Washington Capital Gains Tax (2026)
Washington capital gains tax rate: 7% on long-term capital gains exceeding $262,000; 0% below that threshold
Washington's capital gains tax applies only to gains over $262,000 (2024 threshold, adjusted annually for inflation). Real estate transactions, retirement accounts, farmland, and family-owned small businesses are exempt. Short-term capital gains are not taxed separately (they would be ordinary income, which WA doesn't tax).
Federal Capital Gains Rates Still Apply to Washington Residents
All Washington residents also owe federal capital gains tax. Federal long-term capital gains rates are 0% (income up to ~$47,025 single), 15% (income up to ~$518,900 single), or 20% (above). High earners may also owe the 3.8% Net Investment Income Tax (NIIT).
Short-Term vs. Long-Term Capital Gains in Washington
Assets held less than one year are taxed as ordinary income at federal rates (10%–37%). Assets held over one year qualify for the preferential 0%/15%/20% federal rates. Washington's capital gains tax applies only to gains over $262,000 (2024 threshold, adjusted annually for inflation). Real estate transactions, retirement accounts, farmland, and family-owned small businesses are exempt. Short-term capital gains are not taxed separately (they would be ordinary income, which WA doesn't tax).
Planning Considerations for Washington Investors
- Tax-loss harvesting can offset gains at both state and federal levels
- Timing asset sales to control income year and bracket placement
- Washington has no capital gains tax — only federal rates apply, simplifying planning
- Qualified Opportunity Zone investments can defer federal and potentially state gains
Frequently Asked Questions
What is the capital gains tax rate in Washington?
Washington's capital gains tax applies only to gains over $262,000 (2024 threshold, adjusted annually for inflation). Real estate transactions, retirement accounts, farmland, and family-owned small businesses are exempt. Short-term capital gains are not taxed separately (they would be ordinary income, which WA doesn't tax). Federal rates (0%, 15%, 20% for long-term gains) also apply regardless of state.
Does Washington have a different rate for long-term vs. short-term capital gains?
Washington has no capital gains tax. The distinction between short- and long-term gains only matters for federal tax purposes, where short-term gains are taxed as ordinary income and long-term gains at 0%/15%/20%.
How do I reduce capital gains tax in Washington?
Strategies include: holding assets over one year for federal long-term rates, tax-loss harvesting to offset gains, contributing to retirement accounts (401k, IRA), investing in Qualified Opportunity Zones, and timing sales across tax years. Since Washington has no capital gains tax, federal planning is the primary focus.
Is this capital gains tax calculator free for Washington?
Yes. Enter your gain amount, holding period, and annual income. The calculator applies both federal rates (0%/15%/20% long-term) and Washington's zero state rate to estimate your total tax owed.