Washington State Tax Calculator (2026-2028)
Estimate your Washington tax liability under ESSB 6346 (the 9.9% income tax, effective 2028) and Washington's separate capital gains excise tax (chapter 82.87 RCW: 7%, plus a 2.9% surtax on gains above $1,000,000). The two regimes are coordinated by a nonrefundable credit (ESSB 6346 sec. 205), so the same long-term gain is not taxed twice.
Worked example
A Washington resident in 2028 with $5,000,000 of long-term capital gain and no other income pays about $441,250 - entirely under the capital gains tax. The 9.9% income tax also reaches the gain, but the section 205 credit for capital gains tax paid offsets it to zero. Net result: you effectively pay the greater of the two regimes, not their sum.
This tool provides estimates only and is not legal or tax advice. Consult a qualified attorney or CPA for your situation.
How Washington's Income Tax Works Under ESSB 6346
Washington's Engrossed Substitute Senate Bill 6346 (ESSB 6346), signed into law on March 30, 2026, established the state's first broad-based income tax. The law imposes a 9.9% tax on Washington taxable income above $1,000,000 per household — a single $1,000,000 deduction is shared by married couples filing jointly — effective for the 2028 tax year. It is sometimes called the “millionaire tax.” Before ESSB 6346, Washington had no broad income tax on wages or salaries, relying instead on the sales tax and its capital gains excise tax.
Washington Income Tax Rates for 2026–2028
The income tax rate structure under ESSB 6346 is straightforward: income below the $1,000,000 threshold is taxed at 0%, and income above the threshold is taxed at 9.9%. For 2026 and 2027, no income tax applies — the 9.9% rate takes effect starting January 1, 2028. This two-year window gives high-income Washington residents time to plan, including considering Roth conversions, accelerating income, or revisiting their domicile situation before the tax kicks in.
Washington Capital Gains Tax Rates
Washington's capital gains excise tax (chapter 82.87 RCW), enacted in 2021 and upheld by the Washington Supreme Court in 2023, imposes 7% on net long-term capital gains above a standard deduction (about $278,000 for 2026, indexed annually; $250,000 combined for a married couple), plus an additional 2.9% surtax on the portion above $1,000,000 — a 9.9% top marginal rate. ESSB 6346's 9.9% income tax does not stack on top of this. Although Section 302 returns long-term gains to the income tax base, Section 205 grants a nonrefundable credit for the capital gains tax paid (capped at the income tax otherwise due), so the same gain is not taxed twice. In practice, a resident pays the greater of the two regimes. Gains from qualified small business stock (QSBS) under IRC Section 1202, and real estate exempt under RCW 82.87.050, fall outside both taxes.
How to Use This Washington Tax Calculator
The calculator above is built for Washington residents whose long-term capital gains or household income approach or exceed $1,000,000 in 2026, 2027, or 2028. Enter your federal AGI excluding long-term capital gains, your total long-term capital gains, and any QSBS or real-estate gains separately. The tool estimates your capital gains tax, your 2028 income tax after the Section 205 credit, and your total — coordinating the two regimes so gains are not double-counted. It is not legal or tax advice; consult a qualified attorney or CPA for guidance specific to your situation.
Frequently Asked Questions About Washington State Taxes
Does Washington state have an income tax?
Yes, starting in 2028. Washington enacted ESSB 6346 in 2026, imposing a 9.9% income tax on Washington taxable income above $1,000,000 per household. For 2026 and 2027, no income tax applies to wages or salaries. Separately, Washington has had a capital gains excise tax since 2022 — 7% on net long-term gains above the standard deduction (about $278,000 for 2026, indexed), plus a 2.9% surtax on the portion above $1,000,000.
What is Washington's millionaire tax?
The “millionaire tax” is the 9.9% income tax under ESSB 6346 on Washington taxable income above $1,000,000 per household, effective for the 2028 tax year. It reaches ordinary income — wages, business income, and similar sources. Long-term capital gains also enter the base under Section 302, but a Section 205 credit for the separately imposed capital gains tax offsets the overlap, so those gains are effectively taxed once, under the higher of the two regimes.
What is the Washington state capital gains tax rate?
Washington's capital gains tax is 7% on net long-term gains above the standard deduction (about $278,000 for 2026, indexed; $250,000 combined per couple), plus a 2.9% surtax on the portion above $1,000,000 — a top marginal rate of 9.9%. The ESSB 6346 income tax does not add on top of this. Although Section 302 returns the gains to the income tax base, Section 205 credits the capital gains tax already paid (capped at the income tax due), so the same gain is not taxed at a combined 16.9%. A resident effectively pays the greater of the capital gains tax or the 9.9% income tax on the full base.
What is ESSB 6346?
ESSB 6346 is the Engrossed Substitute Senate Bill 6346, signed into law by Governor Ferguson on March 30, 2026. It established Washington's first broad-based income tax — 9.9% on Washington taxable income above $1,000,000 per household, effective in 2028 — and coordinates with the existing capital gains excise tax through a nonrefundable credit (Section 205) so the same gain is not taxed under both.
Does the Washington capital gains tax apply to QSBS?
QSBS (Qualified Small Business Stock) gains excluded under federal IRC Section 1202 may also be excluded from Washington's capital gains tax and the 9.9% millionaire tax, but the state-law treatment of QSBS is complex and depends on specific facts. The calculator lets you model scenarios with a QSBS exclusion amount. You should consult a tax attorney to confirm your eligibility for QSBS exclusion under both federal and Washington law.
When does Washington's income tax take effect?
Washington's new income tax under ESSB 6346 takes effect for the 2028 tax year. No state income tax applies for 2026 or 2027, though the existing 7% capital gains tax continues to apply to qualifying gains in those years. Planning before 2028 — such as accelerating income, relocating domicile, or maximizing QSBS exclusions — may reduce your total liability.
How can I reduce my Washington state tax liability?
Strategies to reduce Washington state tax liability vary by situation and may include: maximizing QSBS exclusions under Section 1202, timing income realization before or after the 2028 effective date, Roth conversions in 2026 and 2027 while no income tax applies, structuring stock sales to stay below the capital gains threshold, and in some cases evaluating a change of domicile to another state. Each of these carries significant legal and tax complexity — consult a qualified attorney before making any decisions.
How does selling a home affect Washington capital gains tax?
Gains from the sale of real estate are generally excluded from Washington's capital gains tax. However, real estate gains still count toward your federal AGI, which can affect whether your total income crosses the $1,000,000 threshold for the 9.9% income tax starting in 2028. The calculator lets you enter real estate gains separately so they are excluded from the capital gains tax but still reflected in your income picture.
Do selling expenses and closing costs reduce my capital gains tax?
Capital gains are calculated on your net gain, which is the sale price minus your cost basis and qualifying selling expenses such as broker commissions and certain closing costs. Reducing your net gain lowers the amount subject to Washington's 7% capital gains tax. Enter your net long-term capital gains, after these costs, into the calculator for an accurate estimate.
How does the QSBS exclusion work in the calculator?
Qualified Small Business Stock (QSBS) gains excluded under IRC Section 1202 may also be excluded from Washington's capital gains tax and the 9.9% millionaire tax. Enter your QSBS exclusion amount and the calculator removes it from the taxable gain. State-law treatment of QSBS is complex, so confirm eligibility with a tax attorney.