For investors, understanding capital gains taxes is critical to managing wealth and making informed financial decisions. In Nevada, the tax situation is particularly advantageous, as the state does not impose a capital gains tax. This is great news for investors in the state, as it means that, unlike many other states, Nevada residents are not burdened with additional state taxes when selling appreciated assets.
However, capital gains still remain subject to federal taxes. Therefore, it’s crucial to understand how these taxes are structured and how you can plan strategically to minimize your tax liability. In this article, we will explain what capital gains are, how they are taxed at the federal level, and offer strategies to reduce your capital gains tax burden, even when no state tax is involved.
What Are Capital Gains?
Capital gains refer to the increase in value of a capital asset—such as stocks, real estate, or even cryptocurrencies—after it is purchased. The gain is calculated as the difference between the purchase price and the selling price of the asset. Capital gains can be either realized or unrealized.
- Realized Capital Gains: When you sell the asset and capture the gain, it becomes a realized capital gain. This is when tax liability is triggered.
- Unrealized Capital Gains: If you still hold an asset that has increased in value but have not sold it, these are considered unrealized gains. You will not owe taxes until you sell the asset and realize the gain.
Types of Capital Gains
There are two primary types of realized capital gains:
- Short-Term Capital Gains: Gains on assets held for one year or less. These are taxed at ordinary income tax rates, which can be as high as 37% for high earners.
- Long-Term Capital Gains: Gains on assets held for more than one year. These are taxed at lower rates, depending on your income level.
Federal Capital Gains Tax Rates for 2025
Short- and long-term capital gains are taxed differently; assets held for one year or less are taxed at ordinary income rates, while longer-held assets are taxed at lower rates.
The short-term capital gains schedule matches the schedule for ordinary income, and your marginal and effective rates depend on your income and marital status, as shown below:
| Taxable income(Single Filers) | Taxable income (Married Filing Jointly) | Tax Rate |
| $0 to $11,925 | $0 to $23,850 | 10% |
| $11,925 to $48,475 | $23,850 to $96,950 | 12% |
| $48,475 to $103,350 | $96,950 to $206,700 | 22% |
| $103,350 to $197,300 | $206,700 to $394,600 | 24% |
| $197,300 to $250,525 | $394,600 to $501,050 | 32% |
| $250,525 to $626,350 | $501,050 to $751,600 | 35% |
| $626,350 or more | $751,600 or more | 37% |
Long-term capital gains, meanwhile, are taxed at a lower rate than ordinary income. Here, too, the precise rate depends on the individual’s income and marital status:
| Taxable income (Single Filers) | Taxable income(Married Filing Jointly) | Tax Rate |
| $0 to $48,350 | $0 to $96,700 | 0% |
| $48,350 – $533,400 | $96,700 – $600,050 | 15% |
| $533,400 or more | $600,050 or more | 20% |
In addition, some categories of capital assets fall entirely outside of this rubric: gains on collectibles such as art, jewelry, antiques, and stamp collections are taxed up to a maximum 28% rate.
Additionally, the Net Investment Income Tax (NIIT) of 3.8% applies to high-income individuals, specifically those earning over $200,000 (single) or $250,000 (married).
Tax-Free Capital Gains in Nevada
The key advantage for Nevada residents is that the state does not tax capital gains. This can provide significant savings compared to residents of other states that impose state-level capital gains taxes. This exemption allows you to keep more of your investment returns without worrying about state taxes eating into your profits.
Strategies to Minimize Capital Gains Tax
Even though Nevada does not impose capital gains taxes, federal taxes still apply. Here are some strategies you can use to reduce your federal capital gains tax burden:
- Utilize a Charitable Remainder Trust (CRT): A CRT allows you to move appreciated assets into a trust, deferring capital gains taxes. You receive annual distributions from the trust while the principal grows tax-free. At the end of the term, the remaining funds go to charity. This strategy spreads your tax liability over time and may offer a deduction for the charitable contribution.
- Invest in Renewable Energy Projects: Certain renewable energy projects, such as solar and wind farms, offer significant tax incentives. These investments can provide you with tax credits and deductions that lower your taxable income, which may help reduce the overall tax on your capital gains. This strategy is particularly useful for investors looking to align their financial goals with sustainability efforts.
- Explore Oil and Gas Well Investments: Investing in oil and gas wells can offer substantial tax advantages. For example, investors can often deduct drilling costs upfront, which could recoup up to 50% of their investment in tax savings within the first year. In addition, these investments often provide annual cash yields, creating ongoing tax-saving opportunities.
- Maximize Retirement Contributions: Contributing to tax-advantaged retirement accounts, such as a 401(k) or IRA, can help reduce your taxable income. By lowering your income, you may reduce the impact of capital gains taxes, particularly on any earnings from investments held within these accounts.
- Charitable Lead Annuity Trust (CLAT): If you’re charitably inclined, a CLAT could be a powerful strategy. A CLAT allows you to make a charitable gift and receive an upfront income tax deduction. The annuity pays out to a charity for a specified term, and you receive tax benefits while potentially reducing the taxable estate.
Conclusion
Understanding capital gains taxes is essential for any investor, especially in Nevada, where residents benefit from not being taxed at the state level. However, federal capital gains taxes still apply, and with the upcoming potential changes to tax rates, it’s wise to plan ahead. By employing strategies like Charitable Remainder Trusts, renewable energy investments, or oil and gas well opportunities, investors can reduce their tax burden and keep more of their earnings. As always, it’s advisable to consult with a financial advisor or tax professional to ensure your tax planning strategies are optimized to fit your individual financial goals.
