Updated October 7, 2026. Quick answer: No. The Department of Revenue says “Washington does not currently have an individual income tax.” Its capital gains tax is separate, and the Department says it does not apply to transactions through retirement savings accounts.
Washington withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. The Department of Revenue says the state has no individual income tax today |
| Rate or amount | No rate today; a 9.9% income tax starts January 1, 2028 for adjusted gross income over $1 million |
| How to start or stop it | Nothing to file for the withdrawal; the Department’s FAQ says the capital gains tax does not apply to retirement account transactions |
| Direct rollover | The Department’s pages read are silent on it; with no Washington income tax described, there is no Washington withholding to avoid |
| Changed for 2026? | A new 9.9% income tax starts January 1, 2028 above $1 million of adjusted gross income; nothing changes for 2026 |
What the Washington documents say
The Department of Revenue’s income tax page says “Washington does not currently have an individual income tax.” The same page says “Beginning Jan. 1, 2028, a new 9.9% income tax will apply” to individuals and married couples filing jointly with adjusted gross income above $1 million, with the first return due in 2029. That is not in effect for 2026.
The Department’s capital gains FAQ answers whether the capital gains tax reaches retirement accounts. Its answer is that Washington’s “capital gains tax does not apply to transactions through retirement savings accounts”. The accounts it lists include 401(k) plans, IRAs and Roth IRAs.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 401(k) withdrawal paid to you. The IRS says a taxable eligible rollover distribution paid to you from an employer plan is subject to “mandatory income tax withholding (generally at a rate of 20%)”, which on $50,000 is $10,000 (computed as $50,000 times 20%) held back for federal tax. Washington has no individual income tax today, so nothing is held back for Washington: the Washington amount withheld is $0.
The other path is a direct rollover to an IRA or another plan. For federal tax the IRS says “The mandatory withholding doesn’t apply in a direct rollover”. A direct rollover therefore has no Washington withholding to avoid.
What the documents do not say
- The documents read say nothing on withholding forms, rollovers or how the 2028 tax will be collected. The 2028 tax is not in effect for 2026.
Common mistakes
- Reading the 2028 income tax as already in effect; the Department’s page says it begins January 1, 2028.
- Assuming the capital gains tax reaches a 401(k) or IRA withdrawal; the Department’s FAQ says it does not apply to those accounts.
Related: how Washington taxes 401(k) and IRA withdrawals, Washington retirement taxes, retirement withholding calculator, and retirement taxes by state.
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Answer againSources
- Income tax: https://dor.wa.gov/taxes-rates/income-tax
- Frequently asked questions about Washington’s capital gains tax: https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax/frequently-asked-questions-about-washingtons-capital-gains-tax
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.