The Tax Foundation

Research Areas

Washington

The Facts on Washington’s Tax Climate

Here are some basic facts on Washington’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 29 in Washington
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Washington taxpayers had to work until April 29 to pay their total tax bill, ranking it 5th highest in the nation. This is six days after national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states were: Idaho, April 20 (ranked 19th) and Oregon, April 16 (ranked 32nd).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Washington's State/Local Tax Burden Slightly Above Average in 2007
Estimated at 11.1% of income, Washington’s state/local tax burden percentage ranks 16th highest nationally, slightly above the national average of 11.0%. Washington taxpayers pay $4,604 per capita in state and local taxes, and per capita state income is $41,530.
Washington's State-Local Tax Burden, 1970-2005

Washington's 2008 Business Tax Climate Ranks 11th
Washington ranks 11th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Idaho (31st), Oregon (10th) and California (47th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Washington Levies No Individual Income Taxes
Washington levies no state personal income taxes, joining Alaska, Florida, Nevada, South Dakota, Texas and Wyoming as the only other states not to do so.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Washington Levies No Corporate Income Taxes; Levies Nation's Oldest Gross Receipts Tax
Washington's corporate tax structure contains no corporate income tax. Nevada, Texas and Wyoming are the only other states that do not levy corporate income taxes. However, Washington levies the nation's oldest gross receipts tax, the Business and Occupations (B&O) Tax, first instituted in 1933. Washington, Texas, Ohio, Michigan and Delaware are the only states to levy economy-wide gross receipts taxes.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Washington Levies Sales Tax above National Median; Gasoline and Cigarette Taxes High
Washington levies a 6.5% general sales or use tax on consumers, which is above the national median of 5.4%. In 2005, state and local governments combined collected $2,205 per capita in general sales taxes, which ranks the 3rd highest in the nation. Washington's gasoline tax stands at 36 cents per gallon, which ranks 5th highest nationally. Washington's cigarette tax stands at $2.025 per pack of twenty and ranks 3rd highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1921 and the cigarette tax in 1935.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Washington Property Taxes: Slightly Above National Average
Washington is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect the majority of property taxes. Washington's localities collected $4,859,729,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Washington collects more property taxes than most states do. In FY 2002, Washington collected $1,526,617,000, bringing its combined state/local property taxes to $6,386,346,000. That amounts to a per capita collection of $1,029, which ranks 22nd highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Washington is a Donor State
Washington taxpayers receive less federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2005, Washington citizens received approximately $0.88 in the way of federal spending. This ranks the state 38th highest nationally and represents a decline from 1995, when Washington received $0.97 per dollar of taxes in federal spending (ranked 31st nationally). Neighboring states and the federal spending received per dollar of federal taxes collected were: Idaho ($1.21) and Oregon ($0.93).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Articles from the Tax Foundation