Washington State Tax Calculator (2026)

How Washington taxes income

Washington charges no wage income tax; 7% and 9% on large capital gains. State tax is a separate calculation from your federal return rather than a share of it — Washington sets its own schedule and its own definition of taxable income.

• Wage income tax: None — no annual state return
• Capital gains tax: 7% above a $278,000 standard deduction
• Above $1 million: 9% on the portion above $1 million
• Excluded: Real estate sales and retirement account distributions

Rate figures are as of January 1, 2026 and come from the published Tax Foundation compilation; they have not been independently checked against Washington State Department of Revenue. States do change rates mid-year, so confirm a figure there before relying on it.

What catches people out in Washington

• The capital gains tax applies to long-term gains only, and the $278,000 standard deduction is per return rather than per asset. Below it, no Washington tax and no return.
• Real estate sales are excluded from the Washington capital gains tax, as are distributions from retirement accounts and certain qualifying business sales. It is a much narrower tax than "Washington taxes capital gains" suggests.
• RSUs are wage income when they vest, not capital gains — so the vest itself is outside this tax. It is the later sale of the shares, and the gain since vesting, that can fall inside it.
• Washington funds itself largely through sales tax and the business and occupation tax on gross receipts. Anyone running a business in the state has a B&O obligation regardless of profitability, which is a genuinely different model from an income tax.
• Washington taxes capital gains income only, not wages (footnote tt). The deduction shown is the capital gains standard deduction, and it is indexed annually — the 2026 adjustment was not published when the source table was compiled, so the $278,000 figure is the 2025 amount (footnote n). The rates exclude the 0.58% payroll tax funding the WA Cares long-term care programme, which employers withhold from gross wages (footnote ss).

What this estimate leaves out

Three things are deliberately outside this calculation, because they change more often than annually and a confident wrong number does real damage on a tax page.

• Personal exemptions are not applied.
• Local and city income tax is not included. New York City is the significant one nationally.
• State-specific credits, subtractions and income addbacks are out of scope and can move the result either way.

If you have income in India, Washington is where treaty relief runs out

States are not parties to the India-US tax treaty, and a state credit for "taxes paid to other jurisdictions" almost always means other US states rather than other countries.

So NRO interest, Indian rental income or a gain on Indian shares can be taxed by Washington with no credit for the Indian tax deducted at source — even though Form 1116 largely neutralises that same tax federally.

The treatment is not uniform across states, and it has been verified individually rather than assumed. The state guide sets out this state's position with the primary source behind it.

Sources

• Tax Foundation — 2026 State Income Tax Rates and Brackets
• Washington State Department of Revenue — the authority for Washington