topic Paying state taxes for IRA distributions in State tax filing

Paying state taxes for IRA distributions

jspitzle — Mon, 09 Mar 2026 08:15:07 GMT

My IRA has incurred capital gains from several states for many years. Now that I've started to take distributions from the IRA, how do I allocate and pay the various states capital gains that have accumulated over many years?

Re: Paying state taxes for IRA distributions

fanfare — Sat, 12 Mar 2022 18:29:59 GMT

You don't have to worry about this.

IRA is tax-deferred.

That means you don't pay capital gains taxes.

Re: Paying state taxes for IRA distributions

VolvoGirl — Sat, 12 Mar 2022 18:36:36 GMT

IRA withdrawals are taxed at ordinary income tax rates. You don't report or track any transactions, buys, sells, dividends, interest, capital gains etc. Everything is tax deferred. That's one of the benefits of using an IRA or 401K. Except that when you take a distribution it all comes out taxable at your current rate or may push you into a higher tax bracket.

When IRAs first started it was assumed that people would have lower income and be in a lower tax rate when they started taking distributions in retirement. But it doesn't always work out that way.

Re: Paying state taxes for IRA distributions

jspitzle — Sat, 12 Mar 2022 18:37:29 GMT

Taxes need to be paid for IRA distributions

Re: Paying state taxes for IRA distributions

VolvoGirl — Sat, 12 Mar 2022 18:38:55 GMT

Yes? Right you need to pay federal and state taxes on it. Unless it was in a ROTH IRA.

Re: Paying state taxes for IRA distributions

jspitzle — Sat, 12 Mar 2022 18:43:10 GMT

For IRA distributions, do I need to pay state taxes to each state that had capital gains over time? If yes, how do I allocate? thanks

Re: Paying state taxes for IRA distributions

DoninGA — Sat, 12 Mar 2022 18:46:19 GMT

@jspitzle wrote:

For IRA distributions, do I need to pay state taxes to each state that had capital gains over time? If yes, how do I allocate? thanks

No you do not. You may have federal taxes withheld from the distribution and you can have state income taxes withheld from the distribution. The state taxes withheld will only be for your state of residence and you have to tell the IRA plan administrator that you want to have state taxes withheld and the percentage amount.

Re: Paying state taxes for IRA distributions

jspitzle — Sun, 13 Mar 2022 03:32:49 GMT

Thank You!