ALERT - The following amounts have changed for the 2023 tax year:
Standard Deduction: $262,000 (Increase from $250,000 in 2022)
Charitable Donation Deduction Threshold: $262,000 (Increase from $250,000 in 2022)
Cap on Amount of Charitable Donation Deduction: $105,000 (Increase from $100,000 in 2022)
Worldwide gross revenue limit for Qualified Family-Owned Small Business deduction: $10,480,000
(increase from $10,000,000 in 2022)
Only individuals owing capital gains tax are required to file a capital gains tax return, along with a copy of their federal tax return for the same taxable year. The capital gains tax return is due at the same time as the individual's federal income tax return is due.
All taxpayers must electronically file their capital gains excise tax returns and all required documentation. The tax must be paid by electronic funds transfer or other form of department authorized electronic payment, such as by credit card. The department may waive the electronic filing and payment requirement for good cause. You may incur additional penalties if you do not submit payment electronically.
Penalties will apply to late returns. Additional penalties and interest will apply to late payments.
Individuals who receive a filing extension for your federal income tax return: You may receive an extension for your capital gains tax return by submitting a request electronically through My DOR on or before the original due date. A filing extension does not extend the due date for submitting a payment.
The department has determined that estimated payments will be treated as estimated returns. This means if you submit a payment by the filing deadline of April 18, 2023, you will not owe additional penalties unless you have substantially underpaid your tax liability. Substantially underpaid means you have paid less than 80% of the tax due.
Please see our interim guidance statement for more information on this topic.
If you have general questions regarding Capital Gains or would like to request a binding ruling, please use our web page titled Request a tax ruling.
The 2021 Washington State Legislature recently passed ESSB 5096 (RCW 82.87) which creates a 7% tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets.
This tax only applies to individuals. However, individuals can be liable for the tax because of their ownership interest in a pass-through or disregarded entity that sells or exchanges long-term capital assets. The tax only applies to gains allocated to Washington state.
There are several deductions and exemptions available that may reduce the taxable amount of long-term gains, including an annual standard deduction of $250,000 per individual. In the case of spouses or domestic partners, the combined standard deduction is limited to $250,000 whether they file joint or separate returns.
The tax takes effect on Jan. 1, 2022, and the first payments are due on or before April 18, 2023.
The revenue collected from this tax will fund the education legacy trust account and common school construction account.
The sale or exchange of the following assets are exempt from the Washington capital gains tax:
The following deductions apply:
The following tax credits are available: