How Much Is Capital Gains Tax in Ohio: Rates, Deductions, and NIIT

Ohio does not levy a separate capital gains tax. Profits from selling investments or property flow into your Ohio adjusted gross income and are taxed at the same rates as wages, topping out at 3.125%. On top of that, the federal government taxes the same gain at 0%, 15%, or 20% if you held the asset more than a year, or at ordinary income rates if you held it a year or less. A high-income seller may also owe a 3.8% federal surtax. So the total capital gains tax in Ohio is really two bills stacked on the same profit: a federal one that depends mostly on how long you owned the asset, and a state one that depends on your total Ohio income and whether the gain counts as business or nonbusiness income.

What Ohio Charges on the Gain

Ohio treats most capital gains from personal investments as nonbusiness income and runs them through the state’s progressive brackets along with your other earnings. For the 2025 tax year, those brackets are:¹

0% on the first $26,050 of Ohio taxable nonbusiness income.
2.75% on income between $26,050 and $100,000.
3.125% on income above $100,000.

If your total Ohio taxable income including the gain stays under $26,050, the state portion is zero. Above that, the rate that applies to your gain depends on where it lands once stacked on your other income.

When the Gain Is Business Income

Capital gains that arise from the regular course of a trade or business, such as the sale of business equipment, are classified as business income and taxed at a flat 3% rate. The first $250,000 of business income can be deducted before that 3% applies ($125,000 per spouse on separate returns).² Whether a specific gain qualifies as business income turns on how tightly the asset was tied to your trade or business. Gains on a personal stock portfolio generally do not qualify; gains on an ownership stake in a business you actively operated may.

Deductions Aimed at Business Owners and Investors

Starting with the 2026 tax year, Ohio adds two targeted deductions that can reduce or eliminate the state tax on qualifying gains: one for gains from selling an ownership interest in a business (along with associated deductible payroll), and one for gains earned through a qualifying interest in an Ohio venture capital operating company. The venture capital deduction runs 100% for gains tied to investments in Ohio businesses and 50% for investments outside Ohio.² If a qualifying business-owner gain also counts as business income, the business-owner deduction is applied first, before the general $250,000 business income deduction.

Federal Long-Term Capital Gains Rates

Hold an asset more than one year and the profit qualifies for federal long-term rates. For 2026, those rates are 0%, 15%, and 20%, based on your total taxable income and filing status:³

0% on taxable income up to $49,450 single, $98,900 married filing jointly, $66,200 head of household.
15% above the 0% ceiling up to $545,500 single, $613,700 joint, $579,600 head of household.
20% on taxable income above the 15% ceiling.

Rate placement is based on your total taxable income, not just the gain. A large sale can push part of the profit from the 15% bracket into 20%.

Short-Term and Special Rates

Assets held one year or less produce short-term capital gains, which are taxed as ordinary income at federal rates from 10% to 37% for 2026.⁴ Two categories of long-term gain face higher federal rates than the standard 0/15/20 schedule:

Collectibles such as coins, art, and antiques are taxed at a maximum 28% rate.
Depreciation recapture on rental or business real estate is taxed at up to 25% on the portion of gain attributable to depreciation previously claimed.

Any remaining gain beyond the recaptured or collectible portion is taxed at the ordinary long-term rates.⁴

The 3.8% Net Investment Income Tax

Higher earners owe an additional 3.8% federal surtax on net investment income, including capital gains, once modified adjusted gross income exceeds $200,000 for single filers or $250,000 for joint filers.⁵ The 3.8% applies to the lesser of your net investment income or the amount by which your income exceeds the threshold. Those thresholds are not indexed for inflation, so they capture more households each year.

Selling Your Home

If you sell your main home, federal law lets you exclude up to $250,000 of gain if you file single, or $500,000 if you file jointly. To qualify, you must have owned and used the home as your primary residence for at least two of the five years before the sale.⁶ Because the exclusion cuts your federal gain, it also cuts the amount flowing into your Ohio return. A married couple with $400,000 of profit on a qualifying home sale would owe nothing at the federal or Ohio level on that gain. The exclusion generally cannot be claimed more than once every two years.

Offsetting Gains With Losses

Capital losses offset capital gains dollar for dollar. If losses exceed gains in a year, you can deduct up to $3,000 of the excess against ordinary income ($1,500 if married filing separately), and any unused loss carries forward indefinitely.⁴ Watch the wash sale rule: buying a substantially identical investment within 30 days before or after the loss sale disallows the loss for that year, though the disallowed amount gets added to the basis of the replacement.

Because Ohio starts from federal adjusted gross income, the same losses that reduce your federal income reduce your Ohio taxable income by the same amount.

Inherited Assets

If you inherit property or investments, your cost basis is generally reset to fair market value on the date the prior owner died.⁷ Stock a parent bought for $10,000 that was worth $100,000 at their death has a $100,000 basis in your hands. Selling shortly afterward for $100,000 produces no taxable gain at either level.

Ohio City Income Taxes

Ohio is unusual for how many of its cities and villages impose their own income taxes, typically 1% to 3%. Capital gains from investments are generally exempt from those municipal taxes. A narrow grandfathered exception exists for municipalities that taxed capital gains before 1989. For most Ohio residents, the practical result is that your gain faces only federal and state tax, not a third city layer.

Estimated Payments on a Big Gain

Sales of investments do not have tax withheld the way paychecks do. If your resulting liability is large enough, you may need to make quarterly estimated payments to avoid underpayment penalties.

At the federal level, estimated payments are generally required if you expect to owe at least $1,000 after withholding and credits. Payments must cover the lesser of 90% of the current year’s tax or 100% of last year’s tax; if your prior-year AGI exceeded $150,000 ($75,000 if married filing separately), the safe harbor is 110% of last year’s tax.⁸

Ohio requires estimated payments when your estimated state tax after credits and withholding will exceed $500. The 2026 quarterly due dates are April 15, June 15, September 15, and January 15, 2027.⁹ After a big mid-year sale, consider paying in the quarter the gain occurred rather than waiting until you file.

Putting the Numbers Together

Federal and Ohio tax are calculated separately on the same gain, then added. Take a single filer with $120,000 in total taxable income that includes a $50,000 long-term capital gain from selling stock:

Federal long-term rate: with taxable income of $120,000, part of the gain that falls below the $49,450 threshold sits in the 0% bracket and the rest is taxed at 15%.³
Net Investment Income Tax: does not apply, because income sits below the $200,000 threshold.⁵
Ohio state tax: the gain stacks on top of other income, with the portion between $26,050 and $100,000 taxed at 2.75% and the portion above $100,000 at 3.125%.¹
Municipal tax: generally zero on the investment gain.

The combined effective rate on this gain lands well under 20%. Move the same math to a filer with $600,000 of total income and the picture changes: 20% federal, plus 3.8% NIIT, plus 3.125% Ohio on the top slice, produces a combined rate above 26% on the portion of the gain in the highest brackets. Filing status, total income, and any Ohio deductions you qualify for shift the exact numbers, but the framework is always the same two bills on one profit.

1
Ohio Department of Taxation. Annual Tax Rates
2
Ohio Legislative Service Commission. Section 5747.01
3
Internal Revenue Service. Revenue Procedure 2025-32
4
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
5
Internal Revenue Service. Net Investment Income Tax
6
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
7
Internal Revenue Service. Gifts and Inheritances
8
Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals (2026)
9
Ohio Department of Taxation. Estimated Payments