Does Washington have an income tax?

Washington has no traditional income tax on wages or salary. However, starting 2023, Washington enacted a 7% capital gains tax on the sale of stocks, bonds, and other capital assets exceeding $250,000 per year. The state also has the highest sales tax in the nation when combined with local rates (up to 10.25% in Seattle).

How expensive is Seattle?

Seattle has a cost of living index over 170, making it one of the most expensive cities in the US. The median home price in the city of Seattle is approximately $820,000, and median rent for a 1BR exceeds $2,200. However, the no-income-tax advantage means high earners keep significantly more of their salary compared to California or New York.

Living in Washington State: Income, Housing, Taxes & Cost of Living (2026)

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)