Exemptions, deductions, and credits
The sale or exchange of the following assets are exempt from the Washington capital gains tax:
Real estate.
Interests in a privately-held entity to the extent that the capital gain or loss from such sale or exchange is directly attributable to the real estate owned directly by such entity.
Assets held in certain retirement accounts.
Assets subject to condemnation, or sold or exchanged under imminent threat of condemnation.
Certain livestock related to farming or ranching.
Assets used in a trade or business to the extent those assets are depreciable under Title 26 U.S.C. Sec. 167(a)(1) of the internal revenue code or qualify for expensing under Title 26 U.S.C. Sec. 179 of the internal revenue code.
Timber, timberlands, and dividends and distributions from real estate investment trusts derived from gains from the sale or exchange of timber or timberlands.
Commercial fishing privileges.
Goodwill received from the sale of a franchised auto dealership.
The following deductions apply:
The standard deduction for 2025 is $278,000. In 2024 the standard deduction was $270,000 per year per individual, married couple, or domestic partnership. The standard deduction amount is adjusted for inflation annually.
The long-term capital gain from an individual’s sale of all or substantially all of a qualified family-owned small business.
Charitable donations in excess of $278,000 for 2025 per year per individual. The charitable donations deduction cannot exceed $111,000 for 2025 per year per individual. For 2024 the deduction for donations was $108,000 for donations in excess of $270,000. These amounts are adjusted for inflation annually.
The following tax credits are available:
A business and occupation (B&O) tax credit for B&O taxes due on the same sale or exchange which is subject to the Washington capital gains tax. Expired Dec. 31, 2025. Available for tax years 2022-2024.
A Washington capital gains tax credit equal to the amount of B&O tax paid on a sale or exchange that is also subject to Washington’s capital gains tax. Available starting with tax year 2025.
A Washington capital gains tax credit for the amount of any legally imposed income or excise tax paid by the individual to another taxing jurisdiction on capital gains derived from capital assets within the other taxing jurisdiction to the extent such capital gains are included in the individual's Washington capital gains.