Washington has no state income tax, but you still pay other state taxes

Washington does not charge a state income tax on wages, salaries, or most other forms of personal income. This is one of the few states in the country with this rule. However, Washington residents and businesses do pay other state taxes — sales tax, property tax, capital gains tax, and excise taxes — so the absence of income tax does not mean no state taxes at all.

The state has relied on sales tax as its primary revenue source since 1935. Washington's combined state and local sales tax rate ranges from 6.5% to 10.25% depending on where you live, because cities and counties add their own local sales taxes on top of the state rate. This means your actual tax burden depends partly on your location within the state.

Key Takeaways

  • Washington collects no state income tax on wages, salaries, interest, or dividends from most residents.
  • Sales tax is the main state tax you pay, ranging from 6.5% to 10.25% depending on your city and county.
  • Property owners pay property tax to their county, and rates vary significantly by county and local jurisdiction.
  • Washington has a capital gains tax of 7% on the sale of long-term capital assets worth over $250,000, effective since 2022.

What types of income are not taxed in Washington

Washington does not tax wages, salaries, tips, self-employment income, interest, dividends, or rental income at the state level. This applies to most residents regardless of income level. If you work in Washington or live in Washington, you do not file a state income tax return and do not owe state income tax on these sources.

The federal government still taxes all of these income types, so you will still file a federal return and owe federal income tax. Some cities outside Washington — particularly those near the state border — may have local income taxes, but Washington state itself does not. If you receive income from another state or country, check that state or country's tax rules separately.

Sales tax: the tax you see at checkout

Washington's state sales tax rate is 6.5%, but most people pay more because cities and counties add local sales taxes on top. The combined rate in your area depends on your specific city and county. For example, Seattle residents pay 10.25% total sales tax, while residents in some rural counties pay closer to 7% or 8%.

Sales tax applies to most goods you buy in stores, but not to groceries, prescription medications, or most medical equipment. Restaurant meals, prepared foods, and alcohol are taxed. Services like haircuts, repairs, and professional fees are generally not taxed, though this varies by the type of service. When you buy something online from a seller with a physical presence in Washington, sales tax usually applies to that purchase as well.

Property tax: what homeowners and renters should know

Property tax is collected by your county assessor and goes to fund schools, fire departments, libraries, and other local services. The tax is based on the assessed value of the property, not the purchase price. Rates vary significantly by county — some counties have effective rates around 0.7% to 0.9% of assessed value, while others are higher.

If you own a home or other real property in Washington, you receive a property tax bill from your county each year. Renters do not pay property tax directly, but landlords typically factor property tax costs into rent. If you are a first-time homebuyer or senior citizen, your county may offer property tax exemptions or deferrals — contact your county assessor's office to learn what programs exist in your area.

Capital gains tax: the 7% tax on investment sales

Washington introduced a capital gains tax in 2022. The tax is 7% on the sale of long-term capital assets — such as stocks, bonds, real estate held for investment, or business interests — but only if the total gain from the sale is over $250,000 in a single year. Long-term means you held the asset for more than one year before selling it.

This tax does not apply to the sale of your primary residence, retirement account withdrawals, or short-term capital gains. If you sell an investment property or stock portfolio, you will owe both federal capital gains tax and this state tax. The $250,000 threshold is per person per year, so a married couple filing jointly would have a $500,000 threshold combined.

Excise taxes and other state taxes

Washington charges excise taxes on specific products, including gasoline, cigarettes, alcohol, and recreational marijuana. These taxes are built into the price you pay at the pump or at the store — you do not see them as a separate line item. Excise taxes on fuel and alcohol fund transportation and health programs.

The state also collects business and occupation (B&O) tax from businesses based on their gross revenue, not on profit. If you are self-employed or own a business, you may owe B&O tax depending on your business type and revenue level. Rates vary by classification — service and other activities are taxed at 1.5%, retailing at 0.471%, and wholesaling at 0.484%.

How Washington's tax system compares to other states

Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest, though it is phasing that out). States without income tax typically rely more heavily on sales tax, property tax, and excise taxes to fund government services.

Washington's sales tax rate is higher than the national average because the state does not collect income tax. If you move to Washington from a state with income tax, you may pay less in total state and local taxes, or you may pay more — it depends on your income level, where you live in Washington, and how much you spend. High earners may pay less; people with lower incomes who spend most of their money on taxable goods may pay more.

Frequently Asked Questions

Do I have to file a Washington state tax return?

No. Washington has no state income tax, so you do not file a state return. You still file a federal return if you owe federal income tax or meet other federal filing requirements. Some people file even when not required to claim refundable credits.

If I work in Washington but live in another state, do I owe Washington tax?

No. Washington does not tax income, so it does not matter where you work. You owe income tax to the state where you live. Check your home state's rules about taxing income earned in other states.

Are groceries taxed in Washington?

No. Most unprepared food — groceries, raw meat, produce, bread — is not subject to sales tax. Prepared foods, restaurant meals, and hot foods are taxed. Some items like candy and soda are taxed even though they are food.

What happens if I sell my house in Washington?

You do not owe Washington state capital gains tax on the sale of your primary residence. If you sell an investment property or a second home, you may owe the 7% capital gains tax if the gain exceeds $250,000. You will owe federal capital gains tax regardless.

How do I find out my local sales tax rate?

Your combined state and local sales tax rate depends on your city and county. Contact your city or county tax assessor's office, or search the Washington Department of Revenue website for your specific address. Rates change when local jurisdictions pass new tax measures.