Washington does not have a state income tax
Washington State does not tax wages, salaries, or most other forms of personal income. This has been true since the state's founding and remains the case today. You will not file a state income tax return to Washington, and the state will not withhold income tax from your paycheck.
However, Washington does collect revenue through other taxes. The state uses sales tax, property tax, capital gains tax (on certain investment profits), and business taxes to fund schools, roads, and public services. Your total tax burden in Washington depends on what you buy, what property you own, and whether you have investment income — not on how much you earn from work.
If you work in Washington but live in another state, or vice versa, the rules are more complex. Most states tax residents on all income, regardless of where it was earned. Washington's lack of income tax does not override another state's right to tax you.
Key Takeaways
- Washington State collects no income tax on wages, salaries, or most personal income, and you do not file a state income tax return.
- Washington funds state services through sales tax, property tax, capital gains tax on investment profits, and business taxes instead.
- If you live in Washington but work in another state, that state may require you to file and pay income tax on your earnings.
- If you live in another state but work in Washington, your home state typically taxes all your income regardless of where you earned it.
- Federal income tax still applies to all U.S. residents and citizens, regardless of whether your state has an income tax.
How Washington funds state services without income tax
Washington relies on a sales tax as its largest source of state revenue. The state sales tax rate is 6.5 percent, but most counties add a local sales tax on top of that, bringing the total to between 8.5 and 10.5 percent depending on where you shop. This tax is added to most purchases of goods, though groceries and some other items are exempt.
Property tax is the second major revenue source. Homeowners and commercial property owners pay annual property taxes to their county or local taxing district. The rate varies by location but is typically between 0.7 and 1.0 percent of the property's assessed value per year.
Washington also collects a capital gains tax on the sale of certain long-term investments. As of 2022, the state taxes capital gains above $250,000 in a single year at a rate of 7 percent. This applies to stocks, bonds, and other investment assets held for more than one year, though it does not apply to real estate sales or retirement account withdrawals.
Business and occupation taxes, utility taxes, and excise taxes on specific goods like fuel and cigarettes round out the state's revenue. Together, these sources replace the income tax that most other states collect.
What you still owe to the federal government
Washington State's lack of income tax does not affect your federal tax obligations. You must still file a federal income tax return with the Internal Revenue Service (IRS) and pay federal income tax on your earnings. Federal tax rates and rules apply to all U.S. residents and citizens, regardless of state.
When you work in Washington, your employer will withhold federal income tax from your paycheck based on the W-4 form you complete. You will receive a W-2 form at the end of the year showing your federal wages and withholding. You then file this information with your federal return.
Self-employed people in Washington must pay federal self-employment tax (Social Security and Medicare) and file a federal return, just as they would in any other state. The absence of state income tax does not reduce these federal obligations.
Working in Washington but living in another state
If you live in a state that has an income tax and work in Washington, your home state will typically tax all your income, including what you earned in Washington. This is because most states tax their residents on worldwide income — all money earned anywhere during the year.
You will file a return in your home state and pay that state's income tax on your Washington wages. You may also be required to file a part-time or non-resident return in Washington, though Washington will not tax you since it has no income tax. Some states offer a credit for taxes paid to other states to prevent double taxation, but the rules vary.
The best approach is to contact your home state's tax authority or a tax professional to understand your specific obligations. The rules depend on whether you are a full-time resident, how long you worked in Washington, and your home state's tax treaties.
Working in another state but living in Washington
If you live in Washington and work in a neighboring state like Oregon or Idaho, that state may require you to file a return and pay income tax on your wages earned there. Most states tax income earned within their borders, regardless of where the worker lives.
You would file a non-resident or part-time return in the state where you worked, reporting only the income you earned there. You would not file a return in Washington since Washington has no income tax. Some states have reciprocal agreements that reduce or eliminate this requirement for workers who live nearby, but you should verify the current rules with the state where you work.
If you are subject to income tax in another state, you will likely have that tax withheld from your paycheck by your employer. Keep records of any taxes paid to other states, as you may be able to claim a credit on your federal return.
Remote work and multi-state income
If you work remotely for a company based in another state while living in Washington, the tax treatment depends on where your employer is located and where you actually perform the work. Generally, you are taxed by the state where the work is performed, not where the company is based.
If you perform remote work from your Washington home for an out-of-state employer, Washington will not tax you (since it has no income tax), but your employer's home state may try to tax you. This is an area of ongoing dispute between states, and the rules are still evolving. Some states have agreed not to tax remote workers who live elsewhere, while others have not.
If you have income from multiple states — for example, you worked part of the year in Oregon and part in Washington — you will need to file returns in each state where you earned income and report only the income earned in that state on each return. Keep detailed records of where and when you worked.
Frequently Asked Questions
Do I have to file a Washington State income tax return?
No. Washington has no state income tax, so you do not file a state return. You still must file a federal return with the IRS if your income exceeds the federal threshold for your filing status.
Will Washington ever add an income tax?
Washington's constitution has been interpreted to prohibit a tax on income without a statewide vote. Proposals to change this have appeared in the legislature multiple times but have not passed. Any change would require voter approval.
Does no state income tax mean I pay less in taxes overall?
Not necessarily. Washington's sales tax is higher than many states, and property taxes vary by location. Whether you pay more or less in total taxes depends on your spending, property ownership, and investment income, not just the presence or absence of income tax.
If I move to Washington from another state, do I owe back taxes?
No. Once you become a Washington resident, you are only subject to Washington taxes going forward. Your previous state may still tax income you earned there before you moved, but Washington will not tax your past income.
Are retirement account withdrawals taxed in Washington?
No. Withdrawals from 401(k)s, IRAs, and other retirement accounts are not subject to Washington State tax. You will owe federal income tax on most retirement withdrawals, but Washington does not tax them.