Line 13: Capital Gains or Losses

Here’s the line that makes high-income New Yorkers wince. Line 13 carries your capital gains from federal Schedule D, and unlike the federal government, New York doesn’t give long-term gains any special rate. That stock you held for three years? New York taxes the profit at the same rate as your paycheck — up to 10.9%.

The Big Difference: No Preferential Rate

Federally, long-term capital gains (assets held over a year) get taxed at 0%, 15%, or 20% depending on your income (IRC § 1(h)). That’s a massive discount compared to ordinary income rates that top out at 37%.

New York throws that entire framework out. Long-term gains, short-term gains — it all gets treated as ordinary income and taxed at your marginal state rate (NY rate schedules). For a New Yorker in the top bracket, a $200,000 long-term gain might cost around $30,000 federally (at the 15% rate) but another $19,300 to New York (at 9.65%). Tack on NYC tax and you’re adding $6,000 to $7,750 more.

That’s a combined state and city rate of up to 14.776% on top of the federal tax. On a $200,000 gain, you could be looking at $60,000+ in total capital gains tax. People relocate over numbers like these.

What Goes on Line 13

This line captures net capital gains or losses from Schedule D of your federal return. That includes:

Stocks and bonds — gains or losses from selling publicly traded securities
Mutual funds and ETFs — including capital gain distributions reported on 1099-DIV
Cryptocurrency — Bitcoin, Ethereum, and every other digital asset the IRS now tracks through broker reporting (IRS Virtual Currency FAQ)
Real estate (personal) — selling a second home or investment property (primary residence exclusion up to $250K/$500K still applies under IRC § 121)
Collectibles — art, wine, coins — taxed at 28% federally but at ordinary rates for NY, so there’s actually less of a gap here

Note: business property sales go on Line 14 via Form 4797, not here.

The Wash Sale Rule Still Applies

If you sold a stock at a loss and bought the same (or substantially identical) security within 30 days before or after the sale, the wash sale rule disallows that loss (IRC § 1091). This applies to both your federal and New York returns — NY follows the federal wash sale treatment.

Where this gets sneaky: buying the same stock in a different account still triggers it. Selling Tesla in your taxable brokerage and buying Tesla in your IRA the next week? Wash sale. The loss gets added to your cost basis in the new shares, so it’s not gone forever — but you can’t use it this year.

Crypto was in a gray area for years, but broker reporting rules now treat digital assets like securities for wash sale purposes. Don’t assume you can sell Bitcoin at a loss on Monday and buy it back on Tuesday.

Capital Losses: The $3,000 Cap

If your losses exceed your gains, you can deduct up to $3,000 of net capital losses against other income ($1,500 if married filing separately) (IRC § 1211(b)). This limit applies to both your federal and New York returns.

Anything above $3,000 carries forward to future years — indefinitely. You don’t lose it; it just waits. Some people have been carrying forward losses from 2008 for nearly two decades now. The carryforward works the same way on the IT-201 as it does federally.

Real Estate and the Primary Residence Exclusion

Sold your house? The Section 121 exclusion lets you exclude up to $250,000 of gain ($500,000 if married filing jointly) on a primary residence you’ve owned and lived in for at least two of the last five years. New York follows this exclusion — if it’s excluded federally, it doesn’t show up on Line 13.

But gains above that exclusion threshold hit Line 13 in full. Sold a Brooklyn brownstone you bought in 2005 for $400,000 and it went for $1.8 million? That’s a $1.4 million gain. After the $500,000 exclusion (MFJ), you’ve got $900,000 on Line 13. At New York’s top rate: roughly $86,850 in state tax alone. You can see why people time these sales carefully and sometimes establish residency elsewhere first.

Common Mistakes on Line 13

Assuming NY has a preferential capital gains rate: It doesn’t. Every dollar of gain is ordinary income for state purposes.
Forgetting crypto gains: Exchanges now issue 1099s. New York matches these against your return.
Ignoring wash sales across accounts: The rule applies across all your accounts, including IRAs.
Not tracking cost basis properly: If your broker doesn’t report basis (common for shares acquired before 2011), you need to reconstruct it. Otherwise you’re taxed on the full sale price.

Related Lines and Resources

Capital gains on Line 13 add to your business income on Line 12 and wages on Line 7. If you sold business property (not personal investments), that goes to Line 14. For a deeper dive into capital gains across states, see our guide on capital gains tax.

Head back to the NY IT-201 line-by-line guide for the full walkthrough.

Sources & References

Frequently Asked Questions

Does New York tax capital gains at a lower rate than ordinary income?

No. Unlike the federal government, New York taxes all capital gains — both short-term and long-term — at ordinary income tax rates. The state rate ranges from 4% to 10.9% depending on your total taxable income. There’s no preferential rate for assets held longer than a year.

How does New York tax cryptocurrency gains?

Same as any other capital gain. If you sold crypto at a profit, it goes on federal Schedule D, which flows to IT-201 Line 13. New York taxes it at ordinary income rates. With exchanges now issuing 1099 forms, the state has visibility into these transactions.

Can I offset capital gains with capital losses on my NY return?

Yes. Net capital losses offset gains dollar-for-dollar. If losses still exceed gains, you can deduct up to $3,000 against other income ($1,500 if married filing separately). Excess losses carry forward to future tax years on both your federal and New York returns.

Is the primary residence exclusion available for New York tax?

Yes. New York follows the federal Section 121 exclusion. You can exclude up to $250,000 of gain ($500,000 married filing jointly) on the sale of a primary residence you owned and lived in for at least two of the last five years. Any gain above that exclusion amount goes on Line 13.

Do capital gain distributions from mutual funds go on Line 13?

Yes. Capital gain distributions reported on Form 1099-DIV flow through Schedule D to Line 13 on the IT-201. Even if you didn’t sell any shares yourself, the fund’s internal trading can generate taxable gains that you have to report.

Need Help With Your IT-201?

Between wash sales, basis tracking, and New York’s ordinary-rate treatment, capital gains get complicated fast. We’ll make sure you’re not overpaying — or missing anything.

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