Washington State Tax Guide 2025

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.

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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

Source: Sales Tax Handbook

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

• Controversial Capital Gains Tax Upheld in Washington
• Washington Approves Capital Gains Tax Increase for 2025: Who Pays?
• States With the Highest Gas Taxes