5 US States and Countries With the Highest Capital Gains Tax

We follow a simple mantra here at Nomad Capitalist – go where you’re treated best.  

If you’re an American investor, it’s clear that that place is not the United States.

When it comes to the world’s highest capital gains taxes, the Land of the Free leads the list. 

Out of the top capital gains tax rates, only three countries place; the rest are US states.

In fact, when you average all US state capital gains tax rates together, you get a figure higher than the average capital gains taxes paid by residents of all Organisation for Economic Co-operation and Development (OECD) countries. 

And OECD countries have some of the highest capital gains tax rates compared to the rest of the world.

The bottom line is that investing in the United States is an expensive proposition. However, several other Western countries are also quite costly for investors.  

Here are the US states and countries with the highest capital gains taxes in the world:

5. New Jersey, United States – 47.75%

The United States charges short-term capital gains, meaning you could pay as much as 37% tax on these profits. That’s no matter where you live in the US.

New Jersey also taxes short-term capital gains and has one of the highest state tax rates, at 10.75%. So, you could lose as much as 47.75% of your earnings in capital gains to the taxman.

Long-term capital gains, defined as profits made on assets held for over a year, are taxed differently at the federal level. 

You’ll be taxed at 0%, 15% or 20%, depending on the size of your profit. 

New Jersey taxes long-term capital gains as income, too, so you could pay as much as 30.75% tax in total in this instance. 

4. New York, United States – 47.9%

New York residents are in the same boat, as they’ll be taxed on capital gains at the federal level and the state level. 

Short-term capital gains are charged as income in both cases, and New York has one of the highest state income taxes, at 10.9%.

If you live in New York City, taxes are even higher. If you’re ever looking to move (something we advise serious investors to consider), there are plenty of cities just as dynamic as the Big Apple – like Hong Kong – that have no capital gains taxes and better weather.

3. California, United States – 49.3%

California has the highest state income tax (12.3%), and all capital gains are taxed as income. That means you could be taxed as much as 49.3% on short-term capital gains. 

Many economists suggest that the state’s languishing economy is due to its high capital gains taxes. 

After all, why should investors take risks in California when the state’s high income and capital gains taxes eat up much of their profits? 

2. Denmark – 52.07%

The headline rate of capital gains tax is 42%, and this is paid on stocks, shares and precious metals among other assets.

However, some types of gains are taxed as income, meaning you might pay as much as 52.07%, the marginal income tax rate in Denmark.

Capital gains regarded as ‘speculative’ will be charged as income, and that includes all cryptocurrency profits.

Some gains regarded as ‘business activity’ could be taxed as income too, including all investment gains if you’re regarded as a ‘professional investor’.

Denmark is also one of the only countries that tax residents on unrealised annual gains of stocks and shares.  

1. South Korea – 77%

South Korea makes it easy enough for entrepreneurs and investors to earn residency, although the tax rates there are hardly something to get excited about.

The headline rate of capital gains tax is 45%, but you’ll pay up to 77% on some real estate transactions. 

This rate, which is the highest we’ve seen, applies to transfers of unregistered land and buildings. 

Even if you register your real estate, you could pay as much as 68.2% capital gains tax, depending on the type of property and how long you’ve owned it. 

Highest Capital Gains Taxes: FAQs

Go Where You’re Treated Best 

A common reason why Nomad Capitalist clients are motivated to move offshore is that they’re unhappy with the amount of tax they’re paying. 

It’s not that all of them want to move to a 0% tax jurisdiction. Some are happy to pay a little bit of tax. 

Many simply don’t believe they’re getting the quality lifestyle they expect in return for their huge tax bills.

We hear that from a lot of US citizens. The Danish certainly aren’t immune from complaining about their tax system either, even if their country regularly tops the various happiness surveys that are published.

If you think you’re being taxed too much for the services you’re receiving, it’s likely possible for you to leave and go somewhere that offers a better deal. Nomad Capitalist helps high-net-worth individuals to meet their personal and professional goals by moving offshore. Contact us to learn more.