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I'm recently found out that California treats capital gains as normal income. No fun.

There are fewer than 10 states that don't tax capital gains at the same rate as ordinary income.

Most states tax capital gains at the same rate as ordinary income.

And then 10 states don't tax income at all.

Sounds like a great reason to relocate to a state that is more reasonable about income taxes than CA.

imo the cap gains treatment from CA is pretty normal compared to the majority of states.

The part where CA chases your stock grants/options for years after you leave the state is a bit less reasonable to me. (But I'd guess some other states do the same)

Right, the taxation mechanism is typical, but it's the amount that's onerous. CA has the highest state income tax rate in the nation. If states are going to tax capital gains as income anyway, it's all the more reason to move to a state with low or non-existent state income tax.

I'm curious, why shouldn't they?

Short term capital gains, yes.

I don't know about California, but NY State definitely treats long term gains as regular income too. You take the net capital gains number from your IRS Schedule D (total gains minus total losses) and copy it onto a single line on your NY tax form that gets added directly into your NY gross income. (There's no mention at all of long term vs. short term on the NY tax form - capital gains is just a single line item.)

(Everyone, including the IRS, treats short term gains as regular income.)

Long term capital gains as well

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