About Washington State Taxes

Washington is one of only 9 states with no personal income tax. This makes it extremely attractive for high earners and remote workers. However, the state makes up for lost income tax revenue through other means.

How Washington Funds State Services

Without income tax, Washington relies on:

• Sales Tax: Combined state/local rates can reach 10%+ in some areas
• Property Tax: Moderate property taxes on real estate
• Business Taxes: B&O (Business & Occupation) tax on gross receipts
• Excise Taxes: Taxes on specific goods like gas, alcohol, and cannabis

Washington Tax Benefits

• No Income Tax: Keep more of your paycheck
• High Earner Friendly: No state tax on high salaries or bonuses
• Remote Worker Haven: Perfect for high-income remote workers
• No Capital Gains Tax: (Except for capital gains over $250k as of 2022)

Frequently Asked Questions

Does Washington have state income tax?

No! Washington is one of 9 states with no personal income tax. You only pay federal income tax on your wages.

How does Washington make money without income tax?

Washington relies heavily on sales tax (6.5% state rate plus local taxes), property taxes, and business taxes. The combined sales tax in some cities can exceed 10%.

Is Washington good for high earners?

Yes! Without state income tax, high earners save significantly compared to states like California (13.3%) or New York (10.9%). A $200,000 salary could save you $10,000-$26,000 annually in state taxes.

What about the capital gains tax?

Washington implemented a 7% capital gains tax on profits over $250,000 starting in 2022. This only affects a small percentage of very high earners with significant investment gains.

States With No Income Tax

Washington is one of 9 states with no personal income tax:

• Alaska - No income tax
• Florida - No income tax
• Nevada - No income tax
• New Hampshire - Only taxes dividends/interest
• South Dakota - No income tax
• Tennessee - No income tax
• Texas - No income tax
• Washington - No income tax
• Wyoming - No income tax

Washington vs. High-Tax States

Tax savings for a $100,000 earner compared to other states:

• vs. California: Save ~$6,000-$9,000/year
• vs. Oregon: Save ~$8,000-$9,000/year
• vs. New York: Save ~$6,000-$7,000/year
• vs. Minnesota: Save ~$5,000-$6,000/year

Tips for Washington Residents

• Take advantage of no income tax by maximizing earnings
• Be aware of high sales taxes when budgeting
• Consider property taxes when choosing where to live in WA
• Remote workers: WA is one of the best states for tax savings
• Monitor capital gains if you have significant investments