Washington does not impose a broad individual income tax

# Summary — read the dates

Washington is the one jurisdiction in this corpus where "no individual income tax" is true only for a defined window, and the window is closing. Three separate facts have to be held together.

• For tax year 2025 there is no broad-based Washington individual income tax on wages, salary, business income or investment income generally. No return, no withholding.
• Washington does tax individual long-term capital gains in tax year 2025, at 7 percent, plus an additional 2.90 percent on gains above $1,000,000 that first applies to tax year 2025 itself. The state characterises it as an excise tax rather than an income tax, and the Washington Supreme Court upheld it on that basis — but it is a tax on individuals measured by gains, and it is due for the year this determination covers.
• Washington has enacted a 9.90 percent individual income tax. It is imposed beginning January 1, 2028, with first returns and payments in calendar year 2029.

So: correct for TY2025 as to a broad income tax, already wrong if the question is about capital gains, and wrong from TY2028 as to income generally. This determination is scoped to tax year 2025 and must not be carried forward without re-verification.

# Washington Department of Revenue statement

The Department's "Income tax" page no longer says Washington has no income tax. It opens:

"The Washington state legislature recently enacted an income tax on individuals with an annual adjusted gross income of $1,000,000 or more."

and continues that Washington "also levies other types of taxes such as business and occupation (B&O) tax, retail sales or use tax, public utility tax, and other taxes."

This is worth noting for anyone working from older material or from a cached copy: the Department's own page changed. A source that says Washington has no income tax is now out of date, whatever its date stamp.

# The capital gains tax applies for tax year 2025

This is the part most likely to produce a wrong answer, because the tax is on individuals but is not called an income tax.

RCW 82.87.040(1) provides:

"(a) Beginning January 1, 2022, an excise tax is imposed on the sale or exchange of long-term capital assets. Only individuals are subject to payment of the tax, which equals seven percent multiplied by an individual's Washington capital gains.

(b) Beginning January 1, 2025, an additional excise tax is imposed on the sale or exchange of long-term capital assets, which equals 2.90 percent multiplied by the portion of an individual's Washington capital gains exceeding $1,000,000."

The second tier begins in the very year this determination covers. A Washington individual with more than $1,000,000 of Washington capital gains in tax year 2025 faces a combined 9.90 percent on the excess.

RCW 82.87.060(1) allows "[a] standard deduction of $250,000 per individual, or in the case of spouses or domestic partners, their combined standard deduction is limited to $250,000, regardless of whether they file joint or separate returns," adjusted for inflation under RCW 82.87.150. So the tax bites above roughly that level, not from the first dollar.

Only individuals pay it. Corporations and partnerships are not subject — see the companion determinations.

On characterisation: Douglas County Superior Court held the tax unconstitutional in Quinn v. State of Washington in March 2022; the State appealed and the Washington Supreme Court held the capital gains excise tax constitutional and valid, after which the Department "continue[d] collecting the tax." The excise characterisation is what allowed it to survive. Treating it as an income tax for Washington constitutional purposes would be wrong; treating it as irrelevant to a client with large gains would also be wrong.

# The 9.90 percent income tax, imposed from 2028

Engrossed Substitute Senate Bill 6346, chapter 238, Laws of 2026, titled "Establishing a tax on millionaires," was enacted in 2026. From the Final Bill Report:

"Beginning January 1, 2028, a 9.90 percent tax is imposed on the receipt of Washington taxable income. Only individuals are subject to payment of the tax. The first tax payments and returns begin in calendar year 2029."

The threshold works through a deduction rather than a bracket: "a taxpayer may deduct from Washington base income a standard deduction of $1 million per individual, or in the case of spouses or domestic partners, their combined standard deduction is limited to $1 million, regardless of whether they file joint or separate returns." It is adjusted for inflation "beginning with taxes collected in 2030 and every second year thereafter," and is reduced for part-year residents.

The two taxes interlock. Washington taxable income starts from federal AGI and then excludes all long-term capital gains and losses, adds back net long-term capital gains subject to Washington's capital gains tax, and adds back the capital gains standard deduction to the extent it reduced gains subject to that tax. The capital gains tax is not simply superseded.

The bill is contingent on surviving review: "If a court of final jurisdiction invalidates the new tax, the entire bill is null and void." It also specifies that the tax "is necessary for the support of the state government and its existing public institutions" and that the Department of Revenue "will continue with implementation efforts regardless of litigation." Initiative 2111 was amended to specify that it does not apply to the new tax so long as the household standard deduction is at least $1,000,000.

Effective dates: June 11, 2026 generally, with sections 1101 through 1104 effective July 1, 2026. Final passage was 27-22 in the Senate and 51-46 in the House, with the Senate concurring 27-21.

None of this creates a tax liability for tax year 2025. It does mean any statement that Washington has no individual income tax carries an expiry date.

# What Washington does impose

Washington's tax structure does not resemble a no-income-tax state that simply taxes consumption.

Business and occupation tax. RCW 82.04.220(1): "There is levied and collected from every person that has a substantial nexus with this state ... a tax for the act or privilege of engaging in business activities. The tax is measured by the application of rates against value of products, gross proceeds of sales, or gross income of the business, as the case may be." An individual carrying on business in Washington is a "person" for this purpose. B&O is measured on gross receipts, so it is owed whether or not the activity is profitable.

Also, per the Department: retail sales and use tax, public utility tax, and other taxes. Washington has no local income tax, but B&O has local counterparts in many cities.

For an individual, then, the accurate summary for tax year 2025 is: no broad income tax; capital gains excise tax if there are large long-term gains; B&O if carrying on business.

# Coverage and verification

Tax years covered: 2025, and 2025 only.

Verified on 2026-08-13 against the Washington Department of Revenue's "Income tax" and "Capital gains tax" pages as then published, the Department's 2023 news release on the Supreme Court decision, the Final Bill Report for ESSB 6346 (chapter 238, Laws of 2026) published by the Washington State Legislature, and RCW chapters 82.04 and 82.87 as published in this library.

This determination carries status "not-imposed-with-exception" because the capital gains excise tax reaches individuals within the covered year. Any consumer treating status as a boolean should not treat Washington as a no-tax jurisdiction for individuals.

Re-verification is required before this determination is applied to any year after 2025, and specifically before tax year 2028. Two things could change the answer independently: the scheduled imposition of the 9.90 percent tax from January 1, 2028, and the outcome of litigation over ESSB 6346, which by its own terms voids the entire bill if a court of final jurisdiction invalidates the tax. The RCW text relied on here was captured in the corpus snapshot fetched 2026-05-08; the 2.90 percent tier effective January 1, 2025 is present in that text.

# Sources

Washington Department of Revenue, Income tax — https://dor.wa.gov/taxes-rates/income-tax

Washington Department of Revenue, Capital gains tax — https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax

Washington Department of Revenue, "Capital Gains excise tax ruled constitutional" (2023) — https://dor.wa.gov/about/news-releases/2023/capital-gains-excise-tax-ruled-constitutional

Final Bill Report ESSB 6346, ch. 238, Laws of 2026 — https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bill%20Reports/Senate/6346-S.E%20SBR%20FBR%2026.htm

RCW §§ 82.87.040, 82.87.060, 82.04.220, as published in this library.