While the state does not impose a broad personal income tax, it has implemented a targeted capital gains tax designed to tax profits from the sale of certain appreciated assets. Individuals must file a Combined Report and Pay Tax Return (Form RC) if they have Washington capital gains tax liability, even if their overall state tax liability is zero.
Capital Gains Tax Rate Washington 2024
Securities include stocks, bonds, mutual funds, and similar interests, while real property generally refers to residential real estate, including interests in cooperative housing and timeshares. Additionally, tax-loss harvesting remains a valuable strategy, where investors can offset capital gains by selling underperforming assets, thereby reducing the net gain subject to the 7% rate.
This tax is levied annually on a taxpayer's net capital gains that exceed $262,000 for joint filers or $131,000 for other filers, meaning the first portion of gains within these thresholds is not subject to state tax. Filing Requirements and Deadlines Taxpayers are required to report their capital gains and calculate any owed tax on their annual state return, which is typically due April 15th of the year following the tax year.
Capital Gains Tax Rate Washington 2024
Comparison to Federal Taxation It is important to distinguish the state capital gains tax from federal capital gains tax, which operates on a tiered system based on income level and holds a maximum rate of 20% for high earners. Assets Subject to the Levy Not all profits from sales are captured by this tax; Washington law specifically targets gains from the sale or exchange of securities and certain real property.
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