HB1496 enacts an excise tax on sales and extraordinary profits of high valued assets. The excise tax on capital gains is a tax on the one-time, voluntary sale or transfer of a capital asset, not a tax on ownership of the asset itself. This excise tax is paid only by those Washington residents who engage in such voluntary sales or transfers, and is measured by the realization of significant gain on the transaction. In order to protect against further regressive impacts of the tax system, encourage the everyday investments that Washingtonians of all income levels strive for, and support our economy, this excise tax will not apply to capital gains realized by certain sales and transfers. HB1496 defines adjusted capital gain, capital asset and various other terms.
Beginning January 1, 2022, a tax is imposed on all individuals for the privilege of selling or exchanging long-term capital assets as follows: (a) The tax equals seven percent multiplied by the individual's Washington capital gains on real property; and (b) The tax equals 9.9 percent multiplied by the individual's Washington capital gains on all other long-term capital assets. If an individual's Washington capital gains equal an amount that is less than zero for a taxable year, no tax is due under this section and no such amount is allowed as a carryover for use in the calculation of that individual's adjusted capital gain, as defined in section of this act, for any taxable year. The law notes that the tax doesn’t apply to certain sales or exchanges, including principal place of residence with a selling price of $5m or less or specific retirement assets. HB1496 also outlines what happens for long-term gains and losses.