Washington Income Tax Calculator 2026

Why Washington has no wage income tax

Washington funds state government primarily through the 6.5% state sales tax (combined local rates often reach 10.0%–10.4% in Seattle, Tacoma, and Spokane), the Business & Occupation (B&O) tax on gross business receipts, real estate excise tax (REET) on property sales, and selective excise taxes on alcohol, tobacco, cannabis, and fuel. The absence of a wage income tax is a function of both constitutional interpretation and decades of failed ballot initiatives — including 2010's Initiative 1098, which sought a high-earner income tax and was rejected by voters 64%–36%.

Washington capital gains excise tax

Effective 2022 and upheld by the Washington Supreme Court in 2023, the capital gains tax is a 7% excise on long-term gains above the annual standard deduction (~$270,000 for 2026). It applies only to Washington residents (and on Washington-sited tangible personal property for non-residents) and exempts:

• Real estate, regardless of size of gain.
• Qualified retirement account assets (401(k), IRA, pension distributions).
• Livestock, timber, and certain agricultural assets.
• Qualified family-owned small business stock under the annual gross revenue limit.
• Charitable donations directly from gains (above-the-line deduction).

Washington Cares Fund payroll deduction

WA Cares began collecting in July 2023 at 0.58% on all covered W-2 wages (no wage cap), funding a long-term care benefit of up to $36,500 (indexed) per eligible Washington resident. Employees who held qualifying private long-term care insurance as of November 1, 2021 could file a one-time permanent exemption; that window has closed. The deduction shows on Washington paychecks as 'WA Cares' or 'LTSS' withholding.

Out-of-state employees of Washington employers can apply for an exemption, and non-resident workers (those who do not maintain a primary residence in Washington for at least 500 hours per year) are not subject to WA Cares. Cross-border commuters from Oregon and Idaho should confirm their status with payroll.

Washington property tax

Washington's effective property tax rate of approximately 0.98% sits close to the national median, but King County, Snohomish County, and parts of Pierce County frequently exceed 1.2% due to school-district levies and voter-approved bonds. Washington uses a 1% growth-limit law (Initiative 747) that caps annual increases in regular property tax revenue at 1% before new construction — but it does not cap reassessment, so individual bills can rise much faster than 1% as market values appreciate.

The Senior Citizen and Disabled Persons Property Tax Exemption can reduce or freeze property tax for filers age 61+ (or disabled) under the income limit, which varies by county. The Property Tax Deferral program allows qualifying seniors to defer property tax as a lien on the home, payable on sale or estate settlement.

Sales tax and the Seattle premium

Combined sales tax in Seattle is 10.35% (6.5% state + 3.85% local), among the highest large-city rates in the country. Seattle also imposes a payroll expense tax ('JumpStart Seattle') of 0.7% to 2.4% on the highest-paid employees of large companies — paid by the employer, not the employee, but worth understanding as it indirectly affects compensation structuring. There is no city or county income tax on individuals.

Washington tax planning tips

• Time large capital gains carefully relative to the WA cap-gains $270,000 deduction. Spreading sales across calendar years can keep multiple years under the threshold.
• Use real estate over equity for major capital gain events when possible — real estate is fully exempt from the WA capital gains tax.
• Max 401(k), HSA, and traditional IRA. Federal savings only, but with no state income tax the marginal value is purely federal.
• Consider Roth conversions in low-income years. With no state tax, the cost of converting in Washington is purely federal.
• If you receive RSU grants subject to vesting in another state, confirm Washington sourcing — gains accrued in another state before relocation may be partly taxable there.