Washington State Taxes: Everything You Need to Know
Washington state taxes date back to the territory’s inception in 1853. The state has never imposed personal income taxes but has a long history of funding its government activities with the revenue from property taxes. In 1935, the passing of the Revenue Act allowed Washington state to begin imposing excise taxes, including sales and business taxes. This additional revenue helped the state government thrive. These taxes are still in effect today, although the brackets and rates have changed due to inflation.
If you’re a resident in Washington state, it’s important to understand how the state’s tax system works. Review the information presented in this guide to learn more about tax regulations enforced in Washington and how these taxes apply to your situation.
Table of Contents
Washington Personal Income Taxes
When you earn income, you must report it to the federal government so they can ensure the proper federal income taxes were withheld throughout the year. You may be eligible for federal tax credits or you may owe additional taxes. You may also be eligible for a tax refund if too much money was withheld from your paycheck.
Washington state is one of only nine states that doesn’t impose personal income taxes on its residents. An income tax system has never been implemented in Washington. The state has always relied heavily on property taxes to fund government activities and public services.
It also focuses on business taxes to help ensure enough revenue is provided to the state government. If you’re a resident or nonresident who earned income in Washington state, you’re not required to file a tax return with the state to claim this income.
Washington Sales Tax
Washington has a 6.5% statewide sales tax. This tax is added when you purchase tangible goods and certain services in the state. City governments are permitted to collect additional taxes and set their own tax rates. When you make a purchase in a jurisdiction with a local sales tariff, your transaction is subject to a combined sales tax, including the following:
- Kings County: 7.6%;
- Pierce County: 9.6%;
- Snohomish: 9.2%;
- Spokane: 8.9%.
Some foods and ingredients are exempt from sales tax. This includes foods that aren’t ready to eat and aren’t being sold for immediate consumption. Generally, food retailers that provide eating utensils, such as forks, plates, napkins, knives, or spoons to consumers are required to charge sales tax on these transactions. Retailers that only sell separate ingredients for foods that still need preparation are exempt from the tax.
Prescription medications and newspapers are also exempt from sales tax. Cleaning services, fitness club memberships, catering services, and construction services are subject to sales tax. Sellers are responsible for filing tax returns with the state government to pay sales tax.
Washington Personal and Real Property Taxes
Personal property is the property you own that’s movable, including office equipment or computers. Real property is the property you own that isn’t movable, such as land and structures attached to it.
In Washington, you’re responsible for paying property taxes on the real estate you own and the business property you own. Property tax was the first tax the state began to collect and it now accounts for 9.4% of the state’s General Fund, which is used to provide residents with public services.
The DOR isn’t responsible for imposing property taxes — these taxes are collected by your county government. The county assessor evaluates your property and provides an assessment value based on the local market and its characteristics. The assessor is required to use strict assessment guidelines established by the DOR. Homeowners can appeal their assessments if they don’t feel their property was valued fairly.
Your property taxes are calculated using your property’s assessed value and the county’s current tax rate. The average property tax rate in Washington state is 0.92% and property owners pay an average of $2,631 in taxes each year. Tax statements are mailed in February and you must pay at least half of your bill by April 30. If your bill is less than $50, it must be paid in full by this date. If your bill is over this amount, property taxes must be paid in full by October 31.
Washington Inheritance and Estate Taxes
An inheritance tax is the tax an heir must pay when inheriting assets or property from a deceased loved one. Washington state doesn’t collect inheritance taxes.
An estate tax is a levy that an executor must pay when transferring ownership of an estate after the owner passes away. In Washington, you may be required to pay an estate tax, depending on the value of the estate and the death date of your loved one. You’re required to file an estate tax return if:
- The death occurred between 2013 and October 22, 2016, and the estate is worth $2 million or more.
- The death date is between October 23, 2016, and December 31, 2016, and the estate is worth $2,079,000 or more.
- The death occurred in 2017 and the estate is worth $2,129,000 or more.
- The death date is from 2019 to the present and the estate is worth $2,193,000 or more.
If you’re required to pay estate taxes, the tax rate you pay may vary between 10% and 20%, depending on the value of the estate.
Other Washington Taxes
Washington State Litter Tax
Washington state imposes a litter tax on manufacturers, retailers, and wholesalers of products that fall into certain categories which are proven to contribute to the growing litter problem. There are a total of 13 categories, some of which include household paper, groceries, cigarettes, cleaning agents, and metal containers.
Businesses that produce these items are required to pay 0.00015% of their taxable income to the government. The funds are used by the Department of Ecology to employ young residents to clean up litter.
Washington State Spirits Tax
The DOR imposes a sales tax on liquor that’s sold in its original container, called the spirits sales tax. Consumers are responsible for paying a 20.5% tax on these beverages while on-premise retailers, such as bars and restaurants, pay 13.7%.
Marijuana distributors must pay a 37% excise tax on recreational marijuana to the state’s Liquor and Cannabis Board (LCB). There are tax exemptions for certain medical marijuana and low-THC products.
The revenue the state government receives from Washington property and sales taxes is used to fund public services and government activities. By reviewing the tax system’s rules and regulations, you can be sure you’re paying the correct taxes to contribute to government revenue and continue improving the state.
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This post was updated February 4, 2020. It was originally published February 4, 2020.