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
Be a smarter, better informed investor.
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
- Gasoline: $0.45 per gallon
- Diesel: $0.45 per gallon
Source: Sales Tax Handbook
Washington taxes on alcohol and tobacco
Product | Tax Amount |
Cigarettes | $3.03 per pack |
Other tobacco products | 95% of wholesale |
Source: Sales Tax Handbook
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.
Read More
-
I'm a Government Employee and Need to Get By Until the Shutdown Ends. What Can I Do?The second-longest shutdown in history is leaving many federal workers with bills due and no paycheck to cover them. Here's what you can do to get by.
-
Grant Cardone Tells Us the Biggest Retirement Mistake You Can MakeThe entrepreneur, real estate investor and motivational speaker tells us why people should never stop working.
-
Social Security Tax Limit Rises Again: Who Pays More in 2026?Payroll Taxes The Social Security Administration has announced significant changes affecting millions as we approach a new year.
-
Three Critical Tax Changes Could Boost Your Paycheck in 2026Tax Tips The IRS predicts these tax breaks may change take-home pay in 2026. Will you get over $1,000 in tax savings?
-
The Rubber Duck Rule of Retirement Tax PlanningRetirement Taxes How can you identify gaps and hidden assumptions in your tax plan for retirement? The solution may be stranger than you think.
-
RMDs, Roth, and SS: Test Your Knowledge of Retirement Tax RulesQuiz Don't let the IRS catch you off guard. Take our quiz to reveal common retirement tax rules that could save (or cost) you thousands.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
