No income tax in Washington: what the state collects instead

A Washington household files one return, the federal Form 1040, and nothing with the state. Wages, Social Security, pensions, IRA withdrawals, interest, dividends and rent are untouched by Washington, and no city or county in the state levies an income tax either. What the state collects instead is a 6.5% sales tax that local governments push past 10% in most of the Seattle area, a property tax levied and billed by the county, two premiums withheld from wages for long-term care and paid leave, and two taxes most households never meet but should know exist: an estate tax with a $3,000,000 threshold and a capital gains excise tax on long-term gains above a deduction of roughly a quarter million dollars. The Department of Revenue runs the last two and the sales tax; the county assessor and treasurer run the property tax.

The practical effect is that Washington’s taxes are collected at the register, on the paycheck stub and in the property tax bill, never on a return. A household that moved here from a state with a 5% income tax on $150,000 of income saved $7,500 a year in state income tax. It also started paying 10% on everything it buys at a store and a property tax bill that, in King County, often runs $8,000 to $12,000 on a median house (verify). The saving is real for high earners and for retirees drawing pensions and IRAs; for a family that spends most of what it earns, a good part of it comes back out in sales tax.

Sales tax: 6.5% plus whatever the city adds

The state rate is 6.5%. Cities, counties and transit districts add their own, and the combined rate is set by where the buyer takes delivery. For the first quarter of 2026 the Department’s rate flyer shows Seattle at 10.55%, Bellevue and Tacoma at 10.30%, Everett at 9.90%, Olympia at 9.80%, Spokane at 9.10% and Vancouver at 8.80%. The highest rates in the state, 10.60%, are in Edmonds, Lynnwood, Mukilteo and Mill Creek; the lowest, 7.60%, in unincorporated Klickitat County and Goldendale. Groceries and prescription drugs are exempt. Prepared food, clothing, furniture, electronics and cars are not.

Since October 1, 2025, the tax also reaches a list of services that used to be untaxed, under ESSB 5814: advertising, information technology services, custom website development, custom software, live presentations, temporary staffing, and investigation and security services. A household will notice this mostly on a contractor’s invoice or a software subscription; a self-employed person who sells any of these services now has to collect it.

On the federal return the sales tax is what a Washington itemizer deducts in place of state income tax. The IRS optional tables estimate it from income, family size and the local rate, and Washington’s rates make the table generous; the actual tax on a car, boat or building materials is added on top. The whole state and local tax deduction, property tax plus sales tax, is capped at $40,400 for 2026. Most Washington households are nowhere near it.

Property tax: the county’s bill, with a 1% limit that is not yours

There is a state school levy, but the county assessor values the property, the county treasurer sends the bill, and the rate is the sum of every taxing district the parcel sits in: the state, the county, the city, the school district’s voter-approved levies, the fire district, the library, the port, the hospital district. Rates are expressed per $1,000 of assessed value and typically run $8 to $12 per $1,000 (verify), so a $700,000 house carries a bill somewhere between $5,600 and $8,400 depending on the address. Bills are payable in two halves, April 30 and October 31.

Washington has no homestead exemption and no cap on how fast an individual assessment can rise. The 1% limit people have heard of applies to each taxing district’s total regular levy, which may grow only 1% a year plus new construction; it does not limit any one owner’s bill, and voter-approved levies sit outside it. The one property tax break an individual can claim is the exemption for homeowners 61 and older, people with disabilities and disabled veterans, which is income-tested by county and freezes the home’s taxable value. It is explained in Property tax relief in Washington.

Two premiums on every paycheck

Washington’s workers pay two state premiums that function like payroll taxes, and both are often mistaken for an income tax on the pay stub. WA Cares, the long-term care program, takes 0.58% of gross wages with no wage cap; the worker pays all of it and the employer withholds and remits. Benefits became available July 1, 2026. Paid Family and Medical Leave takes 1.13% of wages in 2026, up from 0.92% in 2025, split 71.43% to the worker and 28.57% to the employer, so the worker’s share is about 0.81%. Neither is reconciled on any return and neither is refundable. On the federal return they differ: under IRS Revenue Ruling 2025-4 a worker who itemizes may deduct their own paid family and medical leave premium as a state income tax, within the SALT cap, while the treatment of the WA Cares premium is not settled. On $100,000 of wages they total about $1,387 a year.

The estate tax: a $3,000,000 threshold measured on the gross estate

This is the Washington tax that catches ordinary prosperous families off guard. The Department’s table sets the applicable exclusion, which is also the filing threshold, at $3,000,000 for deaths on or after July 1, 2026 and through 2027; it was $3,076,000 for deaths from January 1 to June 30, 2026. The threshold is measured on the gross estate, before debts and expenses, and the house, the retirement accounts and the life insurance all count. A couple with a paid-off Seattle house and two 401(k)s can cross it without feeling wealthy. Rates on the taxable estate for deaths on or after July 1, 2026 run from 10% on the first $1,000,000 to 20% above $9,000,000, after a year in which the top rate had been 35% under ESSB 5813; ESB 6347, signed in March 2026, rolled the rates back. There is no inheritance tax, no gift tax, and no portability of a deceased spouse’s unused exclusion, which makes planning between spouses matter more here than under the federal rules.

The capital gains excise tax

Since 2022 Washington has taxed an individual’s long-term capital gains allocated to the state at 7% above a standard deduction, $278,000 for 2025 (the 2026 figure is to come), and since tax year 2025 at 9.9% on taxable gain above $1,000,000. Real estate, retirement accounts and short-term gains are exempt. It is paid by a few thousand people a year, 6,726 returns for tax year 2025, who together paid more than $1.5 billion, and for most households it never comes up. For anyone selling a business or a large block of stock it is the most important tax in the state, and it has its own article: Washington’s capital gains tax.

What “no income tax” saves, and what it does not

Washington also charges a real estate excise tax on every sale of property, paid by the seller at graduated rates, and a motor vehicle sales tax on top of the regular sales tax on a car, 0.5% since January 1, 2026 (it was 0.3% through 2025). Neither produces a return.