Long-term vs short-term
A long-term capital gain (held 12+ months past the basis-setting event) gets preferential federal rates: 0%, 15%, or 20% depending on total taxable income, plus 3.8% NIIT for MAGI above $200k single. Short-term gains are taxed at ordinary rates up to 37% federally, plus state. For this $400,000 gain, the short-term total would run approximately $167,937, compared with $93,310 long-term. The difference is roughly $74,627.
Pennsylvania's treatment
Pennsylvania taxes long-term gains at ordinary income rates. At the top bracket, that's 3.07%. No state preference for long holding periods.
Cost basis considerations
For RSU shares, basis equals the vest-date closing price. For ISO shares (qualifying disposition), basis equals strike plus any ordinary-income component at exercise. For ESPP shares, basis depends on whether the sale is a qualifying or disqualifying disposition. These basis rules materially affect whether a reported gross sale amount is mostly gain or mostly return of basis.
Frequently asked
- What's the tax on a $400,000 long-term capital gain in Pennsylvania?
- Approximately $93,310 total. Federal LTCG: $65,830. NIIT at 3.8%: $15,200. Pennsylvania state tax: $12,280.
- Short-term vs long-term?
- If the same $400,000 gain were short-term (held under 12 months), it would be taxed as ordinary income at up to 37% federal plus state, coming to approximately $167,937. That's $74,627 more than the long-term number. Holding past the 12-month mark usually saves meaningful money.
- Does Pennsylvania tax capital gains the same as ordinary income?
- Yes. Pennsylvania taxes long-term capital gains at ordinary income rates, up to 3.07%. There is no state-level preference for long-term treatment.
- What about QSBS?
- If the gain is on Qualified Small Business Stock held more than five years, up to the greater of $10M or 10× basis may be excluded from federal tax under IRC §1202. Pennsylvania's conformity varies; verify current-year treatment.
Related
- Capital gains calculator (customize ordinary income, state, holding period)
- QSBS eligibility calculator
- Pennsylvania capital gains overview
- Pennsylvania QSBS treatment
Educational estimate · 2025 brackets · Single filer · Long-term hold · $250k other ordinary income · Not tax advice