Complete 2026 California capital gains tax stack: federal LTCG, NIIT, CA marginal, Mental Health Services Tax, §1250 recapture, IRMAA, PLUS LA Measure ULA mansion tax and Southern California city/county transfer taxes most CPAs forget.
Most California sellers think they’re paying "around 20%" on their capital gain. The real combined number for high-tenured California property and business sales is 33–42% once city and county taxes are included. Here’s every component:
0% / 15% / 20% federal rate depending on taxable income. For 2026 MFJ: 0% under $96,700, 15% to $600,050, 20% above. For Single: 0% under $48,350, 15% to $533,400, 20% above. Big California gains stacked on top of ordinary income almost always hit 20% on most of the gain.
Additional 3.8% federal tax above $250K MFJ MAGI / $200K Single. Applies to the lesser of your investment income (including capital gains) or your MAGI-over-threshold. For any sizable California sale, this almost always hits the full gain.
California does NOT have a preferential LTCG rate — capital gains are taxed at ordinary income rates. Brackets ramp from 1% (under $10K) to 13.3% (above $1.44M MFJ). For most high-gain California sellers, the gain pushes well into the 9.3-13.3% range.
Separate 1% surtax on taxable income above $1M (in effect since 2004). Pushes the CA top rate to 14.3% on income above $1M. Most CPAs forget to mention this until the tax bill arrives.
For long-tenured rental property, accumulated straight-line depreciation comes back as ordinary income at the 25% federal recapture rate, plus California’s marginal rate (9.3-13.3%). This portion is not deferrable via SIS or CRT — recapture is taxed Year 1 in all structures. A 20-year-held Koreatown apartment typically has $300K-$800K of recapture exposure.
2-year lookback means your 2026 sale MAGI hits your 2028 Medicare premiums. A $4M gain pushes you into Tier 6 (max) → ~$14,000/year extra Medicare premiums for the couple. Full IRMAA breakdown →
The single biggest tax most LA sellers don’t know about. Passed by LA voters in November 2022, effective April 1, 2023. Applies to real-property transfers within City of Los Angeles boundaries:
| Sale price | ULA rate | ULA tax |
|---|---|---|
| Under $5,150,000 (2026 indexed) | 0% | $0 |
| $5,150,000 – $10,300,000 | 4.0% | $206K – $412K |
| Above $10,300,000 | 5.5% | $566K+ |
Critical:ULA applies to the GROSS sale price, not the gain. A $6M sale of a long-tenured LA City property generates ULA of $240,000 BEFORE any capital-gains tax. On a $12M sale, ULA alone is ~$660,000. This is in addition to the LA County documentary transfer tax (#8 below).
ULA jurisdiction: applies to City of LA only. Sellers in unincorporated LA County, or in surrounding cities (Pasadena, Glendale, Burbank, Long Beach city itself, etc.) are NOT subject to ULA. Many LA-area sellers and their CPAs assume any LA-area sale triggers ULA — it doesn’t. Always check the specific city boundary.
Every California real-estate sale has both a county and (in many jurisdictions) a city transfer tax. These are SEPARATE from Measure ULA:
| Jurisdiction | Rate | $2M sale |
|---|---|---|
| LA County (all sales) | $1.10/$1,000 | $2,200 |
| City of LA (additional) | $4.50/$1,000 | $9,000 |
| Culver City | 0.45% – 4% (tiered) | $9K – $80K |
| Santa Monica | 0.3% – 5.6% (tiered, above $5M) | $6K – $112K |
| Beverly Hills | No city transfer tax | $0 (city) |
| Pasadena | No city transfer tax | $0 (city) |
| Orange County (all) | $1.10/$1,000 (county only) | $2,200 |
| Newport Beach, Irvine, Huntington Beach | No city transfer tax | $0 (city) |
| San Diego County (all) | $1.10/$1,000 | $2,200 |
| Riverside County | $1.10/$1,000 | $2,200 |
| San Bernardino County | $1.10/$1,000 | $2,200 |
| Ventura County | $1.10/$1,000 | $2,200 |
Why Orange County is cheaper: no individual OC cities charge a city transfer tax (a quirk of OC home-rule charters). For ultra-high-net-worth sellers comparing similar properties in Newport Beach vs Santa Monica, the local-tax difference can be 5%+ of sale price on $10M+ deals.
For a $2M gain on a long-tenured Newport Beach home (MFJ, $90K ordinary income), the combined federal + CA + NIIT bill typically lands at $660K-$740K. Add the IRMAA hit for age 63+ and you’re looking at a real bite of $700K-$900K on what felt like a $2M gain.
For a $6M LA City commercial property sale, add Measure ULA ($240K) + city/county transfer taxes (~$12K) on TOP of the $2M+ federal/state capital-gains bill. Effective rate often exceeds 40%.
City/county tax rates change.Measure ULA thresholds index annually for inflation. City charter amendments and ballot measures can introduce or change local transfer taxes. Always verify with your escrow officer for the specific property and current rate before closing.
The calculator on this site models the federal + California stack (LTCG, NIIT, CA marginal + Mental Health Tax, recapture, IRMAA). For LA City Measure ULA and city/county transfer taxes specific to your property, we’ll add a local-tax line during your free consultation.
Run the calculator → 213-414-2808