Updated October 7, 2026. Quick answer: No. The Department of Revenue says “Washington does not currently have an individual income tax”, and the state’s 7% capital gains excise tax does not reach a home: RCW 82.87.050 exempts real estate. A real estate excise tax, usually paid by the seller, applies to the sale instead.
Washington tax on home sale profit at a glance
| Item | What the documents say |
|---|---|
| Profit on your main home | No individual income tax to conform: Washington taxes none of the gain |
| Rate on gain above the exclusion | No rate: no individual income tax |
| Collected at the sale | Real estate excise tax (REET), graduated: 1.1% up to $525,000, 1.28% to $1,525,000, 2.75% to $3,025,000, 3% above, plus local REET; usually seller-paid |
| Source | Washington Department of Revenue; Washington State Legislature |
What the Washington documents say
The Department’s income tax page says “Washington does not currently have an individual income tax”. Its capital gains tax page describes “a 7% tax on the sale or exchange of long-term capital assets”, and RCW 82.87.050 lists the exemptions, including “All real estate transferred by deed, real estate contract, judgment”.
The Department’s real estate excise tax page says “Usually, the seller pays this tax, but if they don’t” the buyer is responsible. RCW 82.45.060 sets the state rates by slice of the selling price, starting at “1.1 percent of the portion of the selling price”. The archived pages show no principal-residence exemption.
What the federal exclusion requires
Most state answers start here. The statute says “Gross income shall not include gain from the sale or exchange” of property that, during the five years before the sale, you owned and used as your principal residence for periods adding up to two years or more. The limit is “shall not exceed $250,000”, or $500,000 for a husband and wife who make a joint return and meet the statute’s conditions. See CMG’s home sale taxes page and exclusion calculator.
A worked example at a $400,000 gain
An illustration, not a return: a married couple in Washington sells their main home with a gain of $400,000. On the documents read Washington levies no individual income tax, so the state’s income tax on that gain is $0 whether or not the federal exclusion applies. Federal tax is separate and outside this page: if the couple meets the statute’s ownership and use tests, a gain of $400,000 is below the $500,000 joint exclusion, so no federal income tax is owed on it either.
What is collected at the sale
The Department says the real estate excise tax applies to all sales of real property and is usually paid by the seller. Its table effective January 1, 2023 sets state rates of 1.1% up to $525,000, 1.28% to $1,525,000, 2.75% to $3,025,000 and 3% above that, and local REET is added. RCW 82.45.060 prints the base thresholds, which the Department’s table has since adjusted. The archived pages show no principal-residence exemption.
What changes in 2026
Washington: no change to the rules above for 2026. A new 9.9% income tax on adjusted gross income over $1 million begins January 1, 2028, and the Department publishes REET thresholds for 2027 starting at $551,000; neither applies to a 2026 sale.
What the documents do not say
- The REET thresholds are adjusted by the Department over time; the table read here is effective January 1, 2023, and a later table is noted under changes. The Department’s pages do not address the 2028 income tax’s treatment of home sales.
Common mistakes
- Assuming the absence of a Washington income tax removes the federal tax on a home sale; the federal exclusion limits and tests still decide the federal result.
- Assuming the 7% capital gains excise tax applies to a home sale; RCW 82.87.050 exempts real estate.
- Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the sale.
Related: home sale taxes, state tax on home sale profit, how Washington taxes capital gains, Washington retirement taxes, and home sale exclusion calculator.
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Answer againSources
- Income tax | Washington Department of Revenue: https://dor.wa.gov/taxes-rates/income-tax
- RCW 82.87.050 Exemptions: https://app.leg.wa.gov/RCW/default.aspx?cite=82.87.050
- Capital gains tax: https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
- Real estate excise tax: https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax
- RCW 82.45.060 Tax on sale of property: https://app.leg.wa.gov/RCW/default.aspx?cite=82.45.060
- 26 U.S.C. 121, Exclusion of gain from sale of principal residence (U.S. Code, GovInfo): https://www.govinfo.gov/content/pkg/USCODE-2023-title26/html/USCODE-2023-title26-subtitleA-chap1-subchapB-partIII-sec121.htm
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.