WA lawmakers eyeing capital gains tax hike amid $16B budget deficit
Apr 14, 2025, 9:08 AM | Updated: 9:09 am
Washington legislators swear in and begin the 2025 legislative session in Olympia. (Photo courtesy of Washington State Democrats)
(Photo courtesy of Washington State Democrats)
Washington lawmakers, facing a projected operating budget shortfall of approximately $16 billion over the next four years, are considering raising the state’s capital gains tax to offset the state’s financial hurdles.
This potential solution comes after other ideas, like the wealth tax, were shut down. Currently, the capital gains tax imposes a 7% tax on gains over $270,000 from the sale or exchange of long-term assets like stocks, bonds, and business interests.
Increasing the capital gains tax by how much?
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The proposal would increase the capital gains tax to 9%. Another idea currently being mulled over is imposing a higher rate for gains that exceed $1 million. Conservative lawmakers, including Rep. Drew Stokesbary, R-Auburn, pushed back on this idea.
“It is not wise to have so much of your budget based on such a volatile revenue source,” Stokesbary said, according to The Center Square. “And not only is it volatile, but it is highly correlated with the economy and stock market.”
The capital gains tax was created in 2021. It brought in more than $780 million in tax year in 2022, according to the Washington State Department of Revenue, but saw a significant decline the following year, bringing in approximately $417 million.
The 105-day legislative session ends April 27. It remains to be seen if a special session will be needed to find a resolution for the state budget. State Rep. Travis Couture, R-Allyn, claimed there is a multi-billion-dollar chasm between what Ferguson wants and what lawmakers produced, according to The Olympian.
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