Washington’s new income tax includes a charitable deduction under ESSB 6346 §309. The limit is $100,000 per individual per year, shared by spouses or registered domestic partners. Other charitable strategies work through different federal rules. Start with your giving goals, then compare their effects on federal tax and Washington’s separate income and capital-gains taxes.
(For an overview of ESSB 6346, see Washington’s New Income Tax: What Founders, Investors, Athletes, and High Earners Need to Know. For the full tax landscape, see Washington State Taxes.)
This post is part of our Complete Guide to Washington's New Income Tax.
The §309 Charitable Deduction
Section 309 permits a deduction from Washington base income in computing Washington taxable income for qualifying contributions claimed under federal §170. The recipient must also satisfy RCW 82.87.080’s definition, including being principally directed and managed within Washington. For a DAF contribution, examine the sponsoring organization, not merely a later recommended grantee. Verify the actual sponsor’s eligibility rather than relying on its name or a local office.
The §309 limit is $100,000 per individual per year, with one combined $100,000 limit for spouses or registered domestic partners, whether filing jointly or separately. A fully usable $100,000 deduction reduces tentative income tax by $9,900 at 9.9%. Actual cash savings can be smaller if deductions already eliminate taxable income or credits otherwise offset the liability.
Distinguish an income exclusion from a deduction. A qualifying IRA charitable distribution excludes otherwise taxable IRA income from federal AGI. A §170 itemized charitable deduction generally reduces federal taxable income after AGI; it does not lower AGI itself. Washington’s separate §309 deduction operates in computing Washington taxable income. These mechanisms should not be counted as multiple independent savings from the same dollar.
Donor-Advised Funds and the Bunching Strategy
A donor-advised fund can receive a completed contribution in one year while the donor recommends charitable grants later. The sponsor has legal control of the assets. A current federal deduction depends on §170 limits, valuation and substantiation; the whole gift is not automatically deductible that year. Bunching must be compared with annual giving under both federal and state rules.
Compare giving dates with the actual income expected from stock options or a sale. Washington’s $100,000 annual §309 cap can make a large one-year gift less favorable than qualifying gifts across several taxable years. Conversely, a gift in a year with no income-tax liability may produce no immediate state saving. Confirm sponsor eligibility, available deductions and credits before deciding to bunch.
Do not estimate the federal benefit of a $500,000 DAF contribution by automatically multiplying the gift by 37%. Beginning in 2026, the §170(b)(1)(I) 0.5% contribution-base floor applies to itemized charitable deductions, and §68 can reduce the value of deductions for income in the top bracket. Percentage limits, property type and carryover rules also matter. Compute the allowable deduction and resulting tax rather than promising $185,000 or more.
Timing before and after 2028. Federal deductions are subject to the rules of the contribution year. The new Washington income tax begins in 2028, but the existing capital-gains tax already matters. A qualifying gift from 2028 may also produce a §309 deduction; that does not make either earlier or later giving universally better.
Charitable Remainder Trusts (CRTs)
A qualifying charitable remainder trust can pay a noncharitable beneficiary for life or a permitted term, with the remainder going to charity. The trust recognizes and tracks gains when it sells assets; §664 generally exempts it from federal income tax, but imposes a separate excise tax on unrelated business taxable income. The donor’s potential charitable deduction is for the qualifying remainder interest, subject to applicable limits—not the full value transferred.
CRT beneficiary payments follow the statutory tiers: ordinary income, capital gains, other income, then corpus. Federal treatment does not establish that a CRT sale escapes Washington capital gains tax or that all beneficiary payments are taxable in the same way. Apply Washington attribution, allocation and income-tax modifications, plus the §205 capital-gains credit. Federal AGI below $1 million alone does not prove that both Washington taxes are zero.
A comparison must start with gain, not account value. A $3 million stock position does not necessarily produce $3 million of taxable gain: basis, holding period, QSBS eligibility and allocation matter. Compare a direct sale’s capital-gains tax and income tax after credit with a legally qualifying CRT’s actual distribution schedule, tax character, costs and charitable remainder. A proposed $200,000 annual payment for 15 years is not, by itself, proof of CRT qualification or zero Washington tax; §664 includes payout and minimum-remainder requirements.
Qualified Charitable Distributions (QCDs)
A qualified charitable distribution (QCD) can exclude an otherwise taxable IRA distribution from federal income. Under §408(d)(8), the owner or beneficiary must be at least age 70½ at distribution, and the transfer must meet the direct-payment and other requirements. The annual limit is $111,000 per individual for 2026; use the indexed limit for the actual distribution year. Deductible IRA contributions after age 70½ can reduce the excludable amount.
A qualifying QCD keeps the excludable amount out of federal AGI; it is not a §309 deduction, and the same excluded amount cannot also be deducted as a charitable contribution. Any Washington benefit begins with comparing the otherwise taxable distribution under the applicable state rules. The 2026 QCD limit is not a forecast of the 2028 limit or a 2026 Washington income-tax saving. Ordinary QCD recipients must satisfy §408(d)(8)(B), which excludes DAFs and supporting organizations; most private foundations are ineligible, but the statutory test controls. Section 408(d)(8)(F) separately permits a limited one-time election for specified split-interest entities under strict conditions.
Who benefits most: Retirees with large traditional IRAs who are already making charitable gifts and whose total income (including required minimum distributions) puts them near or above $1 million. Instead of taking the RMD as income and then making a separate charitable gift, routing the gift through a QCD keeps the distribution out of AGI entirely.
For a detailed analysis of how retirement income interacts with Washington’s tax, see Is Retirement Income Subject to Washington’s 9.9% Tax?.
The Pre-2028 Planning Window
Plan before committing to a gift or sale, but compare the actual years. January 1, 2028 is the new income-tax start date, not a universal deadline for obtaining charitable tax benefits.
Compare 2026–2027 with later gifts. Earlier gifts can produce federal benefits under the applicable limits and can affect existing Washington capital-gains tax consequences. Later qualifying gifts may also produce a §309 income-tax deduction. Model both options rather than assuming pre-2028 gifts have no Washington consequences.
Coordinate with Roth conversions. A charitable deduction may reduce federal taxable income in the conversion year, but a $500,000 conversion and a $500,000 DAF gift do not automatically cancel each other for tax purposes. AGI-based limits, the charitable floor, §68 and carryover rules can prevent a full current offset. The deduction does not itself remove the conversion from AGI.
Evaluate QCD eligibility. If you are at least 70½ and already plan to give, compare a qualifying direct IRA transfer with other funding sources. Confirm the recipient, substantiation, annual limit and effect on required distributions. State savings depend on the otherwise applicable liability.
Interaction with the Capital Gains Tax
Washington’s existing capital-gains tax under chapter 82.87 RCW and the new income tax have separate charitable deductions. Section 309’s $100,000 cap is not the capital-gains deduction. RCW 82.87.080 has its own contribution threshold, maximum deduction and inflation adjustments. The same gift may need analysis under both provisions; do not assume either that it reduces both taxes or that the capital-gains tax has no charitable deduction.
A QCD reduces otherwise included IRA income; it does not itself subtract long-term capital gain from Washington’s capital-gains base. A properly timed outright gift of appreciated assets may avoid donor recognition, subject to assignment-of-income rules. CRTs require their own attribution and distribution analysis. Apply the §302 modifications and §205 credit rather than treating every AGI reduction as a reduction of both taxes.
The Bottom Line
Section 309 allows up to $100,000 of qualifying deductions per individual, with one combined cap for spouses or registered domestic partners. Its maximum reduction of tentative income tax is $9,900; the actual saving depends on remaining taxable income and credits.
Keep the mechanisms distinct: QCDs can exclude otherwise taxable IRA distributions from AGI; DAF contributions generally produce itemized deductions rather than AGI reductions; CRTs have separate exemption, distribution and deduction rules. Washington’s own modifications and charitable requirements still need to be applied.
Choose timing based on charitable intent, the asset, the recipient and a multiyear tax comparison. There is no universal rule that charitable gifts must be front-loaded before 2028 to obtain the best result.
Exploring charitable strategies to reduce your Washington tax exposure? Book a 20-minute intro call to discuss how §309 and AGI-reduction strategies apply to your situation. Also see: Washington State Taxes Guide | Income Tax Planning Guide for High Earners
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This post is for educational purposes only and is not legal or tax advice. Consult a qualified attorney about your specific situation.
