Income tax

No income tax in Washington state

Washington state does not have a personal or corporate income tax. However, people or businesses that engage in business in Washington are subject to business and occupation (B&O) and/or public utility tax. The business’s gross receipts determine the amount of tax they are required to pay. Businesses that make retail sales or provide retail services may be required to collect and submit retail sales tax (see Marketplace Fairness – Leveling the Playing Field).

Federal sales tax deduction for tax year 2018

You may continue to itemize and deduct sales tax on your 2018 federal income tax returns. If you qualify to itemize your deductions on Form 1040, Schedule A, you can take this deduction. (This does not apply if you take the standard deduction.)

If you did not keep receipts, the IRS provides an online Sales Tax Deduction Calculator to determine the amount of optional general sales tax you can claim, or you can use the Optional State Sales Tax Tables. If you keep all your receipts, you can deduct actual sales and use tax you paid during the tax year.

Deduction cap for tax years 2018 to 2025

Your deduction for state and local income, sales, and property taxes is limited to a combined total deduction. The limit is $10,000 - $5,000 if married filing separately. You cannot deduct anything above this amount.

This limitation expires on Dec. 31, 2025.

(IRS Tax Reform Tax Tip 2018-176, Nov. 14, 2018).

More information

For information about the federal income tax deductions, please visit the IRS website.