital gains without distinction between asset types.
Oklahoma
Effective rate: 0% (qualifying sales)Mechanism: 100% deduction for capital gains from the sale of Oklahoma tangible personal property held for five or more years.
How it works: Oklahoma allows a full deduction for qualifying capital gains, effectively reducing the state rate to 0%. The top ordinary income rate is 4.75%.
The asset must be tangible personal property located within Oklahoma and held for at least five years. A coin collection stored in an Oklahoma safe deposit box for six years would likely qualify. The same collection stored out of state would not.
Applies to collectibles? Potentially. Collectibles are tangible personal property, so if they meet the location and holding period requirements, the deduction should apply.
New Mexico
Minimal benefitMechanism: Deduction of up to $2,500 of net capital gain, or 40% of gains from the sale of a New Mexico business.
Statute: NMSA §7-2-34 (effective January 1, 2025)
Prior to 2025, New Mexico offered a broader 40% deduction for capital gains. Starting in 2025, the meaningful 40% deduction is restricted to gains from the sale of a New Mexico business. The general deduction is capped at just $2,500 — a negligible benefit for any significant collectibles transaction. With a top rate of 5.9%, the maximum savings is about $148.
Applies to collectibles? Only the $2,500 flat deduction. The 40% deduction does not apply to collectibles gains.
For state sales tax on purchasing collectibles (a separate issue that affects your cost basis), see our 50-state sales tax guide. When you're ready to file, our reporting guide covers Form 8949 and which tax software handles state exclusions correctly.
Comparison Table: Effective State Rates on Collectibles
This table compares the top ordinary income rate versus the effective capital gains rate for states that offer reduced treatment. The difference is the savings from the state’s exclusion or deduction.
| State | Ordinary Top Rate | Effective CG Rate | Mechanism |
|---|---|---|---|
| Arizona (coins) | 2.5% | 0% | 100% legal tender exclusion |
| Oklahoma* | 4.75% | 0% | 100% deduction (5yr + in-state) |
| North Dakota* | 2.5% | ~1.5% | 40% exclusion (3yr hold) |
| Arizona (other) | 2.5% | ~1.875% | 25% subtraction |
| Arkansas | 3.9% | ~1.95% | 50% exclusion |
| Montana | 5.65% | 3.0–4.1% | Separate CG rate schedule |
| South Carolina | ~6.3% | ~3.5% | 44% deduction |
| Wisconsin | 7.65% | ~5.36% | 30% exclusion |
| Hawaii | 11% | 7.25% | Flat CG rate |
| New Mexico | 5.9% | ~5.9% | $2,500 cap (negligible) |
* Oklahoma requires in-state tangible property held 5+ years. North Dakota requires 3+ year holding period. Rates shown are approximate maximums.
Why State Exclusions Apply to Collectibles
A common misconception is that the federal 28% collectibles rate somehow “separates” collectibles from other long-term capital gains for state tax purposes. It does not. Here’s why:
The 28% rate cap on collectibles exists under IRC Section 1(h), which governs rate brackets for capital gains. It does not change the classification of collectibles gains. Under IRC Section 1222(7), “net long-term capital gain” is defined as the excess of long-term capital gains over long-term capital losses — and this definition includes collectibles gains.
When states like South Carolina, Montana, and Arizona define their capital gains benefits using “net long-term capital gain” or “net capital gain” per IRC §1222, they are incorporating collectibles gains by reference. The 28% federal rate cap is irrelevant to these state definitions because it is a rate mechanism, not a definitional one.
Vermont is a notable exception. Its capital gains exclusion specifically references “adjusted net capital gain” under IRC §1(h)(3), which excludes 28-percent-rate gain (collectibles). As a result, Vermont’s 40% exclusion for gains on assets held more than three years does not apply to collectibles. Only a flat $5,000 deduction is available.
Run Your Numbers
Our calculator accounts for state capital gains exclusions. See your estimated federal, state, and NIIT tax in 30 seconds.
Calculate My Tax →What About the Other States?
The remaining states with income taxes (California, New York, New Jersey, Oregon, Minnesota, etc.) generally tax capital gains — including collectibles — at the same rates as ordinary income, with no special exclusion or deduction. Some of these states have the highest marginal rates in the country:
- California: 13.3% (no reduced rate for capital gains)
- New York: 10.9% (plus NYC surcharge up to 3.876%)
- New Jersey: 10.75%
- Oregon: 9.9%
- Minnesota: 9.85%
- Massachusetts: 9% (5% base + 4% surtax on income over $1M)
For collectors in high-tax states, the combined federal + state + NIIT rate on collectibles can exceed 45%. This makes strategies like opportunity zone investments, charitable donations of appreciated collectibles, and installment sales particularly valuable.
Frequently Asked Questions
Sources
- Arizona Revised Statutes §43-1022 — Subtractions from Arizona gross income
- Arkansas Code §26-51-815 — Net long-term capital gains exclusion
- Montana Code Annotated §15-30-2103 — Rate of tax on net long-term capital gains
- Montana HB 337 (2023) — Income tax rate reductions effective 2024–2027
- North Dakota Century Code §57-38-30.3 — Capital gains exclusion
- South Carolina Code §12-6-1150 — Deduction for net capital gain
- Wisconsin Statutes §71.05(6)(b)9 — Capital gains exclusion
- IRC §1222 — Definitions of capital gains and losses
- IRC §1(h) — Tax rate on net capital gain (including 28% collectibles rate)
- IRC §408(m)(2) — Definition of collectibles
- New Mexico Statutes Annotated §7-2-34 — Capital gains deduction (amended 2025)
- Quinn v. State of Washington, No. 100769-8 (Wash. 2023) — Capital gains excise tax upheld
Ready to See Your Number?
Run your sale through a calculator built for the 28% collectibles rate, NIIT, and state capital gains exclusions.
Calculate My Tax →