Texas Capital Gains Tax Calculator (2026)

Drop in your gain, other AGI, holding period, and filing status. The estimator computes long-term rates with the bracket-stacking math plus NIIT. Short-term uses an approximated ordinary rate.

Texas does not levy a state capital gains tax. The Texas Constitution's prohibition on personal income tax (Article 8, Section 24) also blocks a state capital gains tax. Texas residents pay only federal capital gains tax on investment sales — no state add-on.

What federal capital gains tax applies depends entirely on holding period and income level:

• Short-term capital gains (asset held 1 year or less): taxed at ordinary income rates (10-37% federal brackets)
• Long-term capital gains (held more than 1 year): preferential rates of 0%, 15%, or 20% based on total taxable income
• Net Investment Income Tax (NIIT): Additional 3.8% on net investment income above $200,000 (single) or $250,000 (MFJ)
• Collectibles, certain real estate depreciation recapture: Special rates of 25% (depreciation recapture) or 28% (collectibles)

For Texas residents, the practical effect: long-term capital gains on stocks, bonds, mutual funds, ETFs, real estate (other than primary residence under §121), and most other investments are taxed at 0/15/20% federal. State tax: zero. Compare to California (13.3% additional), New York (8.82% additional), Oregon (9.9% additional) — Texas residents keep substantially more of investment gains.

Long-term capital gains thresholds for 2026 (projected):

• 0% rate — taxable income up to $48,350 (single) / $96,700 (MFJ)
• 15% rate — up to $533,400 / $600,050
• 20% rate — above $533,400 / $600,050

Important: these are based on total taxable income (including the gain itself), not just the gain. A retiree with $30,000 of ordinary income and $50,000 of long-term gains has total taxable income of $80,000 (married filing jointly). If they're married, they're below the $96,700 threshold and pay 0% federal capital gains tax on the entire $50,000 gain. That same scenario in California would owe roughly $4,000-$5,000 in state tax on the gain.

The 0% bracket is one of the most underused tax-planning opportunities. Texas retirees and lower-income households can often realize $30,000-$70,000 of long-term gains tax-free each year by carefully sequencing withdrawals.

Capital gains from selling your primary residence get special treatment under IRC §121:

• $250,000 exclusion (single) or $500,000 exclusion (married filing jointly) on gain from sale of primary residence
• Ownership requirement: Must have owned the home for 2 of the prior 5 years
• Use requirement: Must have used as primary residence for 2 of the prior 5 years
• One sale every 2 years: Can't claim the exclusion more than once every 2 years
• Partial exclusion available for sale due to job change, health, or "unforeseen circumstances" even without meeting full 2-year tests

For Texas residents in hot markets (Austin, Dallas-Plano-Frisco, Houston, San Antonio), the §121 exclusion is the biggest tax benefit in housing. An Austin couple who bought for $400,000 in 2018 and sells for $850,000 in 2026 has a $450,000 gain — entirely tax-free under the $500,000 MFJ exclusion. The same couple in California with state tax would still owe zero on §121 sales (CA conforms to federal §121).

For singles in expensive Texas markets, the $250,000 cap can bite. An Austin single homeowner with a $400,000 gain on sale owes federal tax on $150,000 of gain. At 15% LT cap gains plus 3.8% NIIT (if applicable), that's about $28,000 federal — and zero Texas state tax.

The Net Investment Income Tax (NIIT) is a 3.8% federal surtax on net investment income for taxpayers above certain thresholds:

• Modified AGI above $200,000 (single) or $250,000 (MFJ) or $125,000 (married filing separately)
• Applies to capital gains, interest, dividends, rental income, royalties, and other "investment" income
• Does NOT apply to wages, distributions from retirement accounts (IRA/401k), or active trade or business income
• Calculated on the lesser of net investment income OR MAGI over the threshold

For a Texas resident with $300,000 modified AGI and $80,000 of long-term capital gains, the NIIT applies to $50,000 (the lesser of $80,000 net investment income or $100,000 over the $200,000 threshold). Tax: $50,000 × 3.8% = $1,900 in addition to the 15% LT capital gains rate.

The total federal capital gains tax stack for a high-income Texas resident can reach 23.8% (20% LT cap gains + 3.8% NIIT). Compare to California where the same gain gets the 23.8% federal plus 13.3% state = 37.1% total. Texas residents pocket the 13.3% state savings.

Scenario 1 — Austin tech worker, $80k base + $50k RSU vesting: RSUs vest as ordinary income (taxed at marginal federal rate), not capital gains. If she sells immediately at vest price, no capital gain. If she holds the shares 13 months and they rise to $65k, the $15k appreciation is a long-term capital gain taxed at 15% federal = $2,250. Texas state tax: $0. Same scenario in California would owe an additional $1,995.

Scenario 2 — Houston couple sells primary home, $200k purchase 2008, $625k sale 2026: Gain = $425,000. §121 exclusion (MFJ) = $500,000. Taxable gain = $0. Total federal tax on sale: $0. Total Texas state tax: $0.

Scenario 3 — Dallas retiree, $150k from sale of rental property, held 8 years, $40k depreciation taken: $40,000 unrecaptured §1250 gain (depreciation recapture) taxed at 25% federal = $10,000. Remaining $110,000 long-term gain at 15% federal = $16,500. Total federal: $26,500. Total Texas: $0. Compare to California: would add $20,000 in state tax.

Scenario 4 — Frisco couple, $1.5M long-term gain from sale of investment portfolio, $400k other income: $1.5M LT gain. $533,400 at 15% = $80,010. $966,600 at 20% = $193,320. Plus 3.8% NIIT on $1.65M (lesser of NII or MAGI over threshold) = $62,700. Total federal: $336,030 (22.4% effective). Texas state: $0. Same in California: add $199,500 (13.3%) in state tax. Real differential: ~$200,000 of pocketed savings simply for residing in Texas.