Washington State Income Tax Filing
No wage income tax; 7% and 9% on large capital gains
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
Washington income tax at a glance
Washington levies no income tax on wages or salaries, which is why there is no annual state return and nothing withheld for the state from your paycheck. For most people working in Seattle or Bellevue that is the end of it. There is, however, one important exception that catches exactly the population the region attracts: Washington taxes long-term capital gains above a standard deduction of $278,000 at 7%, rising to 9% on the portion above $1 million. Wages are outside it, and so is real estate, but a large stock sale is not — and in a technology-heavy job market where compensation arrives as RSUs, a single vest-and-sell decision can put someone over a threshold they did not know existed. Distinguishing the sale of long-held shares from ordinary wage income delivered as stock is the part worth getting right before you sell rather than after.
Washington tax rates on capital gains
These rates apply only to long-term capital gains above the standard deduction of $278,000 per return. Wages and salaries are not taxed by Washington at all.
| Rate | Taxable income |
|---|---|
| 7% | $0 – $1,000,000 |
| 9% | $1,000,000 and over |
Washington: No wage income tax; 7% and 9% on large capital gains.
Rates and thresholds as of . State legislatures change these mid-year and several states index brackets annually — check against Washington State Department of Revenue before relying on a figure.
What to watch out for 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.
Forms and deadlines
- Which form
- No individual wage income tax return; a capital gains return where the threshold is exceeded
- Deadline
- No annual wage income return. The capital gains return is due with the federal return date where one is required.
- State authority
- Washington State Department of Revenue
Federal deadlines are separate from state ones. Our US tax deadlines page covers the federal calendar, and the federal tax brackets apply on top of whatever Washington charges.
Where these figures come from
Rates, bracket floors, standard deductions and exemptions are taken from the compilation below, stated as of January 1, 2026 and built from state statutes, forms and instructions. The state authority is always the final word on your own position.
Reviewed by Teja K, CPA · last reviewed . General information, not tax advice for your situation. State tax law changes frequently — confirm before acting.
Washington tax questions
Does Washington have a state income tax?
Not on wages or salaries. There is no individual income tax return for wage earners and nothing withheld for the state. Washington does levy a separate tax on large long-term capital gains, which is a narrow tax rather than a general income tax, so the common description of Washington as a no-income-tax state is accurate for almost everyone but not universally.
How does the Washington capital gains tax work?
It applies to long-term capital gains above a standard deduction of $278,000 per return, at 7%, rising to 9% on the portion above $1 million. Real estate sales, retirement account distributions and certain qualifying small business sales are excluded. Below the deduction there is no tax and no return. Figures are as of January 1, 2026.
I have RSUs from a Seattle employer. Am I caught by this?
The vesting itself is not — RSUs are compensation when they vest and are taxed as wage income, which Washington does not tax. What can be caught is the gain between vesting and a later sale, if you hold the shares and that gain exceeds the threshold. In practice most people who sell immediately at vest have little or no capital gain and so no Washington liability. Holding then selling in a large block is the situation that needs planning.
I moved from Washington to California. What changes?
A great deal. California taxes worldwide income for residents at graduated rates up to 13.3% with no preferential treatment for capital gains, so the same stock sale can be taxed very differently depending on when relative to the move it happens. California also scrutinises the timing of large gains around a change of residency. If a significant sale and a move are both in prospect, the sequence is worth deciding deliberately.
Do I file anything with Washington at all?
For wage income, no. If you exceeded the capital gains threshold, a Washington capital gains return is required. If you run a business in the state, you will have business and occupation tax obligations, which are based on gross receipts rather than profit and apply even in a loss-making year. The Department of Revenue administers both.
We file Washington returns alongside your federal
Get your Washington return filed properly
Federal returns from $19.99, state returns from $29.99. Multi-state and part-year situations are what we do most of, so bring us the complicated year.