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Washington State Taxes

Washington-Income-Taxes

State Income Taxes in Washington

The state of Washington is one of only 9 states with no state income tax.

The others are:

*Note: Tennessee and New Hampshire does tax Interest and Dividend Income.

Gross Receipts Business Taxes in Washington

Similar to Texas, the state of Washington has no business income tax, but does have a Gross Receipts tax

Washington’s Gross Receipts Tax is called Business & Occupation Tax (B&O). The B&O ranges from between .13% to 3.30% depending on your business classifications.

New Capital Gains Tax – 7%

Starting January 1st, 2022, the State of Washington is implementing a new Capital Gains tax. This is how the tax works:

  • There is a 7% tax on the sale of stocks, bonds, equities, property, and other investments.
  • The threshold to pay the tax is $250,000
  • Tax starts in 2022. but you don’t have to pay until you file your tax return in early 2023.

Labor and Industries (L&I) in Washington State

All states have requirements regarding workers compensation for your employees. Generally, the employer will contact various Workers Compensation companies and choose one on their own. In the State of Washington, all workers compensation is run by the State through the Washington Department of Labor & Industries. A company’s tax rate is based on it’s NAICS code (type of service you offer). Most payroll companies, such as ADP and Gusto will calculate and pay your workers compensation through your weekly payroll, just like unemployment insurance.

Sales and Property Taxes in Washington

Sales Tax – like many states, Washington has multiple sales tax rates. One at the state level and another at the local level. The state rate is 6.50% and the average local rate is 2.73% (total average rate for Washington Sales Tax is 9.23%).

Property Taxes in Washington – the average property tax rate for residential property in the state of Washington is 0.84%, which is slightly below the national average average rate of 1.03%. 

Estate Taxes in Washington

Washington is one of a few states that has an estate tax. The tax rate ranges from 10% – 20% on any estate over $2,193,000.

Payroll Taxes in Washington

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Washington has a wage base of $52,700 for 2021, highest in the country.
  • UI Rates – range from 0.13% to 5.72%
  • Schedules – Washington has a only one schedule

Washington Business Entities – LLCs

Washington is an inexpensive state to to set up your LLC. Here are some important facts:

  • Washington’s annual LLC fee is only $60.
  • When you register with the state, you pay a one time fee of $200
  • Secretary of State of Washington website – click here

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