Crypto Taxes by State: Which States Tax Crypto the Most?
State-by-state breakdown of cryptocurrency taxes. Which states have no crypto tax, which have the highest rates, and how state taxes interact with federal crypto taxes.
Federal vs. State Crypto Taxes
Crypto gains are taxed at two levels: federal and state. Federal rates are the same for everyone in the US (0–37% depending on income and holding period). State rates vary widely — from 0% in states with no income tax to over 13% in California. Your total effective crypto tax rate is the sum of federal and state rates.
Most states follow the federal classification of crypto as property, taxing capital gains as ordinary income at the state rate. A few states have specific crypto guidance, but in general, if a state taxes capital gains, it taxes crypto gains the same way.
States With No Income Tax (0% State Crypto Tax)
These states levy no individual income tax and therefore no state-level capital gains tax on crypto:
- Florida — no state income tax; popular for high-income crypto investors
- Texas — no state income tax
- Nevada — no state income tax; notable crypto-friendly laws
- Wyoming — no state income tax; very crypto-friendly legislation (DAO recognition, no digital asset property tax)
- Washington — no state income tax (but has a 7% capital gains tax on gains over $250,000 since 2023 — see below)
- South Dakota — no state income tax
- Alaska — no state income tax
- Tennessee — no state income tax on earned income (investment income tax repealed in 2022)
- New Hampshire — no state income tax on capital gains (only taxes interest and dividends, being phased out)
Highest State Crypto Tax Rates
- California: 13.3% — Highest in the nation. California treats all capital gains as ordinary income at state rates. No preferential long-term rate. A California resident in the top federal bracket faces a combined ~54% marginal rate on short-term gains (37% + 3.8% NIIT + 13.3%).
- New Jersey: 10.75% — Top marginal rate applies to capital gains over $1M. Most taxpayers face 8.97% or lower.
- Oregon: 9.9% — Top rate. Capital gains taxed as ordinary income.
- Minnesota: 9.85% — Top rate.
- New York: 10.9% — State + NYC adds up to 14.776% combined for NYC residents.
- Massachusetts: 8.5% — Standard capital gains rate; short-term gains (held under 12 months) taxed at 12%.
Washington State's Capital Gains Tax
Washington state has no individual income tax but enacted a 7% capital gains tax in 2023 on gains above $250,000. Cryptocurrency capital gains are subject to this tax. The first $250,000 in annual capital gains is exempt. This is a state-specific rule that surprises many Washington residents who assumed they had zero state crypto tax.
States With Preferential Capital Gains Treatment
A few states tax long-term capital gains at lower rates than ordinary income:
- Colorado: 4.4% flat income tax rate; relatively low
- North Carolina: 4.75% flat rate
- Arizona: 2.5% flat rate — one of the lowest income tax states
Puerto Rico's Act 60: The Extreme Case
US territories can offer dramatically different tax treatment. Under Puerto Rico's Act 60 (formerly Act 22), bona fide residents of Puerto Rico can qualify for 0% federal capital gains tax on gains accrued after establishing residency. This is legal but requires genuine residency (183 days per year on the island, a real home, social ties). Many crypto investors have relocated to Puerto Rico specifically for this benefit. Improperly claiming PR tax benefits while living in the continental US is tax fraud.
Moving States to Reduce Crypto Taxes
Relocating from a high-tax state (California, New York) to a no-income-tax state (Florida, Texas, Nevada) can eliminate state capital gains taxes. However:
- You must be a genuine resident of the new state before selling — not just visiting
- California aggressively audits former residents who claim they've moved; factors include where you work, where family lives, property ownership, voter registration, and driver's license
- Gains accrued while in California may be subject to California tax even if you later move — California's "safe harbor" requires 546 days (18 months) of residency in the new state before California relinquishes the claim
How Blockchain Smart Tax Handles State Taxes
Blockchain Smart Tax calculates your federal crypto tax liability. State tax calculations vary significantly by state and require knowing your full income picture, deductions, and state-specific rules. We provide the federal gain/loss data you need — your tax software (TurboTax, H&R Block) or CPA will apply the correct state rates.
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