Question

How does California tax long-term capital gains?
California does not tax long-term capital gains.
Like the federal treatment, California has a separate tax rate for long-term capital gains.
On the California tax return, long-term capital gains are taxed at a flat rate of 15%.
On the California tax return, long-term capital gains are taxed at the taxpayer's regular tax rate.

Answer 1

Correct answer: On the California tax return, long-term capital gains are taxed at the taxpayer's regular tax rate.

Explanation: California does not follow the federal preferential long‑term capital gains rates (0/15/20). Instead capital gains are included in taxable income and taxed at the state's ordinary income tax rates (top rate currently 13.3% for highest incomes).