State-by-State Guide to Taxes on Retirees
Tool | December 2021

Washington State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

Washington

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The Bottom Line
Flag of Washington

Mixed Tax Picture

The Evergreen State is one of nine states with no personal income tax. Therefore, retirees don't have to worry about paying taxes on their pensions, Social Security benefits or other retirement income, period.

However, sales taxes in Washington are extremely high. At 9.29%, the state's combined state and local sales tax rate is the 4th-highest in the nation.

Property taxes in Washington are more reasonable, though. In fact, the median property tax rate is very close to the national average. The state also offers two property tax relief programs just for seniors.

Income Tax Range

Washington has no state income tax. However, beginning in 2022, the state will impose a 7% tax on the sale or exchange of certain long-term capital assets if the profits exceed $250,000 annually. (Note: The constitutionality of the Washington capital gains tax is being challenged in court.)

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Washington has no income tax.

Sales Tax

6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.29%, according to the Tax Foundation.

Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Taxable (6.5% ordinary rate, plus additional 0.3% tax)
Prescription Drugs: Exempt

Real Property Taxes

In Washington, the median property tax rate is $929 per $100,000 of assessed home value.

A property tax exemption program is available for people who are 61 or older by the year before the tax is due. The homeowners must have a combined disposable income below the county set limit (county limits range from $40,000 to $58,423). The amount of the property tax reduction is based on the applicant's income, value of the residence, and local levy rates.

Seniors 60 or older who have disposable income below the county-based threshold may also qualify for the state's tax-deferral program (the thresholds range from $45,000 to $67,411). The program allows qualified seniors to defer property taxes or special assessments on their residence. 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 moves from the home.

Annual Car Taxes and Fees

An annual car registration fee based on a standard fee plus the car's weight is imposed. Additional local fees may apply.

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.