Washington State’s capital gains tax has increased to 9.9% for gains exceeding $1 million, following the passage of SB 5813. The updated rate, retroactive to January 1, applies to long-term asset sales such as stocks and bonds. Supporters say the change helps address tax inequities and funds essential services, particularly education and school construction. The Washington State Department of Revenue reports that tax collections for 2024 have already surpassed $560 million.
However, some business advocates caution that the tax hike could drive wealth and businesses out of state. Critics argue that higher rates may discourage investment and prompt business owners to relocate to more tax-friendly states, potentially reducing future tax revenue and local economic activity. They also express concern that the policy could impact not just the ultra-wealthy but also small- and medium-sized business owners relying on asset sales for retirement.
Despite these concerns, Washington voters chose to retain the capital gains tax in November 2024, rejecting Initiative 2109 with 64% of the vote. As the state moves forward, the conversation continues about balancing revenue generation with maintaining a business-friendly climate.
