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Taxes Unique to Washington State: Some of the Taxes Washington Residents and Businesses Encounter
Washington is one of the few states without a traditional personal income tax on wages. However, the state relies on a broad mix of excise taxes, business taxes, sales taxes, and other revenue sources to fund state and local government. As a result, Washington residents and business owners often encounter taxes that are uncommon—or significantly higher—than those found elsewhere in the country.
The list below highlights many of Washington’s most recognizable taxes and fees. Several figures have been verified against current Washington State law, while others represent approximate or commonly referenced rates because they vary by location, business classification, or the type of transaction involved. Businesses and individuals should always consult the applicable state or local agency when determining their actual tax liability.
If you have questions or concerns about how any of these taxes or fees may affect you or your business, contact Pivotal Forensic Accounting & Audits today.
While we have made every effort to ensure the information is accurate, some rates are estimates and are subject to change. This chart is provided as a general reference and should not be considered a complete listing of all applicable taxes, fees, or jurisdictions.
B&O Tax
Washington taxes businesses on gross receipts rather than net profit. Rates vary by industry classification.
Capital Gains Tax
Applies to qualifying long-term capital gains above the annual exemption. An additional 2.9% surtax applies to gains above the higher statutory threshold.
Cigarette Tax
State cigarette tax collected on each pack sold in Washington.
Estate Tax
Applies to taxable estates exceeding Washington’s exemption amount, approximately $3 million beginning July 2026.
Excise Taxes
Washington imposes numerous excise taxes on selected goods and activities.
Financial Institution B&O
Rate varies depending on the financial institution classification.
Fuel / Carbon Costs
Climate-related compliance costs may be reflected in fuel prices but are not a direct per-gallon tax.
Gas Tax
Washington has one of the highest gasoline taxes in the United States.
Insurance Premium Tax
Generally applied to insurance premiums collected by insurers.
Local B&O Taxes
Some cities impose their own Business & Occupation taxes in addition to the state B&O tax.
Marijuana Excise Tax
Retail cannabis excise tax, one of the highest in the nation.
Property Tax
Washington has no state property tax, but local property taxes fund schools, counties, cities, and special districts.
Real Estate Excise Tax (REET)
Graduated state tax on real estate sales, with additional local REET where applicable.
Retailing B&O Tax
Applied to gross receipts from retail businesses.
Sales Tax
State sales tax is 6.5%, with local rates bringing total sales tax above 10% in many communities.
Services B&O Tax
Many professional service businesses pay a higher B&O tax classification.
Use Tax
Generally applies to taxable items purchased outside Washington but used within the state.
Utility Taxes
Washington does not impose a statewide utility tax, but many cities levy utility taxes ranging from approximately 6% to 12%.
Verified Notes
- Cannabis Excise Tax: Washington imposes a 37% excise tax on the retail selling price of cannabis products.Source:
RCW 69.50.535 – Washington State Legislature
- Capital Gains Tax: The original infographic is outdated. Washington’s capital gains tax is 7% on qualifying long-term capital gains above the annual exemption, with an additional 2.9% surtax on gains exceeding the higher statutory threshold enacted in 2025. It is not simply a flat 9.9% on gains over $250,000.Source:
Washington Department of Revenue – Capital Gains Tax
- Estate Tax: Washington’s estate tax remains progressive, ranging from 10% to 20%. Beginning in 2026, the exemption amount increased to approximately $3 million, replacing the previous $2.2 million threshold.Source:
Washington Department of Revenue – Estate Tax
- Real Estate Excise Tax (REET): The state REET is a graduated tax ranging from 1.10% to 3.00%, with additional local REET taxes imposed in many jurisdictions.Source:
Washington Department of Revenue – Real Estate Excise Tax
