No, Washington does not have an income tax. The state collects nothing on your wages, salaries, retirement distributions, or business profits, and you do not file a state income tax return. What Washington relies on instead is a mix of sales tax, property tax, mandatory payroll deductions for two state benefit programs, a real estate excise tax when property changes hands, a gross receipts tax on businesses, and — for a small number of high earners — a 7% excise tax on large long-term capital gains.1Washington Department of Revenue. Income Tax
Why Washington Has No Income Tax
This is not a policy choice the legislature can reverse on its own. Article VII, Section 1 of the Washington State Constitution requires property taxes to be applied uniformly, and in a line of rulings dating to the 1930s the state Supreme Court has treated personal income as a form of property. A graduated income tax would violate that uniformity requirement, so introducing a traditional income tax would almost certainly require a constitutional amendment. Voters have rejected that path multiple times.
The practical result for you: your employer withholds federal income tax from your paycheck, but no portion goes to a state general income tax fund, and there is no annual state return to file.
What Comes Out of Your Paycheck
Even without an income tax, you will see two state deductions on a Washington paycheck. They fund benefit programs rather than the general treasury, but they still reduce your take-home pay.
Paid Family and Medical Leave
Washington’s Paid Family and Medical Leave (PFML) program pays you when you take time off for a serious health condition, to bond with a new child, or to care for a family member. For 2026, the total premium is 1.13% of your gross wages, up to a wage base of $184,500.2Employment Security Department Washington State. Paid Family and Medical Leave Premium Rate Increases to 1.13% in 20263WA.gov. Paycheck Insert 2026 – Paid Family and Medical Leave You pay about 71.43% of that premium and your employer pays the rest. On a $60,000 salary, your share runs roughly $484 a year. The maximum weekly benefit for workers using the program in 2026 is $1,647.
WA Cares Fund
The WA Cares Fund is a state-run long-term care insurance program. You contribute 0.58% of your gross wages, with no salary cap, and in return earn access to a long-term care benefit of up to $36,500 when you need it.4WA Cares Fund. How the Fund Works This premium is paid entirely by you; the employer withholds it but does not chip in.5WA Cares Fund. The Employer’s Role in WA Cares
You may qualify for an exemption if you live outside Washington, are an active-duty service member or the spouse of one, or are a veteran with a disability rating of 70% or higher. Workers on non-immigrant visas became automatically exempt as of January 1, 2026, though they can opt back in by notifying their employer in writing.6WA Cares Fund. Exemptions The separate opt-out for workers with private long-term care insurance closed to new applicants at the end of 2022; previously approved exemptions are permanent.
Sales Tax
Sales tax is one of the largest replacements for an income tax in Washington. The state base rate is 6.5% on most retail purchases. Cities and counties add their own local taxes, pushing combined rates to roughly 7% to 10.6% depending on where you shop.7Washington Department of Revenue. Local Sales and Use Tax Rate Table
Unprepared groceries — fruits, vegetables, meat, bread, and similar staples — are exempt.8Washington Department of Revenue. Retail Sales Tax Prepared food, soft drinks, and dietary supplements are taxable. A parallel “use tax” applies at the same rate when you buy taxable goods from out of state, such as online purchases, that were not charged Washington sales tax at the point of sale.
Property Tax
If you own a home, your county bills you property tax based on assessed value. The average effective rate across Washington is about 0.75% of market value, which falls in the lower half nationally. Your actual bill depends on levy rates set by your county, city, school district, and other local taxing districts.
Washington offers relief for seniors age 61 and older, disabled homeowners, and veterans. Eligibility depends on your household income and county. For tax years 2024 through 2026, income thresholds range from roughly $30,000 in lower-cost counties to $60,000 or more in high-cost ones such as King County.9Washington Department of Revenue. Income Thresholds for Senior Citizen and Disabled Persons Property Tax Exemption and Deferral for Tax Years 2024-2026 Qualifying homeowners can receive partial or full exemptions from regular property tax levies, or defer their taxes until the home is sold.
Capital Gains Excise Tax
This is the one Washington tax that looks and feels like an income tax to the people who owe it, though the courts have classified it differently. Under RCW 82.87.040, individuals pay a 7% tax on Washington long-term capital gains that exceed the annual standard deduction. Starting January 1, 2025, an additional 2.9% surcharge applies to the portion of an individual’s capital gains above $1,000,000, so the combined rate on those high-dollar gains reaches 9.9%.10Washington State Legislature. Washington Code RCW 82.87.040 – Tax Imposed, Long-Term Capital Assets
Most people never owe it. The 2025 standard deduction is $278,000 per individual, or $278,000 combined for married couples and registered domestic partners regardless of whether they file jointly or separately.11Washington Department of Revenue. Capital Gains Tax The figure is adjusted for inflation each year.12Cornell Law School. Washington Administrative Code 458-20-300 – Capital Gains Excise Tax Overview and Administration
Several major asset categories are exempt under RCW 82.87.050. Real estate sales are excluded, including the sale of your home. Gains inside 401(k) plans, IRAs, 403(b) accounts, and similar tax-deferred retirement accounts are exempt. So are gains from livestock, timber, and commercial fishing. For interests in privately held entities, the portion of a gain directly attributable to real estate owned by the entity is also exempt.13Washington State Legislature. Washington Code RCW 82.87.050 – Exemptions
If your gains exceed the deduction, you file electronically with the Department of Revenue by the same due date as your federal return.12Cornell Law School. Washington Administrative Code 458-20-300 – Capital Gains Excise Tax Overview and Administration
Real Estate Excise Tax When You Sell
Selling real estate triggers a Real Estate Excise Tax (REET) based on the selling price. The capital gains tax exempts real estate, but REET applies to essentially every sale, including your primary residence. The state portion uses graduated rates that work like federal income tax brackets — you pay each rate only on the portion of the price that falls in that tier:14Washington Department of Revenue. Real Estate Excise Tax
- $525,000 or less: 1.10%
- $525,001 to $1,525,000: 1.28%
- $1,525,001 to $3,025,000: 2.75%
- Over $3,025,000: 3.00%
Many cities and counties add a local REET, typically 0.25% to 0.75% on top. The Department of Revenue publishes a lookup for the combined rate at your address.
If You Own a Business
Washington has no corporate income tax. In its place, businesses pay the Business and Occupation (B&O) tax under RCW 82.04, which is calculated on gross receipts rather than profit. Costs like labor, rent, and materials are not deducted, so a business operating at a loss can still owe B&O tax.
Rates depend on activity: 0.471% for retailing, 0.484% for wholesaling and manufacturing, and 1.5% for services and most other activities.15Washington Department of Revenue. Business and Occupation (B&O) Tax A small business credit reduces the burden at the low end, and businesses with annual gross income below $125,000 do not need to file a return.
How No State Income Tax Affects Your Federal Return
The State and Local Tax (SALT) deduction on your federal Schedule A lets you deduct either state income tax or state and local sales tax, plus property tax, up to a cap. Because you pay no state income tax, you take the sales tax option instead — whichever version, sales or income, produces the larger deduction is the one federal rules let you claim.
For the 2026 tax year, the SALT cap is $40,400, or $20,200 for married filing separately, raised from the prior $10,000 cap under the One Big Beautiful Bill Act. The higher cap means Washington homeowners with substantial property tax bills can recover more of those costs federally. The cap phases down for taxpayers with modified adjusted gross income above $505,000. If you take the standard deduction rather than itemize, none of this applies to you.