Washington is one of the few states that does not have an income tax for individuals. However, it does impose a capital gains tax on the sale or exchange of long-term investments such as stocks and bonds. The rate is 7%, and a $250,000 exemption exists for married or single filers.
Washington also has a sales tax levied on the purchase of tangible goods and services. This includes retail sales, use taxes, and business and occupation (B & O) taxes. B & O tax is a percentage of a company’s gross receipts and is charged on most businesses, including those formed as corporations, LLCs, and partnerships.
The state also collects property tax levied on the value of a home or other real estate. In addition, the state has a gas tax, which is collected on every gallon of gasoline purchased in the state.
Washington Real Estate Excise Tax (REET)
Washington is one of a few states that does not have an income tax. Instead, it relies on other forms of taxation to generate revenue. These include a sales tax and business and occupation tax. The state also collects a real estate excise tax or REET. The REET is a state-level property tax that is levied on the sale or exchange of long-term capital assets. The tax is based on the profit and is only collected when the profits exceed $250,000.
The tax is controversial and has been challenged in court. The challengers argued that the tax violated the constitutional restriction on taxes on income. However, the court ruled that the tax is constitutional because it is an excise tax. The court also ruled that the tax does not violate the dormant commerce clause because it has a significant nexus with the in-state activity of the sellers.
Washington State Taxes Due Dates
The state’s tax deadlines aren’t as flexible as the federal ones, so make sure you file your returns by the appropriate dates. These due dates include filing the Washington R&D tax credit, business license taxes, property taxes, and payroll taxes. If a due date falls on a weekend or legal holiday, the new due date is the following day. Amended returns are also allowed, but only if you have a good reason for the amendment.
Sales tax applies to nearly all tangible goods sold within the state, and a wide range of services are also taxable, including cleaning, construction, installation, altering, catering, and tattooing. If you’re not sure whether a service is taxable, check the Department of Revenue website for more information. Payments must be POSTMARKED by the due date to qualify for a discount and avoid interest charges. Late payments are charged interest on the full amount of the unpaid tax.