Updated September 8, 2026. Washington’s enacted income tax starts January 1, 2028. Calendar-year taxpayers generally file and pay their 2028 annual liability in April 2029. Individual and electing-entity estimated payments are not required before July 1, 2029. These are different dates: the estimated-payment moratorium does not postpone the annual tax. This guide separates the enacted rules from administrative details that require DOR guidance.
(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.
What the Statute Says
Section 501 requires estimated payments for an individual with estimated Washington tax exceeding $5,000 who is required by the Internal Revenue Code to make estimated payments. It incorporates federal reporting periods and due dates and refers to IRC §6654 for the projected-liability calculation. Subsection (5) directs DOR to adopt rules for estimated payments on compensation subject to federal withholding. See ESSB 6346 §§501–502.
For the income-tax estimated-payment penalty, RCW 82.32.090(11) imposes 5% of the underpaid tax, subject to the specified 90%-of-current-return or 100%-of-most-recently-filed-return protection. Do not substitute an 80% test or a $5,000 shortfall threshold. The $5,000 estimated-tax requirement and other Washington penalty provisions are separate rules.
The statute also provides that the annual return is due on or before the fifteenth day of the fourth month following the close of the tax year — April 15 for calendar-year taxpayers. This mirrors the federal filing deadline.
What to Expect: Following the Federal Model
Section 501(2) incorporates federal estimated-tax reporting periods and due dates. The ordinary calendar-year federal schedule is April 15, June 15, September 15, and January 15 of the following year, subject to applicable adjustments and special rules. Washington’s statutory moratorium still controls: no individual estimates are required before July 1, 2029. Confirm DOR implementation of the transition rather than treating July 1 itself as a specified installment deadline.
The state estimated-payment penalty provision uses 90% of the tax shown on the current return or 100% of the tax shown on the most recently filed Washington return. It does not state a 110% high-income step-up for that penalty protection. Keep this distinct from the federal estimated-payment computation referenced by §501, which includes its own rules. Apply the enacted state protection and check DOR instructions for implementation.
The first tax year is 2028; the first year in which estimates can be required is 2029. A taxpayer who has filed a 2028 Washington return may therefore have a prior-return figure when estimates begin. Do not assume that the most-recently-filed-return protection is unavailable to everyone at the start. Check the actual filing history and transition instructions.
Who Will Need to Make Estimated Payments
Estimated payments are primarily for taxpayers with significant income that isn’t subject to withholding. This includes:
Investment income. Dividends, interest, and short-term capital gains flow through federal AGI into Washington base income. Washington removes federal long-term capital gains and reverses federal long-term capital losses. If you owe Washington capital gains tax for the year, the income-tax calculation adds back taxable Washington capital gains plus the capital-gains standard deduction you claimed. Gains from exempt transactions remain excluded. A separate credit for Washington capital gains tax paid reduces income tax, subject to the statutory limits. QSBS gain excluded under §1202 never enters federal AGI, so it never enters the Washington base at all. For a founder with a liquidity event, that interaction is the main event — don’t assume every dollar of gain is taxed at 9.9%.
K-1 income. Partners and S-corporation shareholders may need individual estimates when the statutory conditions are met. An electing PTE makes estimates in place of participating owners only with respect to income included in the entity’s taxable income. Other income and nonparticipating interests can still require individual payments. See the pass-through income guide.
Business income. Sole proprietors and self-employed individuals with income above $1 million.
One-time events. Taxable option compensation, business income and bonuses can change projected tax. Apply the estimated-payment requirement, annualization and safe-harbor rules rather than assuming every event creates a payment due in that quarter. A qualifying ISO exercise-and-hold generally creates no regular federal AGI at exercise; an AMT adjustment alone does not become Washington income.
W-2 employees may or may not need to make estimated payments, depending on whether Washington implements wage withholding (more on this below).
The statute does not require individual estimates where annualized estimated tax is less than $5,000; its affirmative requirement refers to estimated tax exceeding $5,000 and a federal estimated-payment obligation. This is a tax-liability test, not a $5,000 penalty shortfall test. For full-year taxpayers, the $1 million standard deduction is shared by spouses and registered domestic partners. Credits and other adjustments can materially change the result.
The Entity-Level Election
Section 502 of ESSB 6346 provides a pass-through entity elective tax. Partnerships, S-corps, and LLCs taxed as partnerships can elect to pay Washington’s income tax at the entity level, at the same 9.9% rate. Owners receive a credit on their individual returns.
PTE estimates replace individual estimates only for participating owners’ income included in the electing entity’s taxable income. Other owner-level income remains relevant. An eligible entity-level state income-tax deduction may provide a federal benefit outside the individual SALT cap, but model the actual federal deduction, Washington addback, owner deductions and nonrefundable credits. The election does not automatically simplify every owner’s payments or reduce total tax.
§502(4)(d) makes this explicit: no entity-level estimated payments are required before July 1, 2029 — the same floor that applies to individual filers under §501(6).
Section 502(4)(a) expressly requires electing entities to make estimates in the same manner and at the same times as individuals under §501. DOR guidance can supply administrative details; the statutory relationship between the schedules is already established.
Withholding vs. Estimated Payments
Section 501(5) directs DOR to adopt rules for estimated payments on wages, salaries and other compensation subject to federal income-tax withholding. That provision should not be described as an existing general mandate for employer Washington income-tax withholding.
Employees should model their own liability. Wages, other income, spouse or registered-domestic-partner income, deductions, sourcing and credits may affect whether estimates are required. Payroll practices should follow applicable enacted requirements and DOR instructions.
Do not assume a payroll threshold. A hypothetical withholding rule for wages above $1 million is not an enacted implementation instruction. Employers and employees should confirm the actual rules before changing payroll or relying on withholding to satisfy the tax.
Monitor DOR implementation, especially compensation-related estimates and the 2029 transition. Reserve cash for the 2028 annual liability independently of any future withholding or estimated-payment arrangement.
Penalties for Underpayment
Under RCW 82.32.090(11), the income-tax estimated-payment penalty is 5% of the underpaid tax when total annual estimates are substantially underpaid, subject to the statute’s 90%-of-current-return or 100%-of-most-recently-filed-return protection. Paying 80% is not the stated protection, and a shortfall below $5,000 is not a general exemption from this penalty.
The estimated-payment penalty is separate from annual return, late-payment and interest rules. Determine the tax actually due, the applicable deadline and each penalty’s conditions. A filing extension does not by itself extend the time to pay the annual liability.
Calculate the applicable protection using the current-year projection and the most recently filed Washington return. Retain evidence of payments. Because 2028 tax precedes the July 2029 start of required estimates, a 2028 return may already supply a comparison figure. Do not assume transition relief or substitute an invented first-year rule.
Planning for 2028
Plan the annual liability first, then the later estimated-payment schedule:
Model 2028 income. Start with federal AGI, apply Washington modifications to determine base income, then deductions to determine taxable income. Apply 9.9% and the available credits. Full-year spouses and registered domestic partners share a $1 million deduction; nonresidents and part-year residents require separate proration and sourcing analysis.
Calculate the annual reserve. For illustration, $1.5 million of Washington base income less a $1 million deduction produces $49,500 of tax before credits, assuming no other deductions. Do not subtract the standard deduction twice or call a rough AGI calculation a universal ceiling. Capital-gain adjustments, QSBS exclusions and credits need separate treatment.
Set aside the projected dollars. A $49,500 annual liability divided into four reserve contributions is $12,375 each. That is a savings plan, not a claim that four Washington estimates are due during 2028. If income arrives unevenly, adjust the reserve to the cash flow and projected tax.
Use two calendars. Continue applicable federal estimated payments. Separately plan the 2028 Washington annual return and payment in 2029, followed by Washington estimates after the statutory moratorium ends. An extension to file does not automatically extend payment.
Check DOR guidance. Confirm current forms, administrative instructions, compensation rules and transition treatment before making payments. Do not rely on a predicted date for future rulemaking.
The Bottom Line
Washington’s first tax year is 2028, while required estimated payments do not begin before July 1, 2029. Reserve for the annual liability, then apply the estimated-payment rules and the separate 90%/100% penalty protection. An entity election changes who pays estimates for covered participating-owner income; it does not remove every individual obligation.
We’ll update this post as DOR issues guidance. For planning strategies to reduce your 2028 liability, see Washington’s New Tax Reality: Why 2028 Changes Everything for High Earners.
Need help planning for Washington’s estimated payment requirements? Book a 20-minute intro call to discuss your specific 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.
