Washington State Enacts New Capital Gains Tax

Washington State Enacts New Capital Gains Tax

The Washington State Legislature passed a new capital gains tax on April  25, 2021, which will take effect on January 1, 2022, and the first payment are due on or before April 17, 2023. This tax creates a 7% tax on the sale or exchange of long-term capital assets, if the profits exceed $250,000 annually. It applies to individuals for gains allocated to Washington state and can also be applicable to individuals’ ownership interest in an entity that sells or exchanges long-term capital assets.

Exempt assets

The sale or exchange of the following assets are exempt from the Washington capital gains tax:

  • Real estate
  • Interests in a privately-held entity to the extent that the capital gain (loss) is directly attributable to the real estate owned directly by such entity
  • Assets held in certain retirement accounts
  • Assets subject to condemnation, or sold or exchanged under imminent threat of condemnation.
  • Assets used in a trade or business to the extent of the exhaustion, wear and tear of property or qualify for expensing under Title 26 U.S. code § 179 of the internal revenue code
  • Please see the Department of Revenue Washington State website for other exempt assets.



  • A business and occupation (B&O) tax credit is included for B&O taxes due on the same sale or exchange which is subject to the Washington capital gains tax.
  • A Washington capital gains tax credit is included for any legally imposed income or excise tax owed to other jurisdictions on capital gains included within the individual's Washington capital gains.

written by Sean Jeong

Treasury Report of Joe Biden’s Tax Proposal

Treasury Report of Joe Biden’s Tax Proposal

May 28, 2021, the US Treasury released a report providing President Joe Biden’s tax proposal containing corporate and individual tax increase measures.  Most of the tax increase proposals are expected be effective tax years beginning after December 31, 2021 if enacted.  Here are some key corporate and individual tax increase proposals proposed by President Joe Biden:

  • Corporate tax rate increase from 21% to 28%.
  • Reduce Section 250 deduction from 50% to 25% for GILTI tax computation purpose and remove qualified business asset investment deduction.
  • Repeal FDII (foreign derived intangible income) deduction.
  • Impose a 15% minimum tax on corporations with book income excess of $2 billion.
  • Increase top individual tax rate from 37% to 39.5%.
  • Tax capital gains and qualified dividend income at ordinary rate for individuals with gross income in excess of $1 million.
  • Impose tax on transfer of appreciated properties by gift or inheritance.
  • Broadening application of the 3.8% net investment tax.
  • Treat “carried interest” from certain partnership investment as ordinary income.
  • Remove like-kind exchange deferral provision for real estate gains in excess of $1 million for joint filer.

Taxpayers should continually monitor legislative progress of the tax proposals and plan in advance to minimize expected tax burden increase.

Click the link below to see the Treasury Department’s Green Book providing additional detail on Joe Biden’s tax proposal.  https://home.treasury.gov/system/files/131/General-Explanations-FY2022.pdf