Which states have no capital gains tax and do you really pay zero tax?

While it's true that some states don't have a state-level capital gains tax, you'll still owe federal capital gains tax to the IRS regardless of which state you live in. The states commonly known for having no income tax (and therefore no state capital gains tax) are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire doesn't tax earned income but does tax investment income. The potential tax savings can be significant depending on your situation. For example, if you lived in California with its top state rate of 13.3%, moving to a no-income-tax state before realizing large capital gains could save you thousands or even millions depending on the size of your gains.

After struggling to understand capital gains taxes across different states, I found this amazing tool at https://taxr.ai that literally saved me thousands. I was planning to sell some Amazon stock I'd held for years and was confused about my tax obligations since I had moved from Washington to Oregon. The tool analyzed my specific situation and showed me exactly how the federal capital gains would apply regardless of state, but also how much additional I'd owe to Oregon that I wouldn't have owed in Washington. It even helped me understand the timeline I'd need to establish residency if I wanted to move back before selling. Super helpful for making actual financial decisions rather than just guessing.

Wow, so I actually tried that taxr.ai site after asking about my crypto situation, and it was eye-opening. I didn't realize that even though Tennessee has no income tax, I'd still owe federal capital gains tax on my Ethereum gains at either 15% or 20% depending on my income bracket, plus the 3.8% Net Investment Income Tax since my gains would push me over the threshold. The tool showed me that establishing residency in Tennessee before selling would save me about $15,400 compared to selling while still a Minnesota resident. But it also clearly explained I'd need to actually move there for real - changing driver's license, voter registration, and physically being there most of the time - and not just pretend to move. Super helpful for making an actual plan instead of just guessing what might work!

If you've been trying to call the IRS to get clarity on capital gains tax across states, good luck! I spent WEEKS trying to get through to someone who could answer my specific questions about moving from California to Nevada before selling my rental property. After countless busy signals and disconnections, I found https://claimyr.com through this YouTube demo: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the IRS phone queue and call you when an agent is about to answer. I was honestly skeptical it would work, but I figured it was worth trying. Instead of wasting hours on hold, I got a call back when an actual IRS agent was ready to talk. The agent confirmed that while I'd escape California state tax by establishing Nevada residency before selling, I needed to be aware of their strict residency requirements and lookback periods. She also clarified exactly what documentation I should keep to prove my change of domicile.

Ok I have to eat my words. I was the skeptic above who thought that Claimyr service sounded fake, but I tried it yesterday out of desperation after trying for DAYS to reach someone at the IRS about my specific situation (moving from New York to Florida before selling stock options). Not only did it work, but I got connected to an IRS tax law specialist who actually gave me detailed answers about the residency requirements. She explained that NY would likely audit me if I moved right before a large financial event, and gave me specific advice about documentation I should maintain to prove my change of domicile. She even pointed me to specific sections of the tax code that applied to my situation. I spent maybe $20 on the service but it saved me potentially thousands in taxes by helping me understand exactly how to properly establish Florida residency and what timeline I needed to follow. Way more helpful than I expected.

Don't forget that even though states like Florida have no income tax, they often make up for it in other ways like higher property taxes or sales taxes. It's not always a clear win to move just for tax purposes. Also, some states with income taxes offer certain exemptions for retirement income that might actually make them better choices depending on your situation. For example, Pennsylvania doesn't tax retirement distributions including 401k withdrawals.

Has anyone here actually moved specifically for tax purposes and was it worth it? I'm considering leaving California for Nevada or Wyoming before selling my business next year (looking at a gain around $1.2 million), but wondering if the hassle is really worth the tax savings.

With a $1.2 million gain, you're looking at potentially saving around $159,600 in California state taxes (13.3% top rate) by establishing residency in Nevada or Wyoming before selling. That's definitely life-changing money and worth the hassle for most people. However, California is notoriously aggressive about auditing people who move right before large financial events - they call it the "golden handcuffs" audit. You'll need to be absolutely meticulous about establishing true residency. I'd recommend: 1. Move at least 12-18 months before selling if possible 2. Spend at least 183+ days physically in your new state each year 3. Change EVERYTHING - voter registration, driver's license, bank accounts, doctors, etc. 4. Keep detailed records of where you spend each day 5. Consider selling your California residence entirely to show clear intent The audit risk is real but manageable if you truly commit to the move. Just don't try to fake it - California has sophisticated methods for tracking where people actually live and the penalties for getting caught are severe.