The 2023 picture for Washington residents
Washington has no state income tax, so the 2023 tax picture for its residents was entirely federal: ordinary rates up to 37%, capital gains up to 23.8%, and federal Medicare taxes. That was the structural advantage that drove tech-employee relocations into Washington throughout the decade.
2023 federal capital gains brackets
In $2023, federal long-term capital gains rates were 0% up to approximately $44,625, 15% up to approximately $492,300, and 20% above. The 3.8% NIIT added for MAGI above $200,000 single, producing a 23.8% top federal rate on long-term equity sales.
Washington treatment in 2023
Washington imposed no state income tax on capital gains in 2023, so federal 23.8% was the ceiling. This was a meaningful structural advantage for equity sellers compared to California and New York peers.
Frequently asked
- What supplemental-wage withholding rate applied to RSU income in Washington in 2023?
- The federal supplemental-wage withholding rate was 22% on the first $1,000,000 of supplemental wages per calendar year, rising to 37% above that. Washington does not impose a state income tax on wages, so no state withholding applied.
- Did Washington recognize federal QSBS exclusion in 2023?
- Washington has no state income tax, so QSBS eligibility affects only federal tax. Federal Section 1202 treatment applied in 2023 identically for Washington residents.
- What was the top federal ordinary bracket in 2023, and how did it apply to Washington residents?
- The 37% federal ordinary bracket started around $609,350 of taxable income for single filers in 2023. Washington added nothing at the state level, producing a combined top marginal rate of approximately 37%.