Washington State Taxes: No Income Tax, Capital Gains and Credits

Updated October 26, 2026

No state income tax return

A state publication on Washington's tax structure puts it plainly: unlike most states, Washington has neither a personal nor a corporate net income tax. The state leans on the sales tax, the business and occupation tax and the property tax.

For most wage earners, that means one return a year, and it is the federal one. The federal due date rules still apply, so see our tax deadlines page.

Washington is also one of nine community property states on the IRS list. The IRS says a spouse who files a separate federal return must report half of all community income plus all of their own separate income. This matters for married couples who file separately, and it changes if you move to a state that is not on that list.

The capital gains excise tax

Washington's capital gains excise tax is not an income tax on wages. It targets gains from selling long-term capital assets such as stocks, bonds, business interests and other investments and tangible assets. The Department of Revenue says it applies only to gains allocated to Washington.

• Who files: only individuals who owe the tax. You can owe it through a share in a pass-through or disregarded entity that sells assets.
• What it leaves out: real estate, retirement account assets, assets in privately held entities that are tied to real estate, and certain business-use assets.
• How to file and pay: everyone must file electronically through My DOR or approved software, and pay electronically.
• When: the return is due the same day as your federal return, and payment is typically due April 15.

For an extension, you must ask on or before April 15 through My DOR, and you must already have a federal extension. The extension does not move the payment date.

The B&O tax if you work for yourself

Washington's business and occupation tax is a gross receipts tax. It is based on the total value of what a business sells or earns. A business cannot subtract labor, materials, taxes or other costs. That makes it different from an income tax, which looks at profit.

Most Washington businesses are subject to it. You register for a business license, then report and pay on the Excise Tax Return through My DOR. The Department lists a Small Business B&O Tax Credit among the common credits that may lower the bill.

Freelancers and gig workers still report business income on their federal return. Our side hustle tax guide explains the federal part.

Working Families Tax Credit

Washington's Department of Revenue runs the Working Families Tax Credit. It is a state-funded credit, and it is not part of your federal return. You must file the federal return first, then send a separate state application online, on paper or through tax software.

The eligibility list on the program's site includes:

• living in Washington for at least 183 days of the tax year;
• being at least 25 and under 65, or having a qualifying child;
• qualifying for the federal earned income credit, or qualifying except that you file with an ITIN; and
• having a valid Social Security number or ITIN.

Federal rules for that credit are in our earned income credit guide.

WA Cares for the self-employed

Washington's WA Cares Fund is a long-term care program. A self-employed person can choose to elect coverage through a SecureAccess Washington account. It is optional. The premium is based on net earnings from your business. Coverage starts on the first day of the quarter after you elect it. The program says you must elect within a set window, and meet an hours requirement each year to keep paying in. Read the program page for the dates that apply to you before you decide.

Moving to or from Florida

Leaving Washington for Florida does not create a part-year state income tax return, because Washington has none. Three things still deserve a look:

• Asset sales. If you sell stocks or a business interest, ask whether the gain is allocated to Washington, because the capital gains tax follows allocation.
• The credit. The Working Families Tax Credit asks for 183 days of Washington residency in the tax year.
• Community property. Florida is not on the IRS list of community property states. For married couples, how income is split on separate returns may change when you cross the state line.

Read our moving to Florida tax page for the Florida side.

Common mix-ups

• Thinking no income tax means no return. You still file federally, and you may owe B&O tax or capital gains tax.
• Paper-filing the capital gains return. The Department says all must file electronically.
• Treating an extension as time to pay. It is not.
• Skipping the credit application. Filing your federal return does not apply for the Working Families Tax Credit.
• Ignoring B&O registration. A business license comes first.
• Splitting income wrong on separate returns. Washington couples must follow community property rules.

Filing from Washington with Zero Fuss Taxes

We prepare returns remotely from our Longwood, Florida office for clients in all 50 states, so you never need to visit. A real preparer reviews and signs your return, and you start with a free quote.

FAQ

Sources

• fiscal.wa.gov/Revenue/RevenueOverview
• dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
• dor.wa.gov/taxes-rates/business-occupation-tax
• workingfamiliescredit.wa.gov/eligibility
• wacaresfund.wa.gov/how-it-works/opt-in
• irs.gov/publications/p555
• irs.gov/filing/individuals/when-to-file

General information, not tax advice for your specific situation. Rules can change, so check the official sources below. Zero Fuss Taxes is a PTIN-holding tax preparation firm. We are not a CPA firm, enrolled agents or attorneys.