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Washington Defends Capital Gains Tax at State Supreme Court

July 5, 2022, 5:10 PM

Washington state’s new tax on capital gains isn’t an unconstitutional income tax, the state and a group of education-funding supporters argued to the state top court in an effort to revive the tax.

A trial court struck down the tax law in May, siding with farmer and business groups that argued past court rulings categorized income taxes as property taxes, which can’t exceed 1% annually.

The excise tax, which took effect on Jan. 1, is 7% on gains over $250,000 per year, excluding gains from retirement account sales, real estate, and certain small businesses. “Fewer than one in 1,000 Washingtonians ...