Washington Tax Law
Unlike in most states, Washington residents' tax burden doesn't include state income taxes. To supplement the lack of an income tax, Washington relies on other taxes to generate state revenue. This was especially true in 2014 when a large portion of its revenue was sourced from sales and gross receipt taxes—nearly doubled in proportion compared to the federal government's revenue numbers for the same taxes.
So while you don't have to worry about paying an income tax in Washington, you'll need to account for the other various state and federal taxes in your budget, including everyday sales and gasoline taxes. It can be easy to get lost in all of the taxes you'll owe, so use the information in LawInfo's Washington tax law articles to become familiar with them and to avoid penalties.
Washington Sales and Use Taxes
Washington's largest source of tax revenue is in sales and use taxes. Washington's state sales and use tax rate is 6.5 percent on all goods and services sold within the state. However, every county and city in the state add a local sales tax rate on top of the state rate, ranging from the lowest combined rate of seven percent to the highest of 10.4 percent. (Local rates are based on data collected for the second quarter of 2017.)
Use taxes are charged for products or services sold and used in Washington from which the seller didn't collect state sales taxes. If you buy a product from an out-of-state vendor, you may be paying for a use tax instead of a sales tax.
Washington Property Taxes
Another major source of Washington's tax revenue is property taxes. Property tax rates vary by county and taxing district and there is no state base tax rate. Property tax rates are represented as dollars per $1,000. For example, if you live in Vancouver, your property tax rate in 2016 was $2.7896 per $1,000.
Property taxes are levied on the assessed value of real property and personal property. Real property includes land, buildings and other structures integrated into real estate. Personal property only counts for business property that isn't tied down to real property, such as machines, tools and furniture. Non-business personal property is typically exempt from property taxes. A property's assessed value is 100 percent of its true market value in dollars.
To calculate your property tax amount, you multiply your property's assessed value with your area's property tax rate. Using the Vancouver example, if your home's assessed value is $350,000, you would multiply it by 0.0027896 ($2.7896 divided by $1,000). Your property tax due would be $976.36 barring any exemptions or credits.
Washington Sin Taxes
"Sin" taxes are levied on consumer products like alcohol, tobacco and marijuana—plus activities like gambling—wherever these things are legalized. They act as additional sales taxes (a.k.a. excise taxes) for products or services that are culturally perceived as vices. Sin taxes are meant to dissuade consumers from purchasing or using the taxed products or services without making them illegal.
Washington levies the following sin taxes:
- $3.025/pack of 20 cigarettes or "little cigars."
- $3.78125/pack of 25 cigarettes or "little cigars."
- 95% of the taxable sales price of cigars up to a maximum of $0.65/cigar.
- $2.526/unit of 1.2 ounces or less of moist snuff.
- 95% of the taxable sales price on other tobacco products.
- $3.7708/liter of retail spirits.
- $2.4408/liter of on-premises retail spirits (e.g. spirits served in bars and restaurants).
- Between $4.782 and $8.08/barrel of beer.
- 37% of the taxable sales price on marijuana products.
Washington's state government doesn't collect sin taxes for gambling activities but local governments may do so under these specific maximum limits:
- Five percent of net receipts after the first $10,000 for raffles.
- Five percent of net receipts for bingo.
- Two percent of net receipts for amusement games.
- 20 percent of gross receipts for cardrooms.
- Five percent of gross receipts or 10 percent of net receipts for commercial pull tabs and punchboards.
- 10 percent of net receipts for charitable pull tabs and punchboards.
Speak to an Experienced Tax Attorney Today
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified tax lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local tax attorney to discuss your specific legal situation.