Washington Capital Gains Tax on RSU Sales After SB 5813

A senior product manager at a Bellevue tech company sells $1.5 million of long-held company stock in November 2025, eighteen months past vest. She assumes Washington's lack of an income tax means the only bill on this trade is federal. The capital gains excise tax return she has to file by May 1, 2026 says otherwise. The Washington capital gains tax on RSU sales is now tiered, and on a sale that size it lands at roughly $100,000 of state liability.

Washington's capital gains excise tax under RCW 82.87 took effect January 1, 2022. From 2022 through 2024, the rate was a flat 7% on net long-term gain above the standard deduction. In May 2025, Governor Bob Ferguson signed Senate Bill 5813, which added a second tier retroactive to January 1, 2025. For tax year 2025, the first $278,000 of long-term capital gain is fully deducted under RCW 82.87.060, gain between $278,000 and $1 million is taxed at 7%, and gain above $1 million is taxed at 9.9%. The deduction is indexed annually.

The tax only reaches long-term capital gain. For an RSU holder, the ordinary income recognized at vest is already on the W-2 in Box 1 and is not a capital gain at all. What the state can tax is the appreciation between the vesting date (your new basis under IRC §83) and the sale date, and only if you hold the shares more than one year past vest before selling. A same-day-sale at vest never touches the Washington return because there is no long-term gain to start with.

The starting point on the WA return is federal net long-term capital gain from Schedule D. Whatever the federal return excludes, including the Section 1202 QSBS exclusion after OBBBA, Washington does not pick up on its own. The return is filed with the Department of Revenue with payment due at filing. For tax year 2025, the deadline is May 1, 2026 under federal disaster relief that Washington has aligned with.

For intangibles like stock, the allocation rule under RCW 82.87.100 is domicile-based. If you were domiciled in Washington on the date the sale closed, the gain is Washington-source even if the brokerage is in New York and you happened to be in Hawaii the week of the trade. "Resident" under RCW 82.87.020 also picks up anyone who keeps a place of abode in Washington and spends more than 183 days in the state during the year. A clean move out of Washington before a major sale therefore moves the entire intangible gain, but only if the domicile change actually holds and the close date follows the move. The DOR's interim statement on domicile walks through the facts it weighs, and the analysis runs closer to a California-style residency review than people expect from a state with no income tax. The mirror image of this rule is what drives the California trailing RSU tax after you move out of state.

Real estate is exempt under RCW 82.87.050, and so are interests in privately-held entities to the extent the gain is attributable to real estate the entity owns directly. Retirement account distributions are not picked up because they are ordinary income at the federal level, not capital gain. Federally-excluded §1202 QSBS gain sits outside the Washington base too, since the calculation starts from federal long-term gain. The 2026 legislative session took up SB 6229 and HB 2292 to close that gap, and neither bill passed. The exclusion holds for now, but Washington-domiciled founders should treat it as a planning window.

For owners selling a family-owned operating business, RCW 82.87.070 provides a qualified family-owned small business deduction when worldwide gross revenue sits at or below the indexed statutory threshold and the seller met the ownership and material participation tests. A charitable deduction is also available for donations of long-term capital assets, capped at an annual indexed amount.

First, timing across the year-end boundary. The standard deduction and the $1 million surtax threshold reset every January 1, so splitting a planned $2 million sale across two tax years pulls roughly $722,000 of gain out of the surtax tier and adds a second $278,000 deduction to the calculation. Second, the residency change itself. If the move out of Washington is real and the close date follows it, the deduction, the surtax, and the underlying tax disappear together. The DOR audits domicile claims with the same factual focus California uses for the opposite question, so a move without driver's license, voter registration, primary home, vehicles, and where the family actually sleeps doesn't hold. Third, lot selection. For households holding multiple vesting lots at different prices, specifically identifying high-basis lots at sale reduces the Washington gain dollar for dollar.