Washington's capital gains tax: 9.9% on stock, 0% on property
The mechanics of the excise tax, the 2025 surcharge, and the exemption that makes real estate the tax-favored asset class in this state.
The mechanics
Washington taxes long-term capital gains realized by individuals above an indexed standard deduction. The current 2026 status is: Not yet published; the Department of Revenue lists $278,000 for 2025. In 2025 the legislature added 2.9% on gains above $1 million in a single year. The tax is an excise on the sale, filed with your state return. It survived its court challenge in 2023.
What is exempt
Real estate, in full: land and structures, whether a home, a rental, or bare land. Retirement accounts are also exempt, along with certain small-business and other statutory carve-outs.
A worked example
A Bellevue director sells $1.8M of appreciated Microsoft stock with a $1.5M long-term gain:
- Federal: roughly 23.8% at the top (20% long-term rate plus 3.8% net investment income tax), about $357K
- Washington: 7% on the first $1M of taxable Washington gains, then 9.9% above $1M
- The exact state amount depends on the applicable deduction and other return facts.
The same household selling a rental property with a $1.5M gain owes Washington capital-gains tax of zero, and a 1031 exchange may defer the federal side when its requirements are met.
The strategic consequence
For most equity-heavy households, diversification out of concentrated stock is going to happen eventually. The destination now matters. Gains built in Washington real estate are outside this tax under current law; gains built in a brokerage account are inside it. Over ten to twenty years on the Eastside, the difference compounds meaningfully.
Where I fit
I handle the property side of the rotation: which submarkets, which asset type, what realistic yield looks like, and how to buy without overpaying. Your CPA models the tax. I execute the real estate.
For the enacted 2028 income tax and the I-645 repeal vote, read the Eastside homeowner update. It separates the income tax from this capital-gains tax.
This is not tax or legal advice. Aditya Kasturi is a licensed real estate broker, not a CPA, attorney, or financial advisor. Figures are illustrative, based on Washington and federal law as understood at the time of writing, and laws change. Confirm any strategy on this page with your CPA and, where relevant, your estate planning attorney before acting.
Common questions
Clear answers first. If one question changes the deal, bring it into the review before you move money.
Q1Does Washington's capital gains tax apply to selling my home here?+
No. Sales of real estate are exempt from the Washington capital gains excise tax at any price. Federal rules, including the primary-residence exclusion, still apply. Confirm the details with your CPA.
Q2Can I time gains across tax years?+
Often, yes. Spreading sales across years keeps more of the gain under the annual deduction and the $1M surcharge line. Your CPA models the tranches; the review covers where property fits between them.
Q3Are there alternatives like charitable structures or Opportunity Zones?+
Both exist and can reduce or defer the tax in the right circumstances. They are advisor-led decisions; discuss them with your CPA. Where a strategy involves buying property, that part is my job.
See what the exemption is worth on your numbers.
Book a Tax-Impact Property ReviewNext steps
Keep moving forward
The Washington millionaire tax: what it covers and what it exempts
Washington enacted a 9.9% income tax above $1 million for 2028. See what I-645 would repeal, what remains separate, and where real estate fits.
View next stepWashington's Millionaire's Tax and I-645: What Eastside Homeowners Should Know
A Kirkland broker explains the Washington Millionaire's Tax, I-645, and what wealth migration means for Bellevue, Medina, and Kirkland homeowners.
View next stepRSUs vest tax-free in Washington. Selling them is another matter.
For Microsoft, Amazon, Google, and Meta employees on the Eastside: how the 9.9% capital gains rate changes RSU strategy, and where real estate fits in the sequence.
View next stepMove concentrated stock into the asset class Washington does not tax
Washington taxes large stock gains at up to 9.9% and real estate gains at 0%. A structured process for moving concentrated equity into Eastside income property.
View next step