Washington State has no income tax, the nation’s largest tech employer concentration outside of California, and a cost of living that ranges from extremely expensive (Seattle) to genuinely affordable (Spokane, Tri-Cities). The no-income-tax advantage is massive for high earners — a tech worker earning $200,000 saves roughly $18,000 per year compared to California. The tradeoff is the highest combined sales tax in the nation (up to 10.25% in Seattle) and a new 7% capital gains tax on stock/bond sales above $250,000. Seattle’s median home price exceeds $800,000, but eastern Washington cities like Spokane and the Tri-Cities offer homes under $400,000. The state works best for high-income W-2 earners and remote workers who benefit from the zero income tax.
Washington at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 7.8 million | 13th |
| Median household income | $90,325 | 5th highest |
| Median home price | $580,000 | High |
| Cost of living index | 110 (state) / 170+ (Seattle) | Above average |
| State income tax | None (7% on capital gains over $250K) | N/A |
| Sales tax | 6.5% (+ local up to 4%) | Highest combined in US |
| Property tax (effective rate) | 0.87% | Below average |
Income and Housing
Seattle Metro
| Area | Median Income | Median Home Price | Median Rent (2BR) |
|---|---|---|---|
| Seattle (city) | $110,000 | $820,000 | $2,400 |
| Bellevue | $130,000 | $1,200,000 | $2,800 |
| Redmond | $138,000 | $1,100,000 | $2,600 |
| Tacoma | $68,000 | $470,000 | $1,600 |
| Everett | $65,000 | $580,000 | $1,650 |
| Kent | $72,000 | $530,000 | $1,700 |
| Olympia | $70,000 | $450,000 | $1,500 |
Rest of Washington
| City | Median Income | Median Home Price | Median Rent (2BR) |
|---|---|---|---|
| Spokane | $55,000 | $370,000 | $1,250 |
| Vancouver (WA) | $68,000 | $460,000 | $1,500 |
| Tri-Cities (Richland/Kennewick) | $78,000 | $400,000 | $1,350 |
| Bellingham | $55,000 | $580,000 | $1,600 |
| Yakima | $52,000 | $310,000 | $1,050 |
| Wenatchee | $60,000 | $450,000 | $1,300 |
No Income Tax Savings: Tech Worker Example
A tech worker earning $200,000 in Seattle vs. San Francisco:
| Category | Seattle | San Francisco | Difference |
|---|---|---|---|
| State income tax | $0 | $18,100 | +$18,100 saved |
| Sales tax (8.25% vs 8.625%) | Similar | Similar | Negligible |
| Median home price | $820,000 | $1,350,000 | +$530,000 cheaper |
| Property tax (annual, on median home) | $7,134 | $10,125 | +$2,991 saved |
| Total annual advantage | ~$21,000/year |
Sales Tax: Highest in the Nation
| Area | Combined Sales Tax Rate |
|---|---|
| Seattle | 10.25% |
| Tacoma | 10.20% |
| Spokane | 8.90% |
| Vancouver, WA | 8.40% |
Vancouver, WA has a unique advantage: no income tax (WA) and residents can shop in Portland, OR (no sales tax).
The Capital Gains Tax
Starting 2023, Washington imposes a 7% tax on capital gains above $250,000/year from the sale of stocks and bonds. This applies to:
- Stock sales
- Bond sales
- Business interest sales
It does NOT apply to: real estate sales, retirement account withdrawals, or small business stock.
Washington Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| No state income tax on wages | Seattle housing among most expensive in US |
| 5th highest median income | Highest sales tax in nation (up to 10.25%) |
| Strong tech economy (Amazon, Microsoft, Boeing) | 7% capital gains tax |
| Below-average property taxes | High healthcare costs |
| Spokane/Tri-Cities much more affordable | Rainy climate (western WA), wildfire smoke (eastern) |
Related: Cost of Living by State | States with No Income Tax | Property Tax by State | Average Rent by State