Does Nevada Have a Capital Gains Tax?

When an individual sells an asset like stocks, bonds, or real estate for more than its purchase price, the resulting profit is known as a capital gain. Governments often levy a tax on this profit, which is referred to as a capital gains tax. The amount of tax owed can depend on several factors, including the type of asset sold, how long it was owned, and the seller’s income level.

Nevada’s Position on State-Level Capital Gains Tax

Nevada is one of a handful of states that does not impose a personal income tax on its residents. Consequently, the state does not have a capital gains tax for individuals. This applies to profits realized from the sale of various assets, including financial instruments like stocks and bonds, as well as physical assets such as real estate.

This complete exemption from state-level capital gains tax provides a financial advantage for residents. It allows investors and property sellers to retain a larger portion of their profits compared to their counterparts in states that do levy taxes on capital gains.

Federal Capital Gains Tax Requirements for Nevada Residents

Despite the absence of a state tax, Nevada residents are fully subject to federal capital gains tax laws. The federal system differentiates between the holding periods of assets. A profit from an asset owned for one year or less is considered a short-term capital gain and is taxed at the individual’s standard federal income tax rate, which can range from 10% to 37%.

Gains on assets held for more than one year are classified as long-term and are taxed at more favorable federal rates. These long-term rates are 0%, 15%, or 20%, with the specific rate determined by the individual’s total taxable income and filing status. High-income earners may also be subject to an additional 3.8% Net Investment Income Tax on top of the standard long-term rates.

The Nevada Real Property Transfer Tax

When selling real estate in Nevada, individuals will encounter the Real Property Transfer Tax (RPTT). This is not a tax on the profit or capital gain from the sale, but rather an excise tax levied on the transaction itself. The tax is calculated based on the total value of the property being sold, not the gain realized by the seller.

The statewide rate for the RPTT is $1.95 for each $500 of the property’s value, or any fraction thereof. Certain counties are authorized to levy an additional amount on top of the state rate. This tax is paid to the county recorder at the time the transfer documents are recorded and is a separate financial obligation from any federal capital gains tax owed on the profit from the sale.