WASHINGTON
Return to Retiree Tax Map
NICKNAME
The Evergreen State
BOTTOM LINE: TAX-FRIENDLY
Washington is one of seven states with no broad-based personal income tax. Therefore, retirees don't have to worry about paying taxes on their pensions, Social Security benefits or other retirement income. Sales taxes run high. Property taxes account for about 30% of Washington's total state and local taxes. Properties are appraised at 100% of fair market value, though the state does offer some property-tax relief programs.
STATE SALES TAX
6.5% (food and prescription drugs are exempt); local option taxes may increase the total tax to 9.5%. Tax is 6.8% on sales and leases of motor vehicles. Effective July 1, 2012, the sale, lease or rental of a motor vehicle is subject to an additional tax of 0.3% of the selling price.
INCOME-TAX RANGE
No state income tax.
SOCIAL SECURITY
Social Security benefits are not taxed.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
Retirement income is not taxed.
PROPERTY TAXES
Property taxes account for about 30% of Washington's total state and local taxes. Properties are appraised at 100% of fair market value.
Tax breaks for seniors: A property-tax-exemption program is available to people 61 or older and to those unable to work because of a physical disability. The property must be owner-occupied, and household income must be $35,000 or less. The home would be excluded from all voter-approved excess and special levies. If household income is between $25,001 and $30,000, the owner is exempt from regular levies on $50,000 or 35% of the assessed value, whichever is greater (but not more than $70,000 of the assessed value).
Seniors 60 or older and who have income between $35,000 and $40,000 may qualify for the state’s tax-deferral program. And for those who make more than $40,000, there’s also a property-tax deferral program for homeowners with combined disposable income of $57,000 or less. The program allows homeowners to defer half of their property taxes annually. The deferred amount accrues interest until repaid. Deferrals must be repaid when the home is sold, the applicant passes away, or the home is no longer used as the primary residence.
The state's tax-deferral program works in conjunction with the exemption program. Elderly and disabled people may defer property taxes or special assessments on their residence if they meet the age, disability, ownership, occupancy and income requirements. The state pays the taxes on behalf of the claimant and files a lien to indicate the state has an interest in the property. The deferred taxes must be repaid to the state plus 5% interest when the owner dies, sells or moves from the home. Qualified people may participate in one or both of these programs, and the property must be their primary residence.
The state also has a property-tax assistance program for spouses of deceased veterans. It applies to a widow or widower of a veteran who was 100% disabled, a disabled former prisoner of war, or a veteran who died in active duty or as a result of a service-connected disability. The spouse must be 62 or older, own a primary residence in the state and have income of $40,000 or less. He or she receives a grant based on income, the value of the residence and local levy rates. The grant does not have to be repaid as long as the applicant continues to live in the residence until at least December 15 of the year it is received.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax, but estates in excess of $2 million must file a Washington estate-tax return. Tax is due only on the amount above $2 million. Estate-tax rates range from 10% to 19%.
Visit RetirementLiving.com for a complete rundown of taxes in Washington.
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