What this calculator does
Washington has no income tax on wages, but since 2022 it has taxed long-term capital gains above a large standard deduction. Washington does not tax wages, so Seattle paychecks show federal income tax and FICA plus two small state premiums. The state does tax long-term capital gains above a standard deduction at 7% (9.9% on taxable gains above $1 million), and it enacted a 9.9% tax on household income over $1 million that is scheduled to start in 2028. This calculator estimates the state tax on a year's gains.
How to use it
- Enter total long-term gains.
- Subtract gains from exempt sources, such as real estate or retirement accounts.
- Keep or update the standard deduction.
- Enter your federal rate to compare.
The formula
Taxable gains = gains − exempt gains − standard deduction. Tax = 7% on the first $1,000,000 of taxable gains + 9.9% on the rest.
Worked example
Using the default inputs shown in the calculator above:
| Item | Amount |
|---|---|
| Long-term capital gains | $600,000 |
| Exempt gains (real estate, retirement accounts, etc.) | $0 |
| Standard deduction | -$278,000 |
| Taxable WA capital gains | $322,000 |
| 7% on the first $1,000,000 | $22,540 |
| 9.9% on the part above $1,000,000 | $0 |
| Washington tax | $22,540 |
Estimated Washington capital gains tax: $22,540. 3.76% of the gain you entered.
Washington taxes only long-term gains above the standard deduction, so you pay 7% on $322,000. Sales of real estate and retirement-account gains are exempt, which is why many Washington residents never owe this tax.
Who pays it in Seattle
The tax mostly affects people selling large stock positions, companies or other assets. Real estate, retirement accounts, livestock, timber and some small-business sales are exempt, and a charitable deduction is available. Returns are due with the federal return.
Washington capital gains tax at different gain sizes
These examples assume all the gains are long-term and taxable, such as stock or fund sales, and use the $278,000 standard deduction (2025 amount). Gains from selling real estate or from retirement accounts would not count.
| Long-term gains | Taxable after deduction | Washington tax | Share of the gain |
|---|---|---|---|
| $250,000 | $0 | $0 | 0.00% |
| $500,000 | $222,000 | $15,540 | 3.11% |
| $1,000,000 | $722,000 | $50,540 | 5.05% |
| $1,500,000 | $1,222,000 | $91,978 | 6.13% |
| $2,500,000 | $2,222,000 | $190,978 | 7.64% |
| $5,000,000 | $4,722,000 | $438,478 | 8.77% |
The deduction keeps the tax well below 7% of the gain for moderate amounts: on $500,000 of gains, less than half of the gain is taxable. The 9.9% rate only applies to the portion of taxable gains above $1,000,000, so the effective rate approaches but never reaches 9.9%.
Common mistakes and tips
- Including home-sale gains — real estate is exempt.
- Forgetting the 9.9% tier added in 2025.
- Missing that the deduction is per individual or couple, not per sale.
- Assuming the new 2028 income tax is the same as this tax — it is separate.
Frequently asked questions
What is Washington's capital gains tax rate?
7% on taxable long-term gains, and 9.9% on taxable gains above $1 million since 2025.
What is the standard deduction?
$278,000 for 2025, indexed yearly.
Are home sales taxed?
No. Real estate sales are exempt.
Is this the same as the new millionaires tax?
No. SB 6346 creates a separate 9.9% tax on household income over $1 million starting in 2028.
Sources
Disclaimer
This calculator provides estimates for educational purposes only and is not financial, tax, legal, real estate, or insurance advice. Consult a licensed professional before making decisions.