Updated October 5, 2026. Quick answer: No, not today. The Department of Revenue says “Washington does not currently have an individual income tax”, so dividends and interest add no Washington income tax. A new 9.9% tax begins January 1, 2028, on income above a $1,000,000 deduction.
How Washington treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Not taxed by the state today |
| New income tax | 9.9% beginning January 1, 2028; the session law says it “equals 9.90 percent multiplied by an individual’s Washington taxable income.” |
| The deduction | The law allows a standard deduction of $1,000,000 per individual, and the Department’s FAQ describes the tax as reaching “annual adjusted gross income exceeding $1 million.” |
| Municipal bond interest under the new tax | The law adds back federally excluded interest “except interest on obligations of the state of Washington or political subdivisions” |
| Capital assets today | A separate 7% excise applies to long-term capital assets sold; see the capital gains page, since it is not a tax on dividends or interest |
A $20,000 example
Dividends and interest of $20,000 add $0 of Washington income tax today, and $20,000 is far below the $1,000,000 deduction the new tax uses. Federal tax on the income still applies.
What changes in 2026
The 2026 Legislature enacted a new income tax that begins January 1, 2028, with the first return due in 2029; nothing changes for 2026.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Washington taxes capital gains, whether Washington taxes pensions, how Washington taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- Income tax (Washington Department of Revenue): https://dor.wa.gov/taxes-rates/income-tax
- Frequently asked questions about income tax (Washington Department of Revenue): https://dor.wa.gov/taxes-rates/income-tax/frequently-asked-questions-about-income-tax
- Engrossed Substitute Senate Bill 6346, session law (Washington State Legislature): https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/Session%20Laws/Senate/6346-S.SL.pdf
- Capital gains tax (Washington Department of Revenue): https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.