Washington State Capital Gains Tax FAQ
Washington State Capital Gains Tax
Frequently Asked Questions
Q: Is there a new Capital Gains Tax in Washington?
A: Senate Bill 5069 establishes a flat-rate tax for capital gains incurred on the sale of long-term assets held by Washington residents. The initial payments are due to the State Department of Revenue by April 18, 2023 — the same day as the federal tax filing deadline.
Q: How does the Washington Capital Gains Tax work?
- A: Passed in 2021 and fully enacted this March, the Bill imposes a 7 percent tax rate on individuals’ profits arising from the sale or transfer of long-term assets, such as businesses, stocks and bonds.
- Taxable amounts are delineated by each calendar year and apply to long-term capital gains incurred from January 1, 2022 onward.
- Payments are due before April 18 each year and reflect the profits realized from the sale of assets during the prior taxable period.
- The standard deduction of $250,000 per annum applies for individuals and married households. Only the capital gains in excess of the standard deduction are subject to the tax.
- For example, a net profit of $300,000 from the sale of bonds in 2022 translates to a taxable capital gain of $50,000 in 2023.
- The law also provides up to a $100,000 tax abatement on top of the standard deduction, if the taxpayer contributed at least $250,000 to Washington-based charities during the year.