As of Monday, the state Department of Revenue reports 3,160 capital gains tax payments have been received for a total of $848,495,284.09

Brett Davis
The Center Square Washington

Washington state’s capital gains tax – given the legal green light in March – has brought in almost $850 million, far exceeding initial expectations of bringing in at least $500 million a year for early childhood education programs.

As of Monday, the state Department of Revenue reports 3,160 capital gains tax payments have been received for a total of $848,495,284.09.

The state has also seen 5,363 capital gains tax accounts registered, 1,187 returns filed, and 2,577 extensions requested and granted, according to DOR.

Mikhail Carpenter, DOR communications manager, explained the amount of money brought in could change in the future, based on a number of factors.

“The filing deadline for capital gains was on April 18; taxpayers who were granted an extension have until October 16 to file their return,” he said in an email to The Center Square. “The total will fluctuate until after the extended due date passes and those returns are processed. Some taxpayers will have overpaid and be due refunds, while others may owe more.”

“These numbers are point in time and are going to continue to fluctuate through the October extension deadline,” he continued.

Carpenter also elaborated on where the money will go.

“These are the first collections for the capital gains excise tax since created,” he said. “The first $500,000,000 collected is deposited into the education legacy trust account. Any remainder collected is deposited into the common school construction account.”

In 2021, the state Legislature passed the capital gains tax, and Gov. Jay Inslee signed it into law. It creates a 7% tax on profits of more than $250,000 from the sale of some assets, such as stocks and bonds.

In March 2022, Douglas County Superior Court Judge Brian Huber ruled the tax was “properly characterized as an income tax … rather than as an excise tax as argued by the State” and struck it down. The state constitution’s uniformity clause does not allow income to be taxed at different rates.

State Attorney General Bob Ferguson directly appealed the decision to the Supreme Court, which in July agreed to hear the case.

In November, the Supreme Court allowed the state Department of Revenue to begin collecting the tax while it considered the state’s appeal.

Oral arguments were heard before the state’s highest court on Jan. 26. On March 24, the court upheld the capital gains tax, ruling that it was a lawful excise tax, non an unconstitutional income tax. 

This report was first published by The Center Square Washington.