Washington state taxes at a glance
| Individual income tax | No broad individual income tax on wages |
|---|---|
| Rate structure | No tax on wages. A capital gains excise tax of 7% applies to long-term gains over a standard deduction, with an additional 2.9% (9.9% total) on gains above $1 million. Businesses pay B&O gross receipts tax. |
| Tax agency | Washington Department of Revenue |
| Main individual return | None for wages. A capital gains tax return is required only if you owe the tax or request an extension. |
| Local income taxes | No local income taxes. Local sales taxes, and in some cities local B&O taxes, apply. |
| Sales tax | A 6.5% state rate plus local rates; Tax Foundation ranked Washington’s combined rate third highest in mid-2026 (about 9.6%). |
| Property tax | Assessed by counties. State law limits annual growth in the total property tax levy a taxing district can collect, and exemptions are available for qualifying seniors and disabled homeowners. |
| Retirement & Social Security | No tax on wages, Social Security or retirement income. Assets held in certain retirement accounts are exempt from the capital gains excise tax. |
Verify current-year figures: state rates, brackets, credits and filing rules change. Treat this page as a starting orientation and confirm details on the Washington Department of Revenue website.
How Washington income tax works
Washington has no income tax on wages, interest or most investment income; the Department of Revenue notes that the state’s business and occupation (B&O) tax is a gross receipts tax, not a net-income tax. Tax Foundation counts Washington among states with no wage income tax and notes it taxes capital gains income only. For most employees, that means a paycheck with federal income tax, Social Security and Medicare, plus two Washington payroll items: Paid Family and Medical Leave premiums, and the WA Cares long-term care contribution (0.58% of wages, per Tax Foundation).
The one individual-level income-type tax is the capital gains excise tax. It applies to long-term capital gains from selling stocks, bonds, business interests and other assets, but not to real estate, assets held in certain retirement accounts, or depreciable business property. The Department says the tax is 7% on the first $1 million of taxable Washington capital gains for tax year 2025 and later, and 9.9% (7% plus an additional 2.9%) on amounts above $1 million; Tax Foundation’s table shows 9%, which differs from the Department’s notice, so use the Department’s figure. The standard deduction is $278,000 for 2025 and is indexed annually, so many taxpayers owe nothing. Only individuals owing the tax, or those requesting an extension or making a payment, must file a capital gains return, electronically through My DOR.
Washington’s sales tax is 6.5% with local add-ons, and Tax Foundation’s mid-2026 ranking puts its combined rate third highest in the country. Property tax is limited by a cap on annual levy growth for each taxing district. If you are comparing states, the key point is that Washington’s tax mix depends on sales, property and business activity rather than wages; see states without income tax. For federal gains, see capital gains tax rates.
Filing your Washington return and free options
If you only earned wages, your free-filing question is purely federal: see our free filing hub and VITA. If you sold assets with gains above the standard deduction, you file a Washington capital gains return along with a copy of your federal return, due the same day as your federal return, and you pay electronically (payments can be made in advance starting with tax year 2026). A filing extension must be requested through My DOR on or before April 15, and it does not extend the payment due date.
If you own a business, check the Department’s B&O tax and sales tax pages for registration and filing. If you work in Oregon or another state, you may owe a nonresident return there; see our filing guide.
For the federal side, see our guides to free federal filing options and the complete guide to filing taxes.
Things Washington residents often ask about
- Capital gains tax is only for large gains: a standard deduction ($278,000 for 2025) applies before the tax.
- Real estate is exempt: as are assets in certain retirement accounts.
- Rate discrepancy: the Department lists 9.9% above $1 million; some third-party tables list 9%, so use the Department’s notice.
- WA Cares: a 0.58% payroll contribution funds long-term care benefits; it is separate from income tax.
- B&O tax: a gross receipts tax on businesses, not on individual wages.
Official Washington links
- Washington Department of Revenue
- Washington: capital gains tax
- Washington: income tax information
- Federation of Tax Administrators: State tax agencies
Frequently asked questions
Does Washington have a state income tax?
No tax on wages. Washington levies a capital gains excise tax on large long-term gains, and businesses pay a gross receipts B&O tax.
What is Washington’s capital gains tax rate?
7% on the first $1 million of taxable gains and 9.9% above $1 million, according to the Department of Revenue, after a standard deduction ($278,000 for 2025).
Is real estate subject to Washington’s capital gains tax?
No. The sale of real estate is exempt, as are assets held in certain retirement accounts.
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.