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Draft new: New York State Capital Gains Tax in 2025 Explained
If you have cashed out capital gains in New York State, you know you’ll lose something to taxes. But how much? It’s important to understand your capital gains tax liability and how it will impact your financial future, not least because that knowledge will empower you to take action to reduce your tax bill today.
In this article, we’ll explain what capital gains are and how they are taxed in New York State.
We’ll also show you different tax-planning strategies that can significantly reduce your state capital gains tax:
A capital gain is a capital asset’s increase in value from the value at which it was purchased. Capital assets include stocks, real estate, crypto, and private businesses – in short, any significant property that could gain or lose value over time.
Capital gains can be realized or unrealized. Realized capital gains are gains that you have captured by selling the asset. Unrealized gains, by contrast, refer to the increase in the value of an investment that you have not yet sold. For instance, if you hold stock that increases in value, but you haven’t sold it yet, that is considered an unrealized capital gain. In general, you will not pay taxes until you cash out or “realize” the gains.
Long-Term and Short-Term Capital Gains
There are two types of realized capital gains:
Short-term capital gains: These are gains from selling assets that you’ve held for one year or less. At the federal level, short-term capital gains are typically taxed at the same (high) rate as ordinary income.
Long-term capital gains: These are gains from selling assets that you’ve held for more than one year. At the federal level, long-term capital gains receive more favorable tax treatment than short-term gains.
How are Capital Gains Taxed?
Capital gains are not taxed until they are realized, meaning that even if your Apple stock has increased 50x from the day you bought the stock, you won’t owe any capital gains taxes until you sell the stock. Of course, once you do sell the stock, you will face federal and (depending on the state) state taxes. The tax rate will vary depending on your income and the type of asset you sold, but the rates are generally progressive, so individuals with higher incomes tend to face higher capital gains tax rates. Let’s look at how federal and state governments tax capital gains in more depth.
Need some help to understand the most convenient tax planning structure to reduce your capital gains taxes? Our team of tax-planning experts can help!
Short- and long-term capital gains are taxed differently; assets held for one year or less are taxed at ordinary income rates, while longer-held assets are taxed at lower rates.
The short-term capital gains schedule matches the schedule for ordinary income, and your marginal and effective rates depend on your income and marital status, as shown below:
Taxable income (Single Filers)
Taxable income (Married Filing Jointly)
Tax Rate
$0 to $11,925
$0 to $23,850
10%
$11,925 to $48,475
$23,850 to $96,950
12%
$48,475 to $103,350
$96,950 to $206,700
22%
$103,350 to $197,300
$206,700 to $394,600
24%
$197,300 to $250,525
$394,600 to $501,050
32%
$250,525 to $626,350
$501,050 to $751,600
35%
$626,350 or more
$751,600 or more
37%
Short-Term Federal Capital Gains Tax Rates for 2025
Long-term capital gains, meanwhile, are taxed at a lower rate than ordinary income. Here, too, the precise rate depends on the individual’s income and marital status:
Taxable income (Single Filers)
Taxable income (Married Filing Jointly)
Tax Rate
$0 to $48,350
$0 to $96,700
0%
$48,350 – $533,400
$96,700 – $600,050
15%
$533,400 or more
$600,050 or more
20%
Long-Term Federal Capital Gains Tax Rates for 2025
In addition, some categories of capital assets fall entirely outside of this rubric: gains on collectibles such as art, jewelry, antiques, and stamp collections are taxed up to a maximum 28% rate.
That’s not all: There’s an additional federal tax that was introduced in 2010, known as the Net Investment Income Tax (NIIT), that applies to most capital gains that exceed the exemption amount. The first $200,000 for a single filer, or $250,000 for married filers, are exempt from the NIIT. But everything in excess of those thresholds is taxed at 3.8%.
New York Capital Gains Tax In 2025 Explained
What Is The New York State Capital Gains Tax?
New York State taxes capital gains as income, and the capital gains tax rate reaches 10.9%(excludes New York City, which has its own separate tax brackets):
Taxable Income (Single Filers)
Taxable Income (Married Filing Jointly)
Tax Rate on This Income
$0 to $8,500
$0 to $17,150
4%
$8,500 to $11,700
$17,150 to $23,600
4.5%
$11,700 to $13,900
$23,600 to $27,900
5.25%
$13,900 to $80,650
$27,900 to $161,550
5.50%
$80,650 to $215,400
$161,550 to $323,200
6.00%
$215,400 to $1,077,550
$323,200 to $2,155,350
6.85%
$1,077,550 to $5,000,000
$2,155,350 to $5,000,000
9.65%
$5,000,000 to $25,000,000
$5,000,000 to $25,000,000
10.3%
$25,000,000 or more
$25,000,000 or more
10.9%
New York State Capital Gains Tax Rates
Case Study
So, what would these numbers look like in the real world?
Let’s consider Jenna, a New York State investor who purchased 7,000 shares of Apple stock in April 2019 at $50 per share. She decides to sell her shares in January 2025 at a price of $100 each. Jenna held the stock for more than one year, so her realized income is considered long-term capital gain.
Jenna realized a capital gain of $350,000. (She paid for 7,000 shares at $50 each, for a total of $350,000, and then sold them for $100 each, for a total of $700,000. That’s a net gain of $350,000).
Federal taxes
To simplify this example, let’s assume further that she doesn’t earn any other income. (If she did, it would be more complicated to figure out which bracket she falls into.) Given her $360,000 of gains, she would fall into the income bracket between $48,350 and $533,400, resulting in a long-term federal capital gains tax rate of 15%. As a result of the progressive tax system, however, not every dollar will be taxed at that rate. The amount below $48,350 won’t be taxed, so she would pay $46,748 in federal capital gains tax on this transaction (15% of every dollar over $48,350). In addition, Jenna would owe Net Investment Income Tax on the gains in excess of $200,000, resulting in another $6,080 of tax, bringing her total federal tax liability to $52,828.
State taxes
Jenna would also pay New York State taxes on her capital gains. Given her $350,000 capital gains, she falls into the 6.85% tax bracket. Like the federal government, New York State uses a progressive tax system, which means that different portions of the individual’s capital gains are taxed at different rates.
Here’s how it breaks down for Jenna:
The first $8,500 is taxed at 4% ($340)
The portion from $8,500 to $11,700 is taxed at 4.5% ($144)
The portion from $11,700 to $13,900 is taxed at 5.25% ($115.50)
The portion from $13,900 to $80,650 is taxed at 5.50% ($3,663)
The portion from $80,650 to $215,400 is taxed at 6.00% ($8,073)
The portion from $215,400 to $350,000 is taxed at 6.85% ($9,229.90)
Adding these amounts together, the individual would pay a total of $21,565.40 in New York State capital gains taxes for 2025.
Short-term gains
A quick counterfactual: If Jenna had sold her stock after holding for less than a year, her earnings would have been considered short-term capital gains, and she would have been subject to ordinary income taxes at both the federal and New York State levels.
Don’t let taxes eat into your gains like Jenna’s did. Our Guided Planner will identify which strategies could save you thousands based on your specific situation.
Capital gain taxes can significantly reduce your net earnings from the sale of an asset. Accordingly, it’s critical to identify strategies that can reduce these taxes.
Tax planning is a strategic approach to reducing a person’s tax liability by leveraging various tax benefits and allowances. It’s about understanding the tax implications of your financial decisions so you can minimize your taxes and, ultimately, keep more of your hard-earned money. This might involve making investments that offer tax benefits, choosing the right type of retirement account, taking advantage of generally available deductions and credits, or creating a tax-advantaged trust or other vehicle.
Tax-Planning Ideas to Reduce Capital Gains Tax
There are many tax planning strategies that can help you reduce your federal and New York State capital gains tax liability. Here are a few ideas:
Use a Charitable Remainder Trust: You can defer capital gains by moving appreciated assets into a Charitable Remainder Trust (CRT) before you sell. A CRT is a type of trust that is for the benefit of both an individual (like you) and a charity. The individual receives distributions each year for a specified term. The charity receives a lump sum at the end of the trust term. The trust itself is tax exempt, so assets sold inside of it do not trigger any immediate capital gains tax. You pay tax on the distributions that you receive, spreading out the tax liability across many years and allowing the untaxed principal inside the trust to be generate investment returns in the meantime. CRTs can increase after-tax returns substantially. Learn more about Charitable Remainder Trusts here or set up a call with us here.
See how a Charitable Remainder Trust could defer 100% of your capital gains taxes while generating lifetime income. Read the detailed breakdown or get personalized guidance for your situation.
Buy a Renewable Energy Project: Purchasing renewable energy projects can make you eligible for significant government tax incentives — tax credits and depreciation — to lower your income taxes. Taking into account tax savings and cash flow, this strategy can return 5.85x on your purchase price compared to choosing to pay your taxes directly. Learn more about renewable energy tax savings here or set up a call with us here to learn more.
See how renewable energy investments can transform your tax burden into wealth-building opportunities. Browse projects tailored to different investment sizes and tax situations.
Invest in Oil & Gas Wells: These structures allow investors to put their money into the production and development of oil and gas wells. Oil and gas well investments offer substantial tax benefits, including the ability to deduct drilling costs upfront against other income, potentially recouping up to 50% of the investment in tax savings in the first year. Investors often realize 20%+ cash yields annually for the first five years. You can read more about investing in oil and gas wells here.
Maximize Retirement Contributions: Both federal and state tax laws allow deductions for contributions to certain retirement accounts like a 401(k) or an IRA. Maxing out these contributions can lower your taxes, including ordinary income and capital gains taxes.
Charitable Lead Annuity Trusts: If you are charitably inclined, a Charitable Lead Annuity Trust (CLAT) is an option. Like a donor advised fund, a gift to a CLAT can generate a 100% upfront income tax deduction. But unlike a donor advised fund or a typical charity, with a CLAT you can actually get a portion of your charitable gift back in the future in the form of a “remainder interest.”
You can also compare the quantitative returns and tax savings of these different strategies using our capital gains tax savings comparison calculator and customize it to your own situation.
Conclusion
Capital gain taxes can significantly reduce the wealth you keep. Fortunately, there are several strategies available to minimize these taxes. Read more here and check out our Guided Planner tool, where we’ll point you toward the strategies that might apply to you.
