WASH. Taxes

Washington State Taxes

Washington does not have an income tax.

Washington does have a sales tax.

According to the Tax Foundation between the state and local governments, Washington collects $2416 per person in sales and excises taxes. Washington's gasoline tax is 37.5¢ (9th highest nationally), while its cigarette tax is $3.03 (5th highest nationally), and $1257 per person for property taxes.

Considering all forms of taxation, Washington State is in the top ten of the Tax Foundation’s Tax Climax Index.
  1. Wyoming
  2. South Dakota
  3. Nevada
  4. Alaska
  5. Florida
  6. Washington
  7. Montana
  8. New Hampshire
  9. Utah
  10. Indiana

The Tax Foundation also notes that the Business & Occupation (B&O) tax is a distortive, destructive tax. “Washington State has the highest gross receipts tax of the five states that have this taxes and a top B&O tax rate of 3.3%. "This tax, like all gross receipts taxes, creates tax pyramiding as the revenues of businesses at each level of production are taxed, rather than their net income, or profits. This causes a tax-on-a-tax, and creates incentives for businesses to vertically integrate, even when doing so might not make economic sense without the tax.

“Washington has many great features of its tax climate that help companies like Boeing: no income tax, so they can recruit talent and save on wage costs; no corporate tax, so they enjoy bigger after-tax profit margins; moderate property taxes, so that fixed investment is not prohibitively expensive. For all these reasons, we rank Washington the 6th best tax climate in the nation in our 2014 State Business Tax Climate Index. But the B&O tax is a major blemish on Washington’s otherwise sound tax climate, much like Texas’ destructive margin tax, on which Texas is wisely decreasing its reliance.” Source: The Tax Foundation's tax-climate Washington.

The Tax Foundation is a Washington, D.C.-based think tank founded in 1937 that collects data and publishes research studies on tax policies at the federal and state levels.