Washington State Income Tax in 2025: A guide

Washington has no state income tax, similar to Texas, Florida, and a handful of other states. This means Washington residents don’t pay state income tax on earnings sourced within Washington, including retirement income and Social Security income. However, you’ll still be responsible for federal taxes if you meet the IRS income filing threshold. 

You should be aware of other significant taxes, such as sales and property taxes. This guide will explore how Washington’s tax system impacts residents, and highlight unique considerations like available government credits. 

Specific income tax considerations in Washington state

Although the Evergreen State has no state income tax, there are a few things you need to keep in mind. These include the Washington Working Families Tax Credit (WFTC) and a capital gains tax affecting high earners. Let’s break these down further:

Washington Working Families Tax Credit (WFTC)

The Washington Working Families Tax Credit (WFTC) is a state initiative that provides a refundable tax credit to lower-income households. Eligible residents can receive financial relief based on income, family size, and residency status. The WFTC works by returning a portion of sales tax paid each year.  

To qualify, you must: 

• Be a resident of Washington for at least 183 days in the tax year. 
• Have a valid Social Security number or Individual Taxpayer Identification Number (ITIN). 
• Meet the income thresholds for your family size, similar to the federal EITC guidelines. 
• Be at least 25 years old and under 65 OR have one qualifying child 
• Have filed a federal return the year before claiming the WFTC 
• Be eligible to claim the federal EITC, or be eligible for the filing with an ITIN

Learn more about eligibility and how to apply by visiting the WFTC webpage. If you’re eligible for the credit, you can also claim it from within your TurboTax account. 

Washington capital gains tax

Washington state imposes a 7% tax on the sale or exchange of certain long-term capital assets—such as stocks, bonds, and business interests—when gains allocated to Washington state exceed a standard deduction amount. For the 2024-2025 tax season (the taxes you file in 2025), this standard deduction is $270,000, meaning the tax applies only to gains exceeding this amount. This tax applies only to individuals and gains allocated to Washington state. 

Some of the gains exempt from this tax include: 

• Real estate transactions 
• Retirement accounts 
• Certain livestock and agricultural property sales 
• Timber and timberlands 
• Commercial fishing privileges 
• Goodwill from the sale of a franchised auto dealership 

Certain deductions and credits also apply. If you believe this tax may apply to you, report your gains accurately and understand what exemptions, deductions, and credits may be available to you. Refer to the Washington Department of Revenue for more details and make any required payments by April 15, 2025.

Other types of common taxes in Washington state

While Washington doesn’t levy an income tax, you may be subject to property and sales taxes as a resident. Here’s how it works: 

• Property tax: Property owners in Washington pay taxes based on the assessed value of their property. These funds, collected by county governments, support local services like schools, public safety, and infrastructure. While state law limits the growth of property tax revenue levied by individual taxing districts to 1% annually, individual property tax bills can increase by more than 1% due to factors like new construction, voter-approved levies, and changes in property assessments. Senior citizens and people with disabilities may qualify for property tax exemptions.  
• Sales tax: Washington has one of the highest combined sales tax rates in the US, including a state rate of 6.5%. Local governments—such as cities, counties, towns, transit districts, and public facilities—may also charge additional sales taxes at various rates. Combined state and local rates can top 10% in some areas. Sales tax applies to most goods and services, with exceptions for items like groceries and prescription medications. You can use the Washington Department of Revenue’s Sales Tax Lookup app to find your current local sales tax rates.

How to file income tax in Washington state

Even though there is no Washington income tax, most residents still need to file federal taxes. Additionally, it’s important to be aware of any other tax obligations you have, such as property and sales taxes, which can significantly impact your overall finances. 

TurboTax simplifies filing your federal income taxes while helping you understand Washington’s unique tax considerations. Whether you want to do your taxes yourself or have an expert file for you, we have your back. 

Looking for more personalized support? Work with a local Washington tax expert and get help handling everything from start to finish.