Washington: Nine Signs the State Counts You as a Resident
Washington has no income tax, but it decides residency by nine indicators — and residency is what drives the capital gains tax and a credit worth up to $1,330.
Washington: Nine Signs the State Counts You as a Resident
"Washington has no income tax" is true. But it does not follow that residency there is irrelevant. Residency is exactly what determines both the capital gains tax and your right to a refundable credit of up to $1,330.
Nine indicators of residency
A person is treated as a Washington resident if their actions show an intent to live in the state on something other than a temporary basis. And here is the detail that catches people out: you can be treated as a Washington resident even while you are a resident of another state.
The state starts from a presumption of residency if any one of these indicators is met. The person:
That last item is clearly written for people who live on the road, and it shows the state's logic: a permanent home has to be somewhere, and if it is nowhere else, then it is Washington.
One more thing: Washington is a community property state. Everything acquired or earned after a marriage or a registered partnership is treated as jointly owned by the spouses. For families this affects both the division of property and the federal return when spouses file separately.
The capital gains tax
Since 2022 the state has taxed sales and exchanges of long-term assets — stocks, bonds, business interests. The tax applies only to individuals, but liability can also reach you through an interest in a pass-through or disregarded entity that sold such an asset.
Rates for 2025: 7% on the taxable amount up to $1,000,000 and 9.9% on anything above that. The upper bracket was created by SB 5813, signed on May 20, 2025, retroactive to January 1, 2025.
An important detail: the brackets apply after the standard deduction. That means the 9.9% rate only starts working once total gain for the year exceeds roughly $1,278,000. Note also that the million-dollar threshold is not indexed for inflation, while the standard deduction is.
Deductions:
What is not taxed: real estate, and the share of an interest in a company attributable to that company's real estate; assets held in retirement accounts; property taken under the threat of condemnation; livestock used in farming; business assets that are depreciated or expensed under §179; timber and timberland; commercial fishing quotas; goodwill from the sale of an auto dealership franchise.
Filing: electronically only, together with a copy of the federal return; payment is electronic as well. The due date for 2026 is April 15, 2027. Credits are available for tax paid to another jurisdiction on the same gain, and for B&O tax.
New for 2026: HB 1376 (Chapter 191, Laws of 2026, effective June 11, 2026) allows you to pay the tax in advance — as much as six months before the filing date. Convenient if you sold an asset early in the year and would rather not sit on the money until April.
Working Families Tax Credit — up to $1,330
This is a refund of part of the sales tax you paid, built on the model of the federal EIC. The detail that matters most for our audience: the credit is available to people who file with an ITIN, not only with an SSN.
Requirements:
Income limits for 2026:
| Children | Single, HOH, MFS | Jointly |
|---|---|---|
| 0 | $19,540 | $26,820 |
| 1 | $51,593 | $58,863 |
| 2 | $58,629 | $65,899 |
| 3 or more | $62,974 | $70,244 |
Credit amounts for 2025: $335 with no children, $660 with one child, $995 with two and $1,330 with three or more; the minimum for anyone who qualifies is $50. The department had not yet published the 2026 maximums as of publication — use last year's as a guide and check before you file.
For comparison, the 2025 income limits were lower: $19,104 / $26,214 with no children, $50,434 / $57,554 with one child, $57,310 / $64,430 with two, and $61,555 / $68,675 with three or more.
The application is filed on Form 14 0001 through tax preparation software, online in MyDOR, or on paper. The filing window for 2026 opens on February 1, 2027, and the final deadline is December 31, 2030. For 2025 the application is accepted through December 31, 2029 — so years you missed can still be claimed.
What to do
Sources
dor.wa.gov — the Capital Gains Tax and Working Families Tax Credit sections; RCW 82.87; workingfamiliescredit.wa.gov.
Living in Washington and never applied for the Working Families Tax Credit? Book a consultation — we will work out which years you can still claim it for.
