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WA Tax-Law Changes 2025-2026

17 legislative changes to Washington State revenue law tracked. Each entry shows status (live, reversed, challenged, pending implementation), the effective date, and links to the canonical revenue-source detail page.

The critical RHRI angle: Both the capital gains tax and the new Millionaires' Tax explicitly exempt real estate sales. Every new tax on financial assets — stocks, bonds, business income — makes real property a more attractive tax shelter. This structurally channels more capital into land, pushing values higher, which increases levy revenue for the same governments writing these exemptions.

2028 1 change

WA Millionaires' Income Tax (ESSB 6346)

ESSB 6346 9.9% on income above $1M per taxpayer

Washington's first broad income tax in ~90 years, signed by Governor Ferguson March 30, 2026. Standard $1M deduction (shared for married couples — not $2M). Inflation-indexed starting 2030. Exempts real estate sales, qualified family-owned businesses, public pensions, and ...

RE: RE sales exempt — likely accelerates land-as-asset behavior

eff: Jan 01, 2028

2026 4 changes

WA B&O Across-the-Board Increases (ESHB 2081)

RCW 82.04 Varies by industry; new 0.5% surcharge on $250M+ businesses

Sweeping B&O increases — described by WA House Republicans as part of '$12.5B largest tax increase in state history.' New surcharge on large businesses ($250M+ WA taxable income). Advanced Computing Surcharge raised from 1.22% to 7.5% (affects Amazon, Microsoft, etc.). ...

RE: Increases cost of doing business — passes through to rents and services

eff: Jan 01, 2026

New Local Government Taxing Authority (2026 session)

2026 legislature permitted new local utility taxes and new sales taxes for cities and counties. Also REMOVED voter-approval requirements for existing affordable-housing tax revenues. Directly expands Bellingham and Whatcom County's ability to raise revenue without going to ...

RE: Direct local impact — Bellingham may add utility or sales taxes without a vote

pending implementation

eff: Jan 01, 2026

WA Estate Tax 2026 Rollback (SB 6347)

RCW 83 10-20% range (restored to pre-2025 levels)

Reverted estate-tax rates to pre-2025 levels (10%-20%). Maintained $3M exemption per individual. Froze the exemption by using a defunct inflation index (STB index no longer exists), so the $3M effectively never adjusts upward. Top rate at $9M+. Signed March 25, 2026.

RE: Modest change to RE estate planning incentives

eff: Jul 01, 2026

WA Luxury Vehicle Tax (ESSB 5801)

ESSB 5801 8% on vehicles over $100K

Applies to sale, lease, or transfer of vehicles over $100K. Commercial vehicles and large trucks exempt. The companion aircraft luxury tax (10% over $500K) was repealed in the 2026 session.

RE: No direct RE link

eff: Jan 01, 2026

2025 4 changes

WA Capital Gains Excise Tax — upper tier (SB 5813)

RCW 82.87 9.9% on gains over $1,000,000 (added on top of 7% base tier)

2025 expansion to two-tier structure: 7% on gains $262K-$1M, then 9.9% above $1M. Same exclusions apply — real estate still fully exempt. Part of the 2025 mega-package alongside estate-tax and B&O increases.

RE: Real estate exempt again — even stronger incentive at high end

eff: Jan 01, 2025

WA Estate Tax 2025 Rate Increase (SB 5813)

RCW 83 Top rate raised to 35% (highest in nation) — then reversed

2025 session dramatically raised estate-tax rates and increased exemption to $3M with inflation indexing. Made WA top rate the highest in the US. Reversed less than a year later by SB 6347.

RE: Holding land in LLCs reduces estate tax exposure — incentive preserved

eff: Jul 01, 2025
reversed: Jul 01, 2026

WA Sales Tax on B2B Services (ESSB 5814)

RCW 82.08 Standard sales tax rate applied to B2B services

Added sales tax to many B2B services for the first time. So confusing that WA Department of Revenue temporarily waived penalties. 2026 legislation (SB 6346) partially reversed the most problematic provisions. Staffing, live presentations, and certain professional services ...

RE: Increases operating costs for businesses in Bellingham

partially reversed

eff: Oct 01, 2025

WA State Motor Fuel Tax

RCW 82.36 / 47.24 $0.494/gallon (post-2025 increase)

State gasoline tax, including the +6 cents/gallon increase from ESSB 5801 (2025). Distributed to county road funds and city street funds via RCW 47.24 formula.

RE: Indirect — raises construction & commuting costs

eff: Jul 01, 2025

2022 1 change

WA Capital Gains Excise Tax — base tier (SB 5096)

RCW 82.87 7% on long-term gains above ~$262K (2025, inflation-adjusted)

Washington's first broad-based capital gains tax, signed 2021 (SB 5096), upheld by WA Supreme Court March 2023. Excludes real estate, retirement accounts, and family-owned small businesses. Collected ~$800M in first year.

RE: Real estate is exempt — incentivizes holding land over stocks

eff: Jan 01, 2022

Pending / Unscheduled 7 changes

Local Income Tax Authority (contemplated in SB 6346)

Same $1M standard deduction floor required

SB 6346 explicitly contemplates cities, counties, and municipalities adopting their own local income taxes, subject to the mandatory $1M deduction floor. Seattle is the most likely early mover; Bellingham and Whatcom County could eventually follow if upheld.

RE: Could add another layer on top of property and sales taxes

pending implementation

I-2111 Constitutional Challenge to Income Tax

Initiative 2111 (2024) bans income tax in Washington and would need to be overturned for ESSB 6346 to take effect. Voters have rejected income tax 10 times from 1934-2010. Let's Go Washington pursuing repeal initiative — needs ~340K signatures by early July 2026 for November ...

RE: Uncertainty keeps real estate hedge value elevated

WA State Real Estate Excise Tax (graduated)

RCW 82.45 1.1% < $500K · 1.28% to $1.5M · 2.75% to $3M · 3.0% > $3M

Graduated state REET on real-property sales. Paid by seller. Higher AVs = higher REET.

RE: Direct — scales with property values

WA State Retail Sales Tax

RCW 82.08 6.5% of taxable retail sales

Largest state revenue source. Washington has no income tax, so the state sales tax carries the load. Applied at point of sale.

RE: Indirect — affects construction-materials cost

Bellingham Greenway III Levy (predecessor of Greenways V)

RCW 84.52 varied — historical predecessor levy

The third Greenways levy; predecessor to the current Greenways V. Voter-approved property tax dedicated to the Greenways Capital Projects Fund. Collected through 2023; superseded by Greenways V starting 2024.

RE: Same buys-land-out-of-development pattern as Greenways V

reversed: Dec 31, 2024

Bellingham HB 2015 Public Safety Sales Tax (councilmanic)

HB 2015 (2025) §201; RCW 82.14 (uncodified section) 0.10% of taxable retail sales (Bellingham only)

0.10% local public safety sales tax authorized under Engrossed Substitute House Bill 2015 (2025 WA Legislative Session). Imposed by Bellingham City Council without voter approval. Allowed under HB 2015 if the legislative authority adopts the tax by June 30, 2028; after that ...

RE: Stacks on top of (a) the older 0.10% RCW 82.14.450 PS/EMS tax, (b) the 0.20% ...

Whatcom County HB 2015 Public Safety Sales Tax (councilmanic — under consideration)

HB 2015 (2025) §201; RCW 82.14 (uncodified section) 0.10% of taxable retail sales (county-wide if imposed)

0.10% county-wide public safety sales tax authorized by HB 2015 (2025). As of March 2026, Whatcom County Council was actively debating whether to impose this tax councilmanically (no voter approval required if action taken by June 30, 2028) or to put it before voters. A Whatcom ...

RE: Stack mechanic: city and county can both impose HB 2015's 0.10% ...

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