The Washington State Supreme Court in Quinn v. Washington recently upheld the state's 7% excise tax on certain capital gains exceeding $250,000 in a calendar year. As a result, individual taxpayers in Washington, a state that does not impose a net income tax, are now subject to capital gains excise tax beginning with the 2022 tax year.

What follows is a discussion of how payments for the Washington State Capital Gains Excise Tax may be reflected on a federal tax return, examples of other Washington State excise taxes that can offset federal capital gains, potential tax accounting issues, as well as how Andersen can help you navigate the new state tax on your federal tax return.

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