The Washington millionaire tax: what it covers and what it exempts
Three changes since 2022 altered what wealthy Washington households pay: a capital gains excise tax, a surcharge on gains above $1 million, and a higher estate tax. This page explains all three in plain language, written from the perspective of the asset the law treats differently: real estate.
7%
Base rate on long-term gains above ~$270K per year (indexed)
9.9%
Top rate after the 2025 surcharge on gains above $1M
35%
Top estate tax rate above the $3M exclusion
The three taxes, side by side
The capital gains excise tax (2022) applies 7% to long-term gains above a standard deduction of roughly $270,000 per year, indexed annually. It covers stock, bonds, and business interests. It does not cover real estate or retirement accounts.
The 2025 surcharge adds 2.9% on gains above $1 million in a single year, bringing the top rate to 9.9%. The same exemptions apply.
The estate tax, raised in 2025, now reaches 35% above a $3 million exclusion, with no portability between spouses. Assets removed from the estate through proper planning are outside it.
The exemption is the planning opportunity
Washington now takes up to 9.9% of a large stock sale and nothing from a real estate sale. Federal tax widens the gap further: a $2 million long-term stock gain can face a combined rate near 33.7% at the top, while the same gain on investment real estate faces only federal tax, and a 1031 exchange can defer even that.
Most portfolios in Bellevue, Kirkland, and Seattle were built before this difference existed. The practical questions it raises:
- Sequencing. If you need $3M of liquidity over five years, the order in which you sell stock and property changes the total tax paid.
- Rotation. Moving concentrated stock into income-producing property shifts future appreciation from a taxed asset class into an exempt one.
- Estate titling. With a 35% top rate and a $3M exclusion, many Eastside households are in taxable territory on the house alone.
- Residency. Some households will leave the state. Most will stay. Either choice requires a property plan.
Who is actually affected
Not everyone with an expensive house. The capital gains tax applies only in years you realize more than roughly $270,000 of gains outside real estate and retirement accounts. The people for whom this is a recurring five- or six-figure issue fall into a few groups, and those groups are geographically concentrated around Lake Washington. The neighborhood guides below cover each corridor.
This is not tax or legal advice. Aditya Kasturi is a licensed real estate broker, not a CPA, attorney, or financial advisor. Figures are illustrative, based on Washington and federal law as understood at the time of writing, and laws change. Confirm any strategy on this page with your CPA and, where relevant, your estate planning attorney before acting.
The four guides
Washington capital gains tax
Rates, the $1M surcharge, the real estate exemption, and a worked example on a $1.5M stock gain.
Washington estate tax
The $3M exclusion, the 35% top rate, and why the house is usually the largest item in the estate.
The RSU playbook
For Microsoft, Amazon, Google, and Meta employees: vest, sell, and buy in the right order.
The exit and liquidity guide
For founders: the 18 months before a term sheet, and the property moves that belong in them.
Services built around the new rules
Equity-to-real-estate rotation
Move concentrated stock into the asset class Washington does not tax.
Pre-exit planning
The real estate decisions that belong before your term sheet.
1031 exchange advisory
Reposition investment property without a current tax bill.
Tax-aware home sale
A sale plan that starts from your tax year, not the listing calendar.
Estate and trust sales
Fiduciary-grade execution for personal representatives and trustees.
Waterfront and luxury acquisition
Off-market sourcing and waterfront diligence on Lake Washington.
Leaving Washington
Selling, retaining, and establishing residency properly.
Moving to Washington
For W2 income, Washington remains the best tax deal in tech.
Common questions
Is there a Washington wealth tax on assets I hold?
Proposals to tax intangible assets have been introduced but not enacted as of this writing. The enacted taxes apply to realized gains and to estates. This page is updated when the law changes.
Does the 9.9% apply to my home sale?
No. Real estate sales are exempt from the excise tax at any price.
Do RSUs get taxed by Washington when they vest?
No. Vesting is ordinary income, and Washington has no wage income tax. The state tax applies later, if you sell at a gain above the threshold.