In 2021, the Washington State Legislature passed ESSB 5096 (RCW 82.87) creating a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets.
The tax only applies to gains allocated to Washington state, and it only applies to individuals. However, individuals can also be liable for the tax because of their ownership interest in a pass-through entity or disregarded entity that sells or exchanges long-term capital assets.
There is an annual standard deduction that reduces the amount of long-term gains:
| Tax Year | Annual Standard Deduction |
| 2022 | $250,000 |
| 2023 | $262,000 |
| 2024 | TBD |
The standard deduction is adjusted annually using a formula based on the consumer price index.
While the annual standard deduction is per individual and, in the case of spouses or domestic partners, the combined standard deduction is limited to $250,000 whether they file joint or separate returns.
The Washington State Capital Gains return can be prepared and filed at the Washington DOR website here.
See here for video assistance on completing the form.
Note: The Washington State Capital Gains return is not supported in TaxSlayer Pro.
Additional Information: