What is the new 7% capital gains tax in Washington state?
It is a state excise tax on the profit made from selling long-term investments. It applies specifically to gains that are connected to — allocated to — Washington state.
What sales can generate this tax obligation?
The tax applies to long-term capital assets if the profit is linked with Washington.
The items covered:
- Stocks & bonds and mutual funds
- Cryptocurrency held for more than one year
- Selling the ownership interest in a business
- Valuable physical items, like art / collectibles
How allocation works: The rules vary with what you sold. For intangible assets like stocks, it generally matters where you lived — the domicile — and when you sold them. For physical items, it matters where the item was located at the time of the sale.
What are the current rate tiers and the standard deduction?
For the 2025 tax year — filed in 2026 — Washington has introduced a 2-tier system in accordance with how much profit you made after taking the deduction.
Table reflects Washington Department of Revenue data.
What is excluded from Washington’s capital gains excise tax?
Washington completely removes several categories from this tax calculation as exemplified below.
- Real estate — covering your home
- Assets inside retirement accounts — like 401(k)s or IRAs
- Most depreciable business assets — covering Section 179 property
- Timber & timberlands
- Commercial fishing privileges
- Specific livestock sales
- Property sold under threat of condemnation
Do I need to file if I don’t owe anything?
Often, only individual taxpayers who owe this tax should file. Yet, an extension request or an estimated payment can still establish a filing requirement.
Need Washington capital gains support from Clarity Tax Group?
If you have an upcoming major sale, let us manage the details professionally for you. Our team can confirm what is taxable & organize the documentation and prepare the state return. Reach out to us today to book a call.