Washington does not levy a state income tax on individual wages and salary. A 7% capital gains tax applies to gains exceeding $270,000.
Tax Overview
Washington does not impose a traditional income tax on wages or earned income. However, since 2022, the state levies a 7% tax on net long-term capital gains exceeding $270,000 (indexed for inflation), which was upheld by the Washington Supreme Court in 2023. The state generates most of its revenue through sales taxes, the Business & Occupation (B&O) tax on gross business receipts, and property taxes.
Other Taxes in Washington
7% tax on net long-term capital gains exceeding $270,000 (2024 threshold, indexed annually). Real estate, retirement accounts, and certain small business sales are exempt.
6.5% state sales tax rate, plus local taxes that can bring the combined rate up to 10.4% in some areas. Groceries are exempt from state sales tax.
Business & Occupation tax on gross receipts (not profits): 0.471% for retailing, 0.484% for manufacturing/wholesaling, 1.5% for services. This is the primary business tax in Washington.
Property taxes are levied by counties, cities, and special districts. Washington limits regular levy increases to 1% per year and offers exemptions for seniors and disabled persons.
A graduated real estate excise tax (REET) on property sales, ranging from 1.1% to 3.0% depending on the sale price, with additional local REET in some areas.
Federal Taxes Still Apply
While Washington does not levy a state income tax on wages, residents are still subject to federal income tax, FICA taxes (Social Security and Medicare), and self-employment tax. Use our Federal Income Tax Calculator to estimate your federal tax liability.