Tax in Washington: a complete guide
From state income tax to property and sales tax, this article explains what you need to know to manage your taxes if you live in Washington.
Washington state income tax
Washington is one of the few states in the US that does not have a personal or corporate state income tax.
However, unlike other states with no personal income tax, Washington State does have a capital gains tax. This means that if you sell certain assets, such as stocks, bonds, or real estate, you may have to pay a tax on your profit.
In 2021, Washington State Legislature deemed a seven percent tax on the sale or exchange of long-term capital assets, including stocks, bonds, and other investments.
Several deductions and exemptions may reduce the taxable amount of long-term gains, including an annual standard deduction of $250,000 per individual. The combined standard deduction for spouses or domestic partners is limited to $250,000 whether they file joint or separate returns.
It’s worth remembering that while residents of Washington will not pay state income tax, they may still have to pay federal income tax. In 2023, seven different federal income tax brackets dictate how much you’ll owe each tax year.
For single filers, these include:
| Income bracket | Tax owed |
|---|---|
| Income bracket | Tax owed |
| $0 - $11,000 | 10 percent of taxable income |
| $11,001 – $44,725 | $1,100 plus 12 percent of the excess over $11,000 |
| $44,726 - $95,375 | $5,147 plus 22 percent of the excess over $44,725 |
| $95,376 - $182,100 | $16,290 plus 24 percent of the excess $95,375 |
| $182,101 - $231,250 | $37,104 plus 32 percent of the excess over $182,100 |
| $231,251 - $578,125 | $52,832 plus 35 percent of the excess over $231,250 |
| $578,126 and over | $174,238.25 plus 37 percent of the excess over $578,125 |
For people who are married and filing jointly, these include:
| Income bracket | Tax owed |
|---|---|
| Income bracket | Tax owed |
| $0 - $22,000 | 10 percent of taxable income |
| $22,001 – $89,450 | $2,200 plus 12 percent of the excess over $22,000 |
| $89,451 - $190,750 | $10,294 plus 22 percent of the excess over $89,450 |
| $190,751 - $364,200 | $32,580 plus 24 percent of the excess $190,750 |
| $364,201 - $462,500 | $74,208 plus 32 percent of the excess over $364,200 |
| $462,501 - $693,750 | $105,664 plus 35 percent of the excess over $462,500 |
| $693,751 and over | $186,601.50 plus 37 percent of the excess over $693,750 |
Washington also does not have a corporate income tax. However, it does levy a gross receipts tax. This is a tax on a company’s gross sales.
If you’re unsure about filing your taxes, a financial advisor can help. Here, they can review your income sources and develop a unique tax strategy just for you.
Washington capital gains tax
Washington State imposes capital gains tax at state level.
In 2021, the state introduced a long-term capital gains tax rate of 7% on profits exceeding $250,000 from stock and bond sales.
According to the Washington government website, there are several deductions and exemptions available that may reduce the taxable amount of long-term gains, including an annual standard deduction per individual. The deduction is adjusted for inflation annually.
This tax has proved controversial, with organizations seeking to repeal it, which generated nearly $900 million in its first year.
Alongside your state tax obligations, you also have to pay federal capital gains tax if you are eligible. This is charged at different rates depending on your filing status, taxable income, and how long you held the asset before selling it.
Washington sales tax
Washington State has a state sales tax rate of 6.50 percent.
Like other states, local government can add their own sales tax on top of the state rate. The maximum they can add is 4.10 percent. This brings the maximum sales tax you may pay in Washington to 10.60 percent.
Certain items are exempt from sales tax, this includes:
Groceries
Prescription drugs
Newspapers
Precious metals & bullion
Washington does not have an annual sales tax holiday.
However, in 2022, it held a one-time sales tax holiday when shoppers did not have to pay sales tax on items under $1,000, including clothing, school supplies, computers, and energy-efficient appliances, for three days in September.
Washington property tax
In Washington state, all real and personal property is subject to tax unless specifically exempted by law.
In Washington, county assessors and treasurers administer property tax. The county assessor will value or assess your property while the county treasurer collects property tax.
The state does impose a regular levy rate limit on property tax. The annual rate limit of property taxes that may be imposed on an individual parcel of property to one percent of its true and fair value. Since tax rates are stated in dollars per $1,000 of value, the one percent limit is the same as $10 per $1,000 and is often referred to as the $10 limit.
Washington motor tax
Washington residents must pay the standard sales tax rate of 6.5 percent when buying a vehicle.
In addition, residents must also pay 0.3 percent "motor vehicle sales/lease tax," bringing the total tax levied on a vehicle to 6.8 percent.
Washington estate tax
Washington does impose estate taxes if an estate passes a certain threshold.
For 2023, estate tax must be paid if an estate passes $2,193,000. The tax rate is graduated, starting at 10 percent and rising to a maximum of 20 percent.
| Taxable amount | Tax rate |
|---|---|
| Taxable amount | Tax rate |
| $0 – $1 million | 10 percent |
| $1 million – $2 million | 14 percent |
| $2 million - $3 million | 15 percent |
| $3 million - $4 million | 16 percent |
| $4 million - $6 million | 18 percent |
| $6 million - $ 7 million | 19 percent |
| $7 million - $9 million | 19.5 percent |
| $9 million and over | 20 percent |
Washington does not have an inheritance tax.
Washington retirement tax
When it comes to taxes, Washington is considered a tax-friendly state for retirees.
As Washington does not levy state income tax, retirees in the state do not pay income tax from Social Security, retirement accounts or pensions.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.