Updated October 16, 2026. Quick answer: Washington does not currently tax 403(b) or 457(b) withdrawals at the state level: the Department of Revenue says “Washington does not currently have an individual income tax”. A new tax on adjusted gross income over $1 million begins in 2028.
Washington at a glance
| Item | What the documents say |
|---|---|
| How the state treats 403(b) and 457(b) withdrawals | No state individual income tax today; a tax on AGI over $1 million begins in 2028 |
| Do the state’s documents name these plans? | The documents read name neither 403(b) nor 457(b) plans |
| Retirement exclusion or credit | Not needed today; there is no state individual income tax |
| Public-employee pension rule | Not applicable |
| Rate in the documents read | No tax before 2028; then 9.9% on adjusted gross income over $1 million |
| Changed for 2026? | The 2026 Legislature enacted the 9.9% tax on AGI over $1 million, effective January 1, 2028 (Senate Bill 6346) |
What the Washington documents say
The Department of Revenue’s income tax page says “Beginning Jan. 1, 2028, a new 9.9% income tax will apply” to adjusted gross income above $1 million. The page does not name 403(b) or 457(b) plans.
Federal income tax on the same withdrawals is a separate question, covered on CMG’s pages on the federal rules.
Withholding and federal tax
Whether a state withholds is a separate rule: see state withholding on retirement withdrawals. Federal rules: 403(b) withdrawal rules and 457(b) withdrawal rules. The IRS says pension and annuity payments from a qualified employer plan have “all or some portion of the amounts you receive may be taxable”.
What the documents do not say
- The Department page read does not name 403(b) or 457(b) plans.
- The page read does not say how the 2028 tax will treat retirement plan distributions.
Common mistakes
- Assuming Washington’s rule for a 401(k) or IRA also covers a 403(b) or 457(b): read whether its documents name the plan.
Related: whether Washington taxes 401(k) and IRA withdrawals, Washington retirement taxes, whether Washington taxes pensions, 403(b) withdrawal rules, 457(b) withdrawal rules, and state withholding on retirement withdrawals.
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Answer againSources
- Income tax: https://dor.wa.gov/taxes-rates/income-tax
- IRS Tax Topic 410, Pensions and annuities: https://www.irs.gov/taxtopics/tc410
Sources: the primary documents linked above, read on October 16, 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.