Washington Retirement Income Tax Guide for Seniors
No. Washington has no tax on wages or retirement income. It is not tax-free for every retiree, though: it has an estate tax, a capital gains tax on large gains, and property tax relief that becomes more generous for 2027.
No. Washington does not tax Social Security, pensions, 401(k) or IRA withdrawals, or annuities. Watch three other taxes instead: sales tax (6.5% state plus local, with groceries exempt), a 7% tax on long-term capital gains above a large yearly deduction, and an estate tax on estates over about $3 million. Homeowners 61 or older with income under their county's limit can get a property tax exemption, and starting with 2027 taxes that exemption gets bigger.
Retirement income is not taxed
Washington has no personal income tax. Social Security, military and government pensions, private pensions, annuities and withdrawals from 401(k), 403(b) and IRA accounts are not taxed by the state, and there is no state return for that income. Interest and dividends are not taxed either. The Social Security tax calculator shows what the IRS may tax.
Three Washington taxes retirees should know
Capital gains tax
Washington charges 7% on long-term capital gains above a standard deduction that is adjusted each year ($278,000 for 2025), plus an extra 2.9% on the part of gains above $1 million. Most retirees never owe it. It does not apply to the sale of real estate, including your home, or to assets held in retirement accounts, so 401(k) and IRA withdrawals are not affected. Selling a large block of appreciated stock in one year is the usual way retirees run into it.
Estate tax
Washington is one of the few states with its own estate tax. For deaths on or after July 1, 2025, estates above about $3 million are taxed at rates from 10% to 35%. A paid-off Seattle-area home plus retirement savings can pass that line, so estate planning matters more here than in most no-income-tax states. There is no inheritance tax.
Sales tax
The state rate is 6.5%, and cities and counties add their own rate. Groceries and prescription drugs are exempt.
Property tax exemption for seniors
Washington's senior exemption is based on age and income, and it can cut a large share of the bill. You qualify if you own and live in the home and, by December 31 of the year you apply, you are 61 or older (or meet the disability or veteran rules), and your combined disposable income is at or below your county's threshold. Combined disposable income starts with your adjusted gross income and adds back items such as nontaxable Social Security and pensions, then subtracts certain costs like qualifying medical expenses and Medicare premiums.
What changes for 2027 taxes
The 2026 Legislature passed ESSB 6162, which applies to property taxes collected in 2027. It raises the income thresholds and the size of the exemption:
| Income tier | Through 2026 taxes | 2027 taxes and after |
|---|---|---|
| All tiers | Exempt from Part 2 of the state school levy and local excess levies | Exempt from the whole state school levy and local excess levies |
| Tier 1 (lowest income) | Regular tax on the greater of $60,000 or 60% of value exempt | Local regular tax on the greater of $80,000 or 80% of value exempt |
| Tier 2 | Greater of $50,000 or 35% of value, up to $70,000 | Greater of $70,000 or 45% of value, up to $200,000 |
| Tier 3 | Levy exemptions only | Levy exemptions only |
The thresholds are now 60%, 70% and 80% of county median household income (up from 50%, 60% and 70%). The law also adds a standard deduction of $7,500 per applicant, plus $7,500 for a spouse, in place of itemizing medical expenses, lets you deduct up to $6,000 of income from renting space on your home's parcel (not short-term rentals), and excludes combat-related special compensation.
2027 thresholds in the largest counties
| County | Tier 1 | Tier 2 | Tier 3 | Deferral |
|---|---|---|---|---|
| King | $76,000 | $89,000 | $101,000 | $113,512 |
| Snohomish | $68,000 | $79,000 | $91,000 | $101,355 |
| Pierce | $64,000 | $74,000 | $85,000 | $94,793 |
| Clark | $64,000 | $74,000 | $85,000 | $94,579 |
| Spokane | $56,000 | $65,000 | $74,000 | $83,136 |
These figures are for tax years 2027 through 2029. The Department of Revenue publishes every county's numbers and recalculates them every three years.
Deferral if you earn too much for the exemption
If you are 60 or older and your income is under the deferral threshold, the state can pay your property taxes for you. The amount, plus 5% simple interest a year, becomes a lien on the home that is repaid when it is sold or transferred. Starting with 2027, the deferral threshold rises to 90% of county median income.
How to apply
- Apply to your county assessor. Most counties take applications online.
- Bring proof of age, ownership and income for you and your spouse or domestic partner, such as your federal return, SSA-1099 and pension 1099-R.
- Once approved, report changes in income or residence to the assessor, and expect to renew periodically with updated income records.
Compare Washington with the other no-income-tax states in our state retirement income tax finder, or see senior property tax exemptions by state.
Frequently Asked Questions
Does Washington tax Social Security or pensions?
No. Washington has no personal income tax, so Social Security, pensions, annuities and retirement account withdrawals are not taxed by the state.
Does the Washington capital gains tax apply to my IRA or home sale?
No. Assets in retirement accounts and real estate are exempt. The 7% tax applies to long-term gains from things like stocks above a yearly standard deduction, with an extra 2.9% on gains above $1 million.
Who qualifies for the Washington senior property tax exemption?
Homeowners who live in the home, are 61 or older by December 31 of the year they apply (or meet the disability or veteran rules), and have combined disposable income at or below their county's threshold.
What changes in the senior exemption for 2027?
ESSB 6162 raises income thresholds to 60%, 70% and 80% of county median income, exempts participants from the whole state school levy, and increases the value exempt from local regular taxes, starting with taxes collected in 2027.
Does Washington have an estate tax?
Yes. For deaths on or after July 1, 2025, estates above about $3 million are taxed at rates from 10% to 35%. Washington has no inheritance tax.
Sources: Washington Department of Revenue special notice on ESSB 6162 (June 10, 2026) and its county income thresholds for tax years 2027 to 2029; Washington Department of Revenue capital gains and estate tax guidance. Read October 2026. This page is general information, not tax advice, and is not affiliated with the Washington Department of Revenue or the IRS. Confirm eligibility with your county assessor. See our Data Sources page for how we source figures.