Washington State Income Tax Overview

Washington is one of a small number of states that does not impose a traditional personal income tax on wages or salaries. If you live or work in Washington, you do not file a Washington state income tax return on earned income, and there is no Washington equivalent to a Form 1040 for wages.

That said, no state income tax does not mean no taxes. Washington funds state and local government through other taxes, including sales taxes, property taxes, business taxes, and certain targeted taxes. Understanding how Washington collects revenue, and how that compares to other states, is important whether you are moving to Washington, already living in the state, or considering relocating elsewhere.

This page explains how Washington's tax system works, what taxes residents do and do not pay, and how Washington compares to other states from a tax perspective.

Does Washington Have a State Income Tax?

No. Washington does not have a state-level personal income tax on wages or salaries.

Residents of Washington do not pay state income tax on earned income such as wages, salaries, or self-employment income. There is no Washington state income tax return required for earned income, and no state income tax withholding taken from paychecks.

However, Washington does impose a separate state-level tax on certain long-term capital gains above a specified threshold. This tax is not applied to wages or salaries and is structured differently from a traditional income tax.

It is important to note that this applies only to state income taxes. Washington residents are still required to file and pay federal income taxes with the IRS, just like residents of every other state.

Washington Capital Gains Tax

Washington imposes a tax on certain long-term capital gains that exceed a specified annual threshold.

This tax generally applies to gains from the sale of certain assets, such as stocks or other investments, and does not apply to wages, salaries, or retirement income. Various exemptions and deductions may apply, depending on the type of asset and the circumstances of the sale.

The capital gains tax is calculated and reported separately from federal income taxes and is limited in scope. Not all taxpayers are subject to this tax, and many Washington residents will never owe it.

How Washington Raises Revenue

Washington's lack of a traditional personal income tax does not mean the state operates without revenue. Instead of taxing wages and salaries, Washington relies more heavily on consumption-based taxes, property taxes, business taxes, and targeted excise-style taxes to fund state and local government.

Understanding this trade-off is important, especially for people moving to Washington from high–income-tax states.

Sales and Use Taxes

Sales and use taxes are a major source of revenue for Washington.

• Washington imposes a statewide sales tax on most goods and certain services.
• Local jurisdictions may add additional sales taxes, increasing the total rate in many areas.
• Sales tax applies broadly, meaning residents tend to pay more tax when they spend, rather than when they earn.

For many households, sales taxes represent a significant portion of the overall state and local tax burden.

Property Taxes

Property taxes in Washington are imposed at the local level.

• Rates vary by county and municipality.
• Property taxes fund local services such as schools, public safety, and infrastructure.
• Property taxes are an ongoing cost for homeowners regardless of income level.

For homeowners and long-term residents, property tax considerations still matter.

Corporate and Business Taxes

While individuals are not subject to state income tax on wages, Washington does collect revenue from businesses.

• Washington does not impose a traditional corporate income tax.
• The state imposes a business and occupation (B&O) tax based on gross receipts.
• Business taxes play a central role in funding state government.

This distinction is important for business owners and entrepreneurs operating in Washington.

Other State and Local Taxes

Washington also collects revenue through:

• Fuel taxes
• Alcohol and tobacco taxes
• Real estate excise taxes
• Various state and local fees and assessments

These taxes help offset the absence of a broad-based personal income tax.

How long do you have to live in Washington to avoid taxes?

Residency for tax purposes is demonstrated by whether or not an individual has taken steps to move into Washington, and, sever residency in a previous state or country. You may still need to file a full-year, part-year, or non-resident income tax return in your current state for the year you move to Washington.

If you are considering moving to Washington, remember that personal income taxes are just part of the overall tax burden. In the state of Washington, however, the overall cost of living is relatively low compared to other high tax states such as California, New Jersey, and New York.

Bottom line: Washington does not tax wages or salaries, but it relies heavily on sales, property, business, and targeted taxes. The capital gains tax adds complexity for certain high-income households, but most residents do not pay state tax on earned income.

Last updated: January 17, 2026

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