-
Overall Rank
47
Down 1 place since 2026 -
47
No change since 2026 -
36
Down 5 places since 2026 -
50
Down 1 place since 2026 -
18
Up 5 places since 2026 -
Unemployment Insurance Tax Rank
49
No change since 2026
Washington ranks 47th overall on the 2027 State Tax Competitiveness Index.
Score 4.10 / 10
Notable Changes Washington is singled out in the study for this year's and forthcoming changes.
In the 2027 Index
Although Washington’s overall rank fell one place, from 46th to 47th, the state improved five places on the property and wealth tax component after reverting the top estate tax rate from 35 percent to 20 percent. The inclusion of digital advertising in the sales tax base, part of a broader expansion of business-to-business taxation of digital products, dropped Washington’s sales and excise tax component rank from 49th to 50th. A recently adopted 9.9 percent tax on income above $1 million goes into effect in 2028 and does not affect current rankings.
Forthcoming, Not Yet Reflected
Despite the state’s judicial history of ruling against income taxes, Washington lawmakers adopted a new 9.9 percent tax in 2026 on income above $1 million. This tax will go into effect in 2028, likely facing legal questions before then, and significantly affecting the state’s future Index scores.
Snapshot date: The 2027 Index measures each state's tax law as of July 1, 2026. Changes enacted after that date are not reflected in these ranks.
About Washington's Tax Code
Washington has historically forgone an individual income tax on wage income, which courts and many lawmakers have concluded violates the state constitution, but this is changing. The state recently imposed a tax on high earners’ capital gains income, a policy that raised constitutional questions but ultimately secured the assent of the state supreme court. It became a graduated rate tax in 2025, with a top rate of 9.9 percent for gains above $1 million. In 2026, lawmakers adopted a new tax of 9.9 percent on income above $1 million, which will likewise draw legal challenges. The new tax does not go into effect until 2028 and is not included in the current Index.
The state constitution has been similarly interpreted as blocking a corporate income tax, but Washington instead imposes a high multiple-rate gross receipts tax, called the Business & Occupation Tax. Because it is based on gross revenues rather than net income (profits), it yields very high rates of taxation on low-margin businesses and leads to tax pyramiding, where goods and services have the tax embedded several times over, imposed on each transaction within the production process.
The state’s sales tax, imposed atop the gross receipts tax, is not just a high rate but is also imposed on a base that includes an unusual share of business inputs, particularly in the digital products space. In 2025, lawmakers adopted legislation further expanding digital products taxation and notably including digital advertising in the base, which raises legal concerns along with economic ones. Washington also levies a progressive real estate transfer tax and an estate tax. The estate tax’s top rate was briefly raised to 35 percent in 2025, rivaling the 40 percent top federal rate, but lawmakers, acknowledging that the high rate was counterproductive, rolled it back to 20 percent in 2026. High UI taxes and an uncompetitive UI tax structure also contribute to the state’s poor Index ranking despite the state forgoing an individual income tax, which might otherwise be expected to yield a much more competitive tax environment.
Component Scores
#47 overall · 4.10 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #47 | 3.90 / 10 | |
| Individual Income Taxes | #36 | 4.85 / 10 | |
| Sales Taxes | #50 | 2.72 / 10 | |
| Property Taxes | #18 | 5.23 / 10 | |
| Unemployment Insurance Taxes | #49 | 3.59 / 10 |
Ranking Changes, 2020–2027
#47 in 2027 · down 13 places from 2020Washington ranked 34th in 2020 and ranks 47th in 2027, a decline of 13 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 34 (4.76) | 48 (3.73) | 7 (6.76) | 50 (3.02) | 22 (5.29) | 41 (4.35) |
| 2021 | 35 (4.76) | 48 (3.74) | 7 (6.77) | 50 (3.01) | 17 (5.35) | 44 (4.24) |
| 2022 | 40 (4.71) | 47 (3.69) | 8 (6.83) | 48 (2.98) | 23 (5.23) | 46 (3.87) |
| 2023 | 46 (4.32) | 47 (3.78) | 22 (5.37) | 50 (3.08) | 22 (5.27) | 49 (3.72) |
| 2024 | 46 (4.30) | 47 (3.77) | 26 (5.27) | 50 (3.04) | 25 (5.16) | 46 (4.12) |
| 2025 | 46 (4.28) | 47 (3.75) | 28 (5.25) | 50 (3.06) | 24 (5.16) | 49 (3.89) |
| 2026 | 46 (4.26) | 47 (3.89) | 31 (5.13) | 49 (3.13) | 23 (5.09) | 49 (3.68) |
| 2027 | 47 (4.10) | 47 (3.90) | 36 (4.85) | 50 (2.72) | 18 (5.23) | 49 (3.59) |
Washington Compared across the States
#47 overallEach row places the states on a 0 to 10 score scale for one measure. Washington is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#47 4.10
Corporate Taxes
#47 3.90
Individual Income Taxes
#36 4.85
Sales Taxes
#50 2.72
Property Taxes
#18 5.23
Unemployment Insurance Taxes
#49 3.59
- Washington
- Other states, by rank (1st to 50th)
- 50-state median
Washington and Its Neighbors
#47 overallWashington borders 2 states and ranks 47th overall; every one of them ranks higher.
What Each Component Includes
The five components of the Index, what each one covers, and where Washington lands. Open any component for the full breakdown.
-
Corporate Taxes
Rank #47Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Washington → -
Individual Income Taxes
Rank #36Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Washington → -
Sales Taxes
Rank #50Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Washington → -
Property Taxes
Rank #18Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Washington → -
Unemployment Insurance Taxes
Rank #49Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Washington →
Tax Data Explorer
Every policy variable behind Washington's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
151 data points · Shaded values differ from Washington
Corporate Taxes: Corporate Income Tax Rates
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Bracket 1 | None | 5.3% > $0 (differs) | 6.6% > $0 (differs) |
| Bracket 2 | n.a. | n.a. | 7.6% > $1,000,000 (differs) |
| Gross Receipts Tax | Yes | No (differs) | Yes |
| Gross Receipts Tax Minimum Rate | 0.138% | n.a. (differs) | 0.57% (differs) |
| Gross Receipts Tax Maximum Rate | 3.30% | n.a. (differs) | 0.57% (differs) |
| Gross Receipts Tax Rate Used in the Index | 0.484% | n.a. (differs) | 0.57% (differs) |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Job Credits | Yes | Yes | No (differs) |
| Research and Development Credits | No | Yes (differs) | Yes (differs) |
| Investment Credits | No | Yes (differs) | Yes (differs) |
| Compensation Expenses Deductible | No | n.a. (differs) | No |
| Cost of Goods Sold Deductible | No | n.a. (differs) | No |
Corporate Taxes: Net Operating Losses
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Conforms to Federal NOL Treatment | n.a. | No (differs) | No (differs) |
| Carryback (Years) | n.a. | 2 (differs) | 0 (differs) |
| Carryback Cap | n.a. | $100,000 (differs) | $0 (differs) |
| Carryforward (Years) | n.a. | 20 (differs) | 15 (differs) |
| Carryforward Cap | n.a. | Unlimited (differs) | Unlimited (differs) |
Corporate Taxes: Treatment of Capital Investment
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Section 168(k) Expensing | 100% | 0% (differs) | 0% (differs) |
| Conforms to Section 163(j) Limitation | No | Yes (differs) | Yes (differs) |
| GILTI Inclusion | n.a. | 15% Inclusion (differs) | 20% Inclusion (differs) |
| Section 174 Expensing | Yes | Yes | Yes |
| Section 168(n) Expensing | Yes | No (differs) | Yes |
Corporate Taxes: Other Corporate Base Variables
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Rolling | Static (current) (differs) | Rolling |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Partial (differs) |
| Throwback Rule | No | Yes (differs) | Yes (differs) |
| Foreign Tax Deductibility | Yes | Yes | No (differs) |
| Corporate AMT | No | No | No |
| Brackets Indexed for Inflation | GRT | Flat CIT (differs) | No (differs) |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Bracket 1 | 7.0% > $278,000 | 5.3% > $4,811 (differs) | 4.75% > $0 (differs) |
| Bracket 2 | 9.9% > $1,000,001 | n.a. (differs) | 6.75% > $4,550 (differs) |
| Bracket 3 | n.a. | n.a. | 8.75% > $11,400 (differs) |
| Bracket 4 | n.a. | n.a. | 9.9% > $125,000 (differs) |
| Standard Deduction (Single Filer) | n.a. | $16,100 (differs) | $2,910 (differs) |
| Personal Exemption (Single Filer) | n.a. | n.a. | n.a. |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | $256 (differs) |
| Personal Exemption per Dependent | n.a. | n.a. | n.a. |
| Personal Exemption Credit per Dependent | n.a. | n.a. | $256 (differs) |
| Average Local Income Tax Rate | None | None | 2.64% (differs) |
| Surtaxes on Wage Income | 0.58% | n.a. (differs) | 0.1% (differs) |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Marriage Penalty | Yes | No (differs) | No (differs) |
| Married Couples Can File Separately on One Return | No | No | No |
| Convenience Rule | No | No | No |
| Interest Taxed | n.a. | Yes (differs) | Yes (differs) |
| Dividends Taxed | n.a. | Yes (differs) | Yes (differs) |
| Capital Gains Taxed | Yes | Yes | Yes |
| Combined Capital Gains Tax Rate | 9.9% | 5.3% (differs) | 9.9% |
| Tax Brackets Indexed for Inflation | No | Yes (differs) | Partial (differs) |
| Standard Deduction Indexed for Inflation | Yes | Yes | Yes |
| Personal Exemption Indexed for Inflation | n.a. | Yes (differs) | Yes (differs) |
| Progressivity Ratio | 1.41 | 1.00 (differs) | 1.13 (differs) |
Individual Income Taxes: Other Individual Base Variables
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Federal Income Used as State Tax Base | n.a. | Yes (differs) | Yes (differs) |
| Conformity Status | n.a. | Static (current) (differs) | Rolling (differs) |
| Credits for Taxes Paid to Other States | n.a. | Yes (differs) | Yes (differs) |
| AMT Levied | n.a. | No (differs) | No (differs) |
| Recognition of S Corporation Status | Yes | Yes | Yes |
| Section 179 Expensing Limit | $2,560,000 | $2,560,000 | $2,560,000 |
| Tips | n.a. | Exempt (differs) | Exempt (differs) |
| Overtime | n.a. | Exempt (differs) | Exempt (differs) |
| Filing and Withholding Threshold Index | 10 | 1.98 (differs) | 1.645 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Income Recapture | No | No | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| State Sales Tax Rate | 6.50% | 6.00% (differs) | n.a. (differs) |
| Average Local Sales Tax Rate | 3.07% | 0.03% (differs) | 0.00% (differs) |
| Maximum Local Sales Tax Rate | 4.20% | 3.00% (differs) | None (differs) |
| Gasoline Tax (Cents per Gallon) | 60.17 | 33.00 (differs) | 40.00 (differs) |
| Diesel Tax (Cents per Gallon) | 63.17 | 33 (differs) | 40 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $3.025 | $0.57 (differs) | $3.33 (differs) |
| Beer Tax (Dollars per Gallon) | $0.2606 | $0.15 (differs) | $0.0839 (differs) |
| Spirits Tax (Dollars per Gallon) | $36.68 | $12.94 (differs) | $23.74 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 248.6226% | n.a. (differs) | 170.0833% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | n.a. (differs) |
| Farm Equipment | Taxable | Exempt (differs) | n.a. (differs) |
| Office Equipment | Taxable | Taxable | n.a. (differs) |
| Manufacturing Machinery | Exempt | Exempt | n.a. (differs) |
| Manufacturing Raw Materials | Exempt | Exempt | n.a. (differs) |
| Business Fuel and Utilities | Taxable | Exempt (differs) | n.a. (differs) |
| Business Leases and Rentals | Taxable | Taxable | n.a. (differs) |
| Information Services | Taxable | Exempt (differs) | n.a. (differs) |
| Software as a Service (SaaS) | Taxable | Exempt (differs) | n.a. (differs) |
| Platform as a Service (PaaS) | Taxable | Exempt (differs) | n.a. (differs) |
| Digital B2B Products | Taxable | Exempt (differs) | n.a. (differs) |
| Payroll Services | Exempt | Exempt | n.a. (differs) |
| Data Center Purchases | Partial | Exempt (differs) | n.a. (differs) |
| Digital Advertising Tax | Yes | No (differs) | No (differs) |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Groceries | Exempt | Taxable (differs) | n.a. (differs) |
| Clothing | Taxable | Taxable | n.a. (differs) |
| Prescription Medication | Exempt | Exempt | n.a. (differs) |
| Nonprescription Medication | Taxable | Taxable | n.a. (differs) |
| Gasoline | Exempt | Exempt | n.a. (differs) |
| Landscaping | Taxable | Exempt (differs) | n.a. (differs) |
| Repair Services | Taxable | Exempt (differs) | n.a. (differs) |
| Real Estate Services | Exempt | Exempt | n.a. (differs) |
| Parking | Taxable | Exempt (differs) | n.a. (differs) |
| Dry Cleaning | Taxable | Exempt (differs) | n.a. (differs) |
| Fitness Services | Taxable | Taxable | n.a. (differs) |
| Barber Services | Exempt | Exempt | n.a. (differs) |
| Veterinary Services | Exempt | Exempt | n.a. (differs) |
| E-Books | Taxable | Taxable | n.a. (differs) |
| Streaming Video | Taxable | Taxable | n.a. (differs) |
| Medical Services | Exempt | Exempt | n.a. (differs) |
| Legal Services | Exempt | Exempt | n.a. (differs) |
| Financial Services | Exempt | Exempt | n.a. (differs) |
| Accounting Services | Exempt | Exempt | n.a. (differs) |
| Sales Tax Holiday | No | No | n.a. (differs) |
Sales Taxes: Sales Tax Structure
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | n.a. (differs) |
| Unified Tax Administration | Yes | Yes | n.a. (differs) |
| Safe Harbor for Remote Sellers | Gross Sales Threshold | Gross Sales Threshold | n.a. (differs) |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Property Tax Collections per Capita | $2,134 | $1,059 (differs) | $2,108 (differs) |
| Property Tax as a Percentage of Personal Income | 2.50% | 1.70% (differs) | 2.97% (differs) |
| Assessment Limit | No | No | Yes (differs) |
| Levy Limit | Yes | Yes | No (differs) |
| Capital Stock Tax Rate | None | None | None |
| Capital Stock Tax Maximum Payment | n.a. | n.a. | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | n.a. | n.a. |
Property Taxes: Property Tax Bases
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | None | $250,000 (differs) | None |
| Intangible Property Tax | No | No | No |
| Inventory Tax | No | No | No |
| Real Estate Transfer Tax | Yes | No (differs) | No (differs) |
| Split Roll | No | No | No |
| Split Roll Ratio | 1.00 | 1.00 | 1.00 |
| Estate Tax | 20% | No (differs) | 16% (differs) |
| Inheritance Tax | No | No | No |
| Gift Tax | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Minimum Rate | 0.27% | 0.21% (differs) | 0.90% (differs) |
| Maximum Rate | 6.15% | 5.40% (differs) | 5.40% (differs) |
| Taxable Wage Base | $78,200 | $58,300 (differs) | $56,700 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.00% | 0.18% (differs) | 0.50% (differs) |
| Most Favorable Schedule: Maximum Rate | 5.40% | 5.40% | 5.40% |
| Least Favorable Schedule: Minimum Rate | 0.00% | 0.96% (differs) | 2.20% (differs) |
| Least Favorable Schedule: Maximum Rate | 5.40% | 6.80% (differs) | 5.40% |
| Employer Contributions as a Share of Total Wages | 0.68% | 0.53% (differs) | 1.19% (differs) |
| Employer Contributions as a Share of Taxable Wages | 1.25% | 0.79% (differs) | 1.95% (differs) |
| Trust Fund Solvency Ratio | 0.6 | 1.47 (differs) | 2.46 (differs) |
| New Employer Rate | 2.70% | 3.34% (differs) | 2.40% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Experience Formula Based On | Benefits Ratio | Reserve Ratio (differs) | Benefits Ratio |
| Benefits Charged in Proportion to Base-Period Wages | Yes | No (most recent or principal employer) (differs) | Yes |
| Charged If Employee's Benefit Award Is Reversed | Yes | No (differs) | No (differs) |
| Charged for Reimbursements on Combined Wage Claims | Yes | No (differs) | No (differs) |
| Charged If Employee Left Voluntarily | No | No | No |
| Charged If Employee Was Discharged for Misconduct | No | No | No |
| Charged If Employee Refused Suitable Work | Yes | No (differs) | Yes |
| Charged If Employee Continues to Work Part-Time | No | No | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Washington | Idaho | Oregon |
|---|---|---|---|
| Solvency Tax | Yes | No (differs) | No (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | Yes | No (differs) | No (differs) |
| Loan and Interest Repayment Surtaxes | Yes | Yes | Yes |
| Reserve Taxes | No | Yes (differs) | No |
| Surtaxes for UI Administration or Non-UI Purposes | Yes | Yes | Yes |
| Temporary Disability Insurance | No | No | No |
| Voluntary Contributions | Yes | No (differs) | No (differs) |
| Years to Qualify for Experience Rating | 1.5 | 1.5 | 1 (differs) |
Share This Page
About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Media Contacts
Sarah Wilbur
Sarah Wilbur is Communications Manager at the Tax Foundation where she advances the organization’s institutional reach by developing its corporate communications and media programs.
Jesse Solis
Jesse Solis is Vice President of Communications at the Tax Foundation, where he leads the communications team and works to build coverage of Tax Foundation’s experts and their work across the globe. He joined the team in 2021 as Communications Manager and became Communications Director in 2024.