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Washington
The Facts on Washington’s Tax Climate
Last updated July 1, 2009.
Here are some basic facts on Washington’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 16 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 2009, Washington taxpayers had to work until April 16 to pay their total tax bill, ranking it 8th highest in the nation. This is three days after national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states were: Idaho, April 12 (ranked 18th) and Oregon, April 9 (ranked 26th).
Full study of Tax Freedom Day, nationwide and in each state
Washington's State/Local Tax Burden Below National Average
Estimated at 8.9% of income, Washington's state/local tax burden percentage ranks 35th highest nationally, below the national average of 9.7%. Washington taxpayers pay $4,334 per capita in state and local taxes.
Washington's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Washington's 2010 Business Tax Climate Ranks 9th
Washington ranks 9th 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 (18th), Oregon (14th) and California (48th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth 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, 2000-2009
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, slightly above the national median of 6%. In 2006, state and local governments combined collected $1,868 per capita in general sales taxes, which ranks the highest in the nation. Washington's gasoline tax stands at 37.5 cents per gallon, which ranks 3rd highest nationally. Washington's cigarette tax stands at $2.025 per pack of twenty and ranks 8th 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
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 $835.25 per capita in property taxes in fiscal year 2006, 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 2006, Washington collected $257.73 per capita, bringing its combined state/local property taxes to $1,092.98 per capita, which ranks 25th 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
