How does Califronia tax long$-$term capital gains? a$.$California does not tax long$-$term capital gains. b$.$ Like the federal treatment, califronia has a separate tax rate fro long$-$term capital gains. c$.$ On the California tax return, long$-$term capital gains are taxes at a flat rate of $15\%.$ d$.$ On the California tax return, long$-$term capital gains are taxed at the taxpayer's regular tax rate.