Selling a business in Washington: what the state takes (2026)
Washington has no wage income tax but taxes long-term capital gains through a separate excise tax. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- None
- Top Washington income tax rate (2026)
- $2,418,478
- State tax on a $25M long-term gain
- 33.5%
- Combined federal and state rate on $25M
- 7 of 51
- Rank by total tax on $25M (1 = highest)
How Washington taxes a business sale
- Income tax
- No broad-based individual income tax.
- Long-term capital gains
- Washington has no wage income tax, but it levies a capital gains excise tax on individuals' long-term gains on stock and other intangibles; residents are taxed on intangible gains wherever sold. The tax is 7% on gains above the standard deduction plus 2.9% on Washington capital gains above $1M, for 9.9% at the top. The $1M tier is measured after the standard deduction.
- Capital-gains-specific taxes
- Capital gains excise tax under RCW 82.87: 7%, plus 2.9% on Washington capital gains over $1,000,000 (9.9% top), after a $278,000 standard deduction (2025; indexed).
- Relief that applies only in some sales
- RCW 82.87.070 deducts all gain from selling at least 90% of a qualified family-owned small business's assets, or the taxpayer's interest in one. Conditions: the taxpayer held a qualifying interest for at least 5 years before the sale; the taxpayer or family materially participated (IRC 469 standard) for at least 5 of the 10 prior years (not required for sales to family); and worldwide gross revenue was no more than $10M (indexed: $11,095,000 for 2025) in the 12 months before the sale. A qualifying interest is a sole proprietorship or at least 50% family ownership, or at least 30% with 2 families holding 70% or 3 families holding 90%. It covers many founder-owned lower-middle-market sales, but not companies with revenue above about $11M or minority/investor holders. Gain directly attributable to real estate owned by the entity is exempt under RCW 82.87.050.
- Entity-level taxes
- No corporate income tax; businesses pay gross-receipts B&O tax. From tax year 2025 a credit is allowed against the capital gains tax for B&O tax paid on the same sale.
- Local taxes
- No local income taxes. A separate 9.9% tax on income over $1M (SB 6346, signed March 30, 2026) is reported to start in 2028 and does not affect 2026.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Washington tax | $933,478 | $2,418,478 | $4,893,478 |
| Total tax | $3,313,478 | $8,368,478 | $16,793,478 |
| Effective combined rate | 33.13% | 33.47% | 33.59% |
| Net proceeds after tax | $6,686,522 | $16,631,522 | $33,206,522 |
| Extra tax versus Texas | $933,478 | $2,418,478 | $4,893,478 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Washington tax
- $2,418,478
- Washington capital gains excise tax (7%)
- $1,730,540
- Washington additional capital gains tax (2.9%, total 9.9%)
- $687,938
- Total tax
- $8,368,478
- Effective rate on the gain
- 33.47%
- Net proceeds after tax
- $16,631,522
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Methodology and sources
Washington figures are for tax year 2026. Rates per RCW 82.87.040: 7%, plus an extra 2.9% over $1M from tax year 2025. DOR's 'Updated Amounts' table did not yet show a 2026 standard deduction when checked (RCW 82.87.150 requires publication by Oct 31), so the 2025 figure of $278,000 is used. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1RCW 82.87.040 Tax imposed (7%; additional 2.9% over $1,000,000)
- 2RCW 82.87.020 Definitions ('Washington capital gains' = adjusted capital gain as modified in 82.87.060)
- 3RCW 82.87.060 Deductions (standard deduction $250,000, indexed)
- 4RCW 82.87.070 Qualified family-owned small business deduction
- 5RCW 82.87.150 Annual adjustments
- 6WA DOR, Do you owe capital gains tax? (Updated Amounts table, 2022-2025)
- 7WA DOR, Capital gains tax
- 8WA DOR special notice, New tiered rates for Washington's capital gains tax (June 30, 2025)
- 9Governor Ferguson signs Millionaires' Tax into law (SB 6346)
- 10Axios, Ferguson signs Washington income tax targeting millionaires. Secondary source
- 11Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Washington,” 2026, https://laurent.capital/research/seller-tax-map/washingtonLink (HTML)
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