Section 315 reduces the standard deduction for people who are not Washington residents for the entire taxable year, including part-year residents. Its ratio is Washington base income divided by federal AGI from all sources, capped at one. Determine base income under the applicable sourcing and adjustment rules first. Employee compensation generally follows §403; independent consulting business income generally follows §405. Section 404 has a separate duty-day rule for qualifying professional-team members. These income-allocation rules are not interchangeable.
How the general version works
For a nonresident employee, §403 generally allocates compensation by Washington workdays divided by total workdays, or another reasonable DOR-approved method. Section 315 then uses Washington base income divided by all-source federal AGI to prorate the standard deduction. Those fractions coincide only under suitable facts. Section 401 also provides exclusions, including its five-or-fewer-service-days rule with specified exceptions; check those before calculating taxable income.
A consulting executive, worked example
Assume a single, full-year Texas nonresident executive is a W-2 employee, has $3 million of compensation and federal AGI in 2028, works 20 of 250 workdays in Washington, and has no other income, adjustments, deductions or credits. Washington base income is $240,000. The prorated standard deduction is $80,000, leaving $160,000 taxable and $15,840 of tax. An independent consultant must separately apply the business-income rules; physical workdays alone do not establish the same result.
A larger contract, more Washington days
Using the same employee-only assumptions, $10 million of compensation and federal AGI with 30 of 250 workdays in Washington produces $1.2 million of Washington base income. The deduction is $120,000, taxable income is $1.08 million, and tax is $106,920. These examples assume the initial $1 million deduction and enacted 2028 tax apply.
The pattern to watch
For fixed total federal AGI, increasing the Washington income share increases both Washington base income and the prorated deduction proportionally. In the simple employee-only examples, more Washington workdays increase the dollars owed but do not increase the effective tax rate on the Washington slice. That rate is 6.6% at $3 million of total income and 8.91% at $10 million. It approaches 9.9% as total income rises relative to the standard deduction, not merely because the Washington share rises. Other income, modifications, deductions or credits can change these results.
This post is part of our Complete Guide to Washington's New Income Tax. For how the same mechanism plays out for professional athletes, see Washington's Jock Tax Under ESSB 6346.
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. The rules discussed here are based on ESSB 6346 as enacted; DOR regulations are still pending. Consult a qualified attorney or tax advisor before making planning decisions.
