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Washington Capital Gains Tax

Washington imposes a capital gains excise tax on long-term gains above a threshold. This is not an income tax.

Why It Matters

Understanding how Washington taxes capital gains helps you estimate the true cost of selling investments, plan asset sales, and compare after-tax returns across states.

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Open Washington Capital Gains Tax Calculator →

How It Works

The calculator computes both your federal capital gains tax and Washington state tax to show your combined burden. Enter your gain amount, other income, and filing status.

Example

Single filer • $10,000 long-term gain • $100,000 other income • 2025

Federal

$1,500

15.00% rate

Washington

$0

No state tax

Total

$1,500

15.00%

Resources

Washington Capital Gains Tax Information

Official Washington tax information relevant to capital gains, including rates, forms, and filing resources.

Source: Washington Tax Authority

Frequently Asked Questions

Does Washington tax capital gains?

Yes. Washington imposes a 7% excise tax on long-term capital gains above the standard deduction threshold (~$286,000 for 2026), plus 9.9% on gains over $1 million. Real estate and retirement accounts are exempt.

Is Washington's capital gains tax an income tax?

No. It's legally classified as an excise tax, not an income tax. The Washington Supreme Court upheld this classification in 2023. It applies only to long-term gains above the threshold.

What is exempt from Washington's capital gains tax?

Real estate sales, retirement account distributions, livestock/timber, and depreciable business assets are all exempt from the excise tax.

What is the combined capital gains tax rate in Washington?

For gains above the threshold: up to 33.7% (federal 20% + NIIT 3.8% + state 7%). For gains over $1M: up to 33.7%.

Key Terms

1031 Exchange
A tax-deferred swap of one investment property for another, allowing you to postpone paying capital gains tax.
Capital Asset
Property you own for investment or personal use that can generate a capital gain or loss when sold.
Capital Gain
The profit from selling a capital asset for more than you paid for it.
Capital Loss
The loss from selling a capital asset for less than your cost basis.
Cost Basis
The original value of an asset for tax purposes, usually the purchase price plus certain adjustments.
Filing Status
A category that determines your tax bracket thresholds, standard deduction, and eligibility for certain credits.
Holding Period
How long you owned an asset before selling it, which determines whether gains are taxed at short-term or long-term rates.
Long-Term Capital Gains
Profits from selling assets held for more than one year, taxed at preferential federal rates of 0%, 15%, or 20%.
Marginal Tax Rate
The tax rate applied to your next dollar of income — the highest bracket you've reached.
Modified Adjusted Gross Income
Your adjusted gross income (AGI) with certain deductions added back, used to determine eligibility for tax benefits and surtaxes like the NIIT.
Net Investment Income Tax
A 3.8% federal surtax on investment income for individuals with MAGI above $200,000 (single) or $250,000 (married filing jointly).
Short-Term Capital Gains
Profits from selling assets held for one year or less, taxed as ordinary income at rates up to 37%.
Step-Up in Basis
When an inherited asset's cost basis is reset to its fair market value at the date of the owner's death, eliminating all unrealized capital gains.
Taxable Income
Your gross income minus deductions — the amount used to determine which tax bracket you fall into.
Wash Sale Rule
An IRS rule that disallows a capital loss deduction if you buy a substantially identical security within 30 days before or after the sale.

Next review: 2027-01-15 • Applies to tax year: 2025