Wyoming does not have a state capital gains tax

Wyoming is one of nine states with no capital gains tax at all. When you sell an investment — a stock, rental property, or business — and make a profit, you owe federal capital gains tax to the IRS, but Wyoming does not add a state tax on top of that. This applies whether you live in Wyoming full-time, own property there, or earned the gain while a resident.

This is different from income tax. Wyoming also has no state income tax, which means residents do not file a state income tax return. Capital gains are treated the same way: they are not taxed by the state, even though they are taxed by the federal government.

Key Takeaways

  • Wyoming has no state capital gains tax, so you will not owe Wyoming state tax when you sell an investment at a profit.
  • You still owe federal capital gains tax to the IRS on the same profit, because Wyoming's lack of a state tax does not affect federal rules.
  • Wyoming also has no state income tax, so residents do not file a state income tax return at all.
  • If you move to Wyoming from a state with capital gains tax, you will no longer owe that state's tax on gains earned after you become a resident.

How federal capital gains tax still applies in Wyoming

Even though Wyoming does not tax capital gains, the federal government does. The IRS taxes capital gains at either the long-term rate (if you held the asset for more than one year) or the short-term rate (if you held it for one year or less). Long-term rates are lower and range from 0 percent to 20 percent depending on your total income. Short-term gains are taxed as ordinary income, which can be higher.

You report capital gains on your federal tax return using Form 1040 and Schedule D. The state where you live does not change this federal obligation — Wyoming residents file the same federal forms as residents of any other state. The difference is that Wyoming does not require you to report the same gains on a state return, because there is no state return to file.

What happens if you move to Wyoming from another state

If you move to Wyoming from a state that taxes capital gains — such as California, New York, or Massachusetts — you will no longer owe that state's capital gains tax on gains you earn after you become a Wyoming resident. However, you may still owe tax to your former state on gains you earned while living there, depending on when you sold the asset and when you moved.

The timing matters. If you sold an investment while living in California and then moved to Wyoming, California will tax that gain because you were a resident when the sale occurred. If you move to Wyoming first and then sell an investment, Wyoming will not tax it. Some states also have rules about gains on property located in that state, even if you no longer live there — for example, if you own rental real estate in your former state, that state may still tax gains when you sell it.

Keep records of when you became a Wyoming resident, because you may need to prove your residency date to your former state if they question a return.

States with no capital gains tax

Wyoming is one of nine states that do not tax capital gains. The others are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Washington. New Hampshire and Tennessee tax only dividend and interest income, not capital gains from the sale of assets, so they function similarly to the other seven.

This does not mean these states have no taxes at all. Most of them use sales tax, property tax, and other revenue sources instead. Wyoming relies heavily on mineral extraction taxes and sales tax. The absence of a capital gains tax is a state policy choice, not a sign that the state has no tax system.

How to report capital gains on your federal return

You report capital gains on IRS Form 1040, Schedule D. List each asset you sold, the date you bought it, the date you sold it, your cost basis (what you paid for it), and the sale price. The form calculates your gain or loss automatically.

If you sold a home, you may be able to exclude up to $250,000 of gain (or $500,000 if you are married filing jointly) if you meet the ownership and use tests. If you sold stocks or mutual funds through a brokerage, your broker will send you a Form 1099-B showing the sales, and you can use that to fill out Schedule D.

Because Wyoming has no state capital gains tax, you do not report these gains on a state return. You file only the federal return.

Capital gains from business sales and real estate

If you sell a business or investment property in Wyoming, the same rule applies: Wyoming does not tax the gain, but the federal government does. For a business sale, you may also owe self-employment tax on certain portions of the sale price, depending on how the sale is structured. A tax professional can help you understand which parts of the sale are taxed as capital gains and which are taxed as ordinary income.

For real estate, the gain is the sale price minus your cost basis (the price you paid plus improvements you made). If you sell a rental property, you also have to account for depreciation you claimed in prior years — the IRS taxes that depreciation back at a 25 percent rate, separate from your capital gains rate. Wyoming does not add its own tax to any of these amounts.

Frequently Asked Questions

If I live in Wyoming, do I have to file a state tax return?

No. Wyoming has no state income tax and no state capital gains tax, so you do not file a state return. You still file a federal return if your income is above the threshold set by the IRS, which is the same for all states.

Can Wyoming tax capital gains from property I own in another state?

No. Wyoming taxes only income earned by Wyoming residents. If you own property in another state and sell it, that state may tax the gain, but Wyoming will not. You may owe tax to both your state of residence and the state where the property is located.

Does moving to Wyoming help me avoid federal capital gains tax?

No. The federal government taxes capital gains regardless of which state you live in. Moving to Wyoming saves you only the state capital gains tax, not the federal tax. You will still owe the IRS on any profit you make from selling an investment.

What if I sell an investment and then move to Wyoming the same year?

It depends on when you became a Wyoming resident. If you sold the investment before you moved, your former state may tax the gain. If you sold it after you moved and became a resident, Wyoming will not tax it. The date you establish residency matters — typically the date you move and intend to stay permanently.

Do I owe Wyoming tax on gains from stocks or mutual funds?

No. Wyoming does not tax capital gains from any source — stocks, mutual funds, bonds, real estate, or business sales. You owe federal tax on these gains, but not Wyoming state tax.