---
title: "Washington Capital Gains Tax: Rates and Deduction | TaxWren"
description: "Washington taxes long-term gains above $278,000 at 7%, and 9.9% above $1,000,000. Who pays, what is exempt, examples and due dates."
url: https://taxwren.com/blog/washington-capital-gains-tax
---

[State taxes](/blog/state-taxes) · Explainer

# Washington capital gains tax: rates, 2025 deduction and what is exempt

Washington taxes long-term gains above $278,000 at 7%, and 9.9% above $1,000,000. Who pays, what is exempt, examples and due dates.

By [the TaxWren team](/about#who-writes) · Updated November 5, 2026 · 3 min read

## Key takeaways

-   Washington has no tax on wages, but it taxes long-term capital gains: 7% on taxable gains up to $1,000,000 and 9.9% above that.
-   The first $278,000 of gain (the 2025 amount, adjusted for inflation) is deducted before the tax applies. Real estate and assets in certain retirement accounts are exempt.
-   It is a separate return filed with the Department of Revenue, due the same day as your federal return.

Washington taxes long-term capital gains even though it has no tax on wages. The rate is 7% on taxable gains up to $1,000,000 and 9.9% on the part above that. "Taxable" means after a standard deduction, which was $278,000 for 2025 and is adjusted for inflation each year. Only individuals owe it, and only on gains allocated to Washington.

## How is the Washington capital gains tax calculated?

Start with your federal net long-term capital gain, subtract the Washington standard deduction, then apply 7% to the first $1,000,000 of what is left and 9.9% to the rest. The upper tier is a recent addition, described in the department's notice linked below. The deduction is one amount per individual, married couple or domestic partnership.

| Long-term gain | Taxable gain | Washington tax | Share of gain |
| --- | --- | --- | --- |
| $200,000 | $0 | $0 | 0.0% |
| $300,000 | $22,000 | $1,540 | 0.5% |
| $500,000 | $222,000 | $15,540 | 3.1% |
| $1,000,000 | $722,000 | $50,540 | 5.1% |
| $1,500,000 | $1,222,000 | $91,978 | 6.1% |
| $3,000,000 | $2,722,000 | $240,478 | 8.0% |

Computed from the 2025 standard deduction of $278,000, before any charitable deduction or credit. Source: Washington Department of Revenue, Capital gains tax.

A gain in the upper tier

A gain of $1,500,000 leaves $1,222,000 after the deduction. The first $1,000,000 is taxed at 7% ($70,000) and the remaining $222,000 at 9.9% ($21,978), for $91,978.

## What is exempt from the tax?

The Department of Revenue lists these exemptions:

-   Real estate, and interests in a privately held entity to the extent the gain comes directly from real estate the entity owns directly
-   Assets held in certain retirement accounts
-   Assets taken by condemnation, or sold under imminent threat of it
-   Certain livestock used in farming or ranching
-   Depreciable trade or business assets, and assets eligible for expensing under section 179
-   Timber and timberlands, commercial fishing privileges, and goodwill from selling a franchised auto dealership

There is also a deduction for the long-term gain on selling all or substantially all of a qualified family-owned small business, and a charitable deduction for donations above the standard deduction amount, capped per person. Check the department page for the current amounts. Stocks, bonds, business interests and other investments are the main things the tax reaches.

## How does it stack on top of federal tax?

Washington's tax is separate from federal tax. The same gain is also taxed federally at the rates in the [long-term capital gains rates](/blog/long-term-capital-gains-tax-rates) guide, and high earners may owe the 3.8% [net investment income tax](/blog/net-investment-income-tax) as well.

Single filer, wages and a stock sale

A single filer in Washington earns $150,000 of wages and sells stock held for years at a $500,000 gain. Estimated federal tax on the gain is $79,420 plus $17,100 of net investment income tax. Washington taxes $222,000 of it, for $15,540. Together that is about $112,060. Our [capital gains tax calculator](/capital-gains-tax-calculator) gives the federal part; it does not include the Washington tax.

## When do I file and pay?

The return is due the same day as your federal income tax return, and payment is generally due April 15 (or the next business day when that falls on a weekend or holiday). Returns are filed electronically through My DOR or tax software, with a copy of your federal return. Penalties apply to late returns, and paying less than 80% of the tax due triggers an underpayment penalty.

An extension does not move the payment date

To extend the filing deadline you need a federal extension and must request the state extension in My DOR on or before the due date. The department says this does not extend the time to pay.

## Is there a second Washington tax on high incomes?

Yes, scheduled. A law signed on March 30, 2026 sets a 9.9% tax on Washington taxable income above $1,000,000, starting January 1, 2028. Initiative 645, on the November 3, 2026 ballot, would repeal the tax and bar state and local taxes on individual income. Our data files do not record the result yet, so check the Washington Secretary of State for the outcome. The [states with no income tax](/blog/states-with-no-income-tax) guide tracks both taxes.

This guide does not cover Washington's estate tax, sales tax or business and occupation tax. See the [state comparison](/states) for how Washington stacks up, and the [Washington take-home pay calculator](/take-home-pay-calculator/washington) for wages, which includes the state's long-term care payroll tax.

## Sources

1.  Washington Department of Revenue: [Capital gains tax](https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax) (official)
2.  Washington Department of Revenue: [New tiered rates for Washington’s capital gains tax](https://dor.wa.gov/forms-publications/publications-subject/special-notices/new-tiered-rates-washingtons-capital-gains-tax) (official)
3.  Washington State Legislature: [ESSB 6346, Establishing a tax on millionaires](https://app.leg.wa.gov/billsummary?BillNumber=6346&Year=2026) (official)

Figures come from the data files behind our calculators and update with them. See our [methodology](/methodology) and [editorial policy](/editorial-policy). This article is general information, not tax advice.

## Frequently asked questions

### Does Washington tax short-term capital gains?

The Department of Revenue describes the tax as applying to long-term capital assets, meaning gains from assets held more than a year. Short-term gains are not part of it, though they are part of your federal taxable income.

### Do I pay Washington capital gains tax on the sale of my house?

No. Real estate is exempt, and so is the gain on a privately held entity to the extent it is directly attributable to real estate the entity owns directly. Federal tax can still apply to a home sale gain above the federal exclusion.

### Is a 401(k) or IRA sale taxed?

No. Assets held in certain retirement accounts are exempt from the Washington tax.

### Do I have to file if I owe nothing?

Only individuals who owe the tax must file. If you request an extension or make a payment, the Department of Revenue says you must still file a return, even if no tax is due.

### Does a filing extension give me more time to pay?

No. You must have a federal extension and request the state one in My DOR on or before the due date, but the department says an extension does not extend the payment due date.

### What if I live outside Washington?

The tax applies only to gains allocated to Washington. The department links an interim statement on domicile for allocation, which this guide does not cover; ask the department if you moved or hold assets in two states.

## Run your own numbers

-   [Capital gains tax calculator](/capital-gains-tax-calculator)
    
    Tax on selling stocks, crypto, property or a home, and on dividends: 0/15/20% long-term and qualified dividend rates, short-term rates, 3.8% NIIT, state tax and the main home exclusion.
    
-   [Income tax calculator](/income-tax-calculator)
    
    Federal and state income tax owed for 2026.
    
-   [State income tax map](/states)
    
    Interactive map and table of 2026 income tax for all 50 states and DC, with links to each state 1099 calculator.
    

## More on state taxes

-   [States with the highest income tax in 2026](/blog/states-with-highest-income-tax)
-   [States with no income tax in 2026](/blog/states-with-no-income-tax)