A taxpayer pays 22% on the federal return for their ordinary income (including some short-term capital gains) and 15% on some long-term capital gains. Assuming that the income is equally taxable to California and that the California ordinary income tax bracket for the same taxpayer is 9.3%; What rates are going to be used for taxing the long-term capital gains for the State? 0%. LTCG rates in the 9.3% bracket are zero for those gains. 9.3% on all income that qualifies in that bracket. The State doesn't give preferential treatment to capital gains. 1%. The LTCG rates for all gains are a single percentage point. 4%. LTCG rates are two brackets lower for long-term gains. Next