Taxtirement

State guides · WA

How Washington taxes retirement income

Some 2026 figures pending confirmation  Tax year 2026 · research last updated October 3, 2026

  • Washington has no income tax on wages, pensions, IRA or 401(k) distributions, Social Security, interest or dividends.
  • It does tax long-term capital gains above a large yearly deduction, at 7% (9.9% on the part above $1 million).
  • Sales inside IRAs and 401(k)s, and Roth conversions, are never subject to it.

At a glance

Income tax on wages and retirement incomeNone
Social SecurityNot taxed
Pensions, IRAs, 401(k)sNot taxed
Roth conversionsNot taxed
Long-term capital gains7%, and 9.9% above $1 million (after the deduction)

The capital gains tax

Excise tax on the sale or exchange of long-term capital assets (RCW 82.87), individuals only

Washington capital gains = federal net long-term capital gain allocated to WA, adjusted per RCW 82.87.020, minus exempt assets and the deductions in RCW 82.87.060 (standard deduction, charitable, qualified family-owned small business). Short-term gains and ordinary income (interest, dividends other than capital gain distributions allocated as LTCG, IRA distributions) are not taxed.

Per couple. The standard deduction is $X per individual, but spouses/state-registered domestic partners share ONE combined standard deduction regardless of joint or separate filing (RCW 82.87.060(1)). Spouses are treated as one individual for ALL thresholds, caps and deductions (RCW 82.87.120(4)(a)) - so the $1,000,000 threshold for the 2.9% surcharge is also per couple. Spouses filing a joint federal return must file a joint WA return (RCW 82.87.120(1)).

RateOn
7%$0 to $1,000,000 of Washington capital gains, after the deduction
9.9%$1,000,000 and up of Washington capital gains, after the deduction

The 2026 standard deduction hadn't been published when this page was built; Taxtirement uses $278,000 (the 2025 amount) until it is (pending confirmation). Seattle-area CPI-U, rounded to nearest $1,000, never reduced; DOR must publish by Oct 31 (RCW 82.87.150 as amended 2025 c 409). The 2026 amount had not been published as of 2026-09-30 - use $278,000 as a placeholder.

Exempt from the tax

  • Real estate (all real property transferred by deed/real estate contract etc.), and interests in privately held entities to the extent gain is attributable to real estate the entity owns directly (RCW 82.87.050(1)-(2))
  • Assets held in retirement accounts: 401(k), 403(b), 457(b), traditional and Roth IRAs, defined contribution and defined benefit plans, and similar retirement vehicles (RCW 82.87.050(3)) - so sales inside IRAs/401(k)s and IRA/Roth distributions/conversions are never subject
  • Assets under condemnation or imminent threat of condemnation
  • Cattle/horses/breeding livestock for qualifying farmers/ranchers
  • Property depreciable under IRC §167(a)(1) or expensed under §179
  • Timber, timberland, and REIT dividends/distributions from timber gains
  • Commercial fishing privileges; goodwill from sale of franchised auto dealership
  • Qualified family-owned small business sale (deduction; 2025 gross-revenue cap $11,095,000)
More detail from our research notes

Washington has no tax on wages, pensions, IRA/401(k) distributions, Social Security, interest or dividends for 2026; the only income-type tax is the capital gains excise tax on long-term gains. ESSB 6346 (ch. 238, Laws of 2026, approved March 30, 2026 per the session law certificate) enacts a 9.9% tax on Washington taxable income above $1,000,000 beginning January 1, 2028 (capital gains remain under RCW 82.87) - out of scope for 2026 but relevant to long-range projections; litigation likely. Washington also has an estate tax (separate).

Pending confirmation

2 items
  • 2026 capital gains standard deduction not yet published: DOR's capital gains page (fetched 2026-10-02) still shows only 'The standard deduction for 2025 is $278,000'. RCW 82.87.150(1) requires publication by Oct 31 (expected by Oct 31, 2026 at https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax). Placeholder $278,000 (2025); upward-only, Seattle CPI-U, rounded to $1,000.
  • ESSB 6346 (ch. 238, Laws of 2026) now read in the session law : 9.90% from Jan 1 2028 (txt line 1079), $1,000,000 household standard deduction (sec. 314), CPI-W indexing from October 2029 in odd years (sec. 316). Still open (secondary only): the I-645 repeal initiative on the Nov 3 2026 ballot and the pending constitutional challenge.

Sources

  1. Overview, exemptions, 2025 standard deduction $278,000 per individual/married couple/domestic partnership, charitable deductionhttps://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
  2. Yearly table of indexed amounts 2022-2025 (std deduction 250k/262k/270k/278k; charitable max 100k/105k/108k/111k)https://dor.wa.gov/node/151401
  3. Tiered rate: 7% first $1M, 7% + 2.9% above $1M, beginning TY2025https://dor.wa.gov/forms-publications/publications-subject/special-notices/new-tiered-rates-washingtons-capital-gains-tax
  4. RCW 82.87.040 - 7% rate; additional 2.90% on portion exceeding $1,000,000 from Jan 1, 2025https://app.leg.wa.gov/RCW/default.aspx?cite=82.87.040
  5. RCW 82.87.050 - exemptions incl. real estate and retirement accountshttps://app.leg.wa.gov/RCW/default.aspx?cite=82.87.050
  6. RCW 82.87.060 - standard deduction, combined for spouses/domestic partnershttps://app.leg.wa.gov/RCW/default.aspx?cite=82.87.060
  7. RCW 82.87.120 - joint filing; spouses combined as one individual for thresholdshttps://app.leg.wa.gov/RCW/default.aspx?cite=82.87&full=true
  8. RCW 82.87.150 - inflation indexing (Seattle CPI-U, publish by Oct 31); RCW 82.87.150 (annual adjustment, publish by Oct 31, as amended 2025 c 409 s 11) and DOR capital gains page showing $278,000 for 2025 onlyhttps://app.leg.wa.gov/RCW/default.aspx?cite=82.87.150
  9. SB 6346 millionaires tax from 2028 (secondary)https://www.kiplinger.com/taxes/washington-state-millionaire-tax
  10. WA DOR capital gains page history (Wayback 2024-11-20, 2024-12-10, 2025-10-30): the October year-N figure is the year-N deduction ($270,000 for 2024, $278,000 for 2025), under the ESSB 5096 sec. 17 wording (*.txt); same convention puts the first income-tax…https://web.archive.org/web/2025*/https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
  11. WA Attorney General explanatory statement, IP26-645 (July 23, 2026): $1,000,000 deduction indexed 'Beginning in 2029'https://www.sos.wa.gov/sites/default/files/2026-07/ExStmt_IP26-645.pdf

See your own years. Taxtirement applies these Washington rules, and the federal and Medicare rules, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.

This page summarizes Washington's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.