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Bill

HB 1665

Repealing the capital gains income tax.

2025-2026 Regular Session Introduced by Jeremie Dufault

HB 1665 eliminates Washington's 7% capital gains tax, removing $1-2B in annual state revenue previously allocated to education and healthcare.

First reading, referred to Finance.
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Bill Summary · HB 1665

Legislative bill overview

HB 1665 seeks to repeal Washington's capital gains income tax, which was enacted in 2021 and imposes a 7% tax on long-term capital gains exceeding $250,000 annually. The bill would eliminate this tax entirely, removing a revenue source that has generated approximately $1-2 billion annually for the state's education and healthcare funding.

Why is this important

Washington's capital gains tax is one of the state's primary funding mechanisms for education and long-term care services. Repealing it would significantly reduce state revenue and potentially force reductions in these programs unless alternative funding is found. This directly affects how the state balances its budget and funds core services.

Potential points of contention

  • Revenue impact: The state would lose substantial funding designated for education and healthcare without a clear replacement revenue source, potentially requiring cuts to these programs or tax increases elsewhere
  • Tax fairness debate: Supporters argue the tax unfairly targets investment income; opponents contend it's a reasonable tax on wealth gains that other income earners already pay through income taxes
  • Constitutional questions: Washington's Supreme Court previously ruled the tax constitutional, but legal challenges about whether it qualifies as an "income tax" under state law remain unresolved

Compiled from official sources — confirm details with the bill’s official record.

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