State tax on investments
Easy to forget: federal is not the whole bill. States tax investment income too, and the spread between the highest and lowest is wide enough to matter on a large gain.
Things worth knowing:
• Several states levy no income tax at all
• Most states do NOT give the federal long-term capital gains discount — they tax the gain as ordinary income
• Municipal bond interest is often exempt federally, and exempt at state level too if issued in your own state
• Residency is determined by facts, not intent — states audit this aggressively when someone moves in a year they realise a large gain
Practical point: if you are planning a large sale around a move, the sequencing is worth professional advice. The difference can exceed what you would pay for it several times over.