Washington Tax: Guide to Income, Sales, Property, and Retirement Taxes

Washington state flag for Washington state tax guide

(Image credit: Getty Images)

Navigating the complexities of state taxes can be daunting, but understanding Washington state's tax landscape is essential for residents and newcomers alike.

In this guide, we'll explore key components of The Evergreen State's tax system, from income and sales taxes to property taxes and retirement benefits.

Washington state tax: Overview

Washington is one of only nine states with no income tax, which is a big draw for many residents. Property taxes are fairly average, but where the state stands out is its high sales tax rate.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

The state's controversial capital gains tax was upheld by the Supreme Court, adding a new twist to the tax story. How much you pay often depends on the kind of income you have and where you live, making it a bit of a mixed bag for residents.

As Kiplinger has reported, the state's capital gains tax recently increased. For more information, see Washington Approves Capital Gains Tax Increase for 2025.

[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]

Washington state Income tax

There is no state personal income tax in Washington. However, unlike other states with no personal income tax, Washington State now has a capital gains tax of 7%.

Washington state retirement taxes

Pensions: Not taxable
401(k) and IRA Distributions: Not taxable
Social Security: Not taxable

Washington sales tax

Washington's state sales tax rate is 6.5%. Localities can add up to 2.46% to that, with the average combined rate at 8.96%, according to the Tax Foundation.

Groceries: Exempt
Prescription drugs: Exempt
Clothing: Taxable

How much are property taxes in Washington?

In Washington, the average effective property rate is 0.76%.

Washington Property Tax Breaks for Retirees

Property tax exemption program: Qualified homeowners may have their property taxes reduced. Additionally, this program can prevent excess taxes if the market value increases by freezing the home's taxable value. To qualify for this program, you must meet specific requirements by the end of the assessment year.

Must be at least 61 years of age (at least 57 if the surviving spouse of a qualified participant)
Must own your home
Must have lived in the home for more than half the year
Combined disposable income must not exceed the county threshold.

Property tax deferral: Adults 60 or older with disposable income below the county-based threshold may also qualify for the state's tax deferral program.

The program allows qualified homeowners to defer property taxes or special assessments on their residences.

The state pays the taxes on behalf of the homeowner and files a lien to indicate that the state has an interest in the property. The deferred taxes, plus 5% interest, must be repaid to the state when the owner passes away, sells, or otherwise moves from the home.

For more information on the programs above, see Property tax exemptions and deferrals

Washington gas tax

rendering of a yellow car against a yellow background

Gasoline: $0.45 per gallon
Diesel: $0.45 per gallon

Source: Sales Tax Handbook

Washington taxes on alcohol and tobacco

Swipe to scroll horizontally

Product	Tax Amount
Cigarettes	$3.03 per pack
Other tobacco products	95% of wholesale

Source: Sales Tax Handbook

Swipe to scroll horizontally

Product	Tax Amount
Wine	$0.87 per gallon
Beer	$0.26 per gallon
Liquor	$14.27 per gallon

Source: Sales Tax Handbook

Washington estate and inheritance taxes

An estate tax is imposed by Washington on estates exceeding $2.193 million (the exemption threshold is subject to adjustment each year for inflation).
Tax rates range from 10% to 20%.
The state offers an additional $2.5 million deduction for family-owned businesses valued at less than $6 million.

There is no inheritance tax in Washington.

Washington capital gains tax

Washington's capital gains tax is 7% on the sale or exchange of individual long-term capital assets (e.g., stocks, bonds, business interests, etc.) that exceed $250,000. Only the portion of gains above the threshold is subject to the tax, and some assets are exempt from the tax.

The capital gains tax was challenged in court, but the Washington Supreme Court upheld the capital gains tax in March 2023 as a valid excise tax under the state's constitution.

As mentioned, the levy was recently increased for some for 2025.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.