Tax Planning for Washington
Tech Professionals & Investors.
Washington has no traditional income tax — but the new capital gains tax on high earners adds complexity. Between RSU vesting, stock option exercises, and real estate investments, Washington residents need a CPA who understands the full federal picture.
The Washington Advantage
Washington state has no personal income tax on wages, business income, or most investment income. For the state's large population of tech workers — at Amazon, Microsoft, Google, Meta, and hundreds of startups — this means no state tax bite on your salary or RSU vesting. But your federal tax bill can be enormous without the right strategy.
Washington's new capital gains tax (7% on gains exceeding $270,000) adds a layer of complexity for high earners selling stock, real estate, or business interests. This requires careful timing of stock sales, strategic use of Qualified Small Business Stock (QSBS) exclusions, and coordination between state and federal capital gains planning.
Seattle and the Puget Sound region also have one of the strongest real estate markets in the country. We serve Washington investors who use cost segregation, 1031 exchanges, and the STR loophole to build tax-efficient rental portfolios — all while navigating the state's unique tax landscape.
Washington Tax Quick Facts
State Income Tax
None*
Avg. Property Tax
0.87%
Sales Tax
6.50%+
B&O Tax
0.47–1.5%
Notable Washington Tax Rules
- No personal income tax on wages, self-employment, or most investment income
- New 7% capital gains tax on gains exceeding $270,000 (real estate excluded, but stock sales are subject)
- Business & Occupation (B&O) tax is a gross receipts tax — not a net income tax — ranging from 0.47% to 1.5% depending on industry
- No corporate income tax, but the B&O tax applies to all business activities in Washington
- Community property state — affects how RSUs, stock options, and investment income are reported on federal returns for married couples
Washington vs. National Average
| Category | Washington | National Avg. |
|---|---|---|
| State Income Tax | 0%* | 4.6% |
| Capital Gains Tax | 7% (>$270K) | Varies |
| Avg. Property Tax | 0.87% | 1.07% |
| State Sales Tax | 6.50% | 5.09% |
| B&O Tax (Service) | 1.5% | N/A |
* Washington has a 7% capital gains tax on gains exceeding $270,000 (excludes real estate).
Key Strategies for Washington Residents
Who We Serve in Washington
Tech Professionals
RSUs, ISOs, NQSOs, ESPP — Washington's tech industry creates complex federal tax situations. We help Amazon, Microsoft, and startup employees optimize stock compensation timing, manage AMT exposure, and build tax-efficient investment portfolios.
Learn moreReal Estate Investors
Seattle's rental market, Eastside appreciation, and vacation rentals in the San Juan Islands create diverse investment opportunities. We use cost segregation, 1031 exchanges, and the STR loophole to minimize your federal tax on real estate income.
Learn moreBusiness Owners
Washington's B&O tax is a gross receipts tax — not income-based — which changes how you think about entity structure. We optimize your S-Corp election, reasonable compensation, and retirement funding in the context of Washington's unique business tax environment.
Learn morePhysicians
UW Medicine, Swedish Medical, Providence, and Virginia Mason serve a large physician population in the Puget Sound. We help Washington physicians reduce federal taxes through moonlighting S-Corps, retirement plan optimization, and real estate investment strategies.
Learn moreLive in Washington? Let's Reduce Your Federal Tax Bill.
Book a free 30-minute strategy call to see how much you could save. We serve Washington clients 100% remotely — no travel required.
Schedule Your Free CallHow We Work Together
Free Strategy Call
A 30-minute video call to understand your income and stock comp.
Tax Diagnostic & Plan
We review returns, RSU vesting, and portfolio to build a plan.
Implementation
Entity formation, elections, retirement plans, stock timing.
Year-Round Advisory
Quarterly planning, RSU coordination, year-end optimization.
Potential Scenarios, Potential Savings
Amazon Employee — RSU Tax Optimization
A senior engineer at Amazon with $480K in total comp ($200K base + $280K in RSU vesting) was losing over 40% of his RSU income to federal taxes. We implemented a strategy combining tax-loss harvesting, charitable giving of appreciated stock, and strategic timing of stock sales to reduce his effective federal rate by 8 percentage points — saving $38K annually.
Annual Savings
$38,000
Seattle RE Investor — STR Loophole
A Microsoft product manager purchased a vacation rental in Leavenworth, WA. With average stays of 4.5 days and active management, she qualified for the STR loophole. A cost segregation study generated $165K in first-year depreciation, offsetting a significant portion of her $350K tech salary.
Annual Savings
$49,500
Startup Founder — QSBS + Capital Gains Planning
A Bellevue startup founder preparing for a $5M exit structured his equity as Qualified Small Business Stock (Section 1202). By holding for over 5 years and meeting all QSBS requirements, he excluded $10M in capital gains from federal taxation — and coordinated the timing to minimize Washington's 7% capital gains tax impact.
Annual Savings
$350,000+
Washington Tax Questions
Washington has no traditional personal income tax on wages, business income, or most investment income. However, as of 2022, Washington imposes a 7% tax on capital gains exceeding $270,000 from the sale of stocks, bonds, and other capital assets (real estate is excluded). This applies to long-term capital gains only.
When you sell vested RSU shares and realize more than $270,000 in capital gains in a single year, the excess is subject to Washington's 7% capital gains tax — on top of federal capital gains tax. We help tech professionals time their stock sales, use tax-loss harvesting, and explore charitable giving strategies to minimize both state and federal exposure.
The Business & Occupation (B&O) tax is a gross receipts tax — meaning it's based on your total revenue, not profit. Rates range from 0.47% (retail) to 1.5% (service businesses). Unlike an income tax, you owe B&O tax even if your business operates at a loss. This affects entity structure decisions, and we factor it into your overall tax optimization.
Yes. This affects how RSUs, stock options, and investment income are divided for federal tax purposes, particularly for married couples filing separately or going through divorce. We help navigate the community property implications in your federal tax planning.
Ready to Keep More of What You Earn?
Washington has no state income tax. Let's make sure your federal strategy is just as optimized. We serve Washington clients 100% remotely.