SB 6102 implements an excise tax on capital gains to provide an ongoing source of funding to support basic education. Beginning January 1, 2016, an annual state net Capital Gains Tax (CGT) is imposed on the sale or other voluntary exchange of capital assets, with some exceptions, by resident individuals during the year. The tax rate is 7 percent. The tax rate is applied to the capital gains amount reported on the federal income tax return.
For resident individuals, all capital gains are apportioned to the state, regardless of the location of the asset. All revenues from the CGT must be deposited into the education legacy trust account to be spent on the program of basic education. All taxpayers must file with the Department of Revenue, a CGT return for each taxable year; however a person with no tax liability is not required to file a tax return. The due date of the CGT is the due date for the federal income tax return, unless otherwise required by the Department of Revenue. The first state CGT returns are due in 2017. For taxpayers filing joint federal tax returns, a $500,000 deduction is provided.
For taxpayers filing other returns, a $250,000 deduction is allowed. The CGT does not apply to the sale or exchange of residential real property solely for a single-family; retirement accounts; cattle, horses or breeding livestock held for more than 12 months; agricultural or timber land; or timber.