Washington State Tax Overview: 0% on Wages
Washington State has long been a top destination for software engineers, executive leaders, and entrepreneurs. Home to global tech leaders like Microsoft, Amazon, and extensive engineering hubs for Google and Meta, Washington levies 0% personal state income tax on all wage income, bonuses, and Restricted Stock Units (RSUs) earned as ordinary compensation.
To calculate your Washington paycheck, use our Washington Income Tax Calculator.
Washington State 7% Capital Gains Excise Tax Explained
In 2021, Washington enacted a landmark 7% excise tax on long-term capital gains, which was upheld by the Washington State Supreme Court in 2023.
What is Subject to the 7% WA Capital Gains Tax?
The tax applies to long-term capital gains from the sale of:
- Publicly traded stocks and mutual funds
- Cryptocurrencies and digital assets
- Private business equity and venture capital interests
What is Exempt from the Tax?
The Washington capital gains tax includes substantial statutory exemptions:
- Standard Deduction Threshold: The first $262,000 of annual long-term capital gains is 100% tax-exempt (indexed annually for inflation).
- All Real Estate Sales: Residential, commercial, and agricultural property sales are completely exempt.
- Retirement Accounts: 401(k), IRA, and pension transactions are exempt.
- Ordinary Wages & RSUs at Vesting: RSUs vested as ordinary income are taxed at 0% state tax.
Washington (0%) vs. California (13.3%) for Tech Compensation
Because equity compensation forms a large portion of tech industry compensation, compare a tech employee earning $300,000 ($180,000 base + $120,000 RSU vesting):
- California State Tax Liability: ~$27,600 / year
- Washington State Tax Liability: $0.00
- Annual Savings in Washington: +$27,600 / year (over $2,300 every month in additional cash flow!)
Calculate your state tax savings and net salary with the Washington Income Tax Calculator or compare with the California Income Tax Calculator.