Washington’s capital gains excise tax
Washington has no income tax on wages, but it taxes long-term capital gains with an excise: 7% on annual long-term gains above an inflation-adjusted standard deduction, plus an extra 2.9% on taxable gains above $1 million, for 9.9% at the top from 2025. Short-term gains are not taxed by it.
The exemptions are broad: real estate, assets in retirement accounts, livestock and timber, among others, so selling a house or a rental in Washington does not trigger this tax, though real estate excise tax applies at closing. A move to $1.2 million of taxable gains from $900,000 adds $26,800 of excise.
Washington uses annual taxable gains after exemptions and deductions
Washington’s Department of Revenue explains that the first $1 million of taxable Washington long-term capital gains is taxed at 7%, with an additional 2.9% on the amount above $1 million. The tiered rates begin with tax year 2025 and continue in later periods. The $1 million boundary applies to the annual taxable Washington amount, not each sale independently.
The capital-gains guidance excludes real estate and assets held in specified retirement accounts, among other categories. It also adjusts deductions annually and provides credits under stated conditions. This calculator therefore requests prepared Washington taxable amounts after exemptions and approved deductions instead of inserting a prior-year deduction labeled as a 2026 value.
Use the Washington mode to compare the excise calculation before credits in both annual scenarios. If credits change, enter complete prepared liabilities instead. A confirmed increase from $900,000 to $1.2 million of taxable Washington gains adds $26,800 before credits: $7,000 in the first tier and $19,800 above it. A taxable federal home-sale gain does not imply Washington capital-gains excise tax on that real-estate sale.
Washington preparation checklist
- Washington allocation and exempt asset review
- Current annual deduction before entered taxable amounts
- Annual tier crossing and applicable credits