Crypto taxes in Washington (2026): federal + state basics
Washington has no income tax — but it is not a zero-tax state for crypto. A 7% excise tax hits long-term gains above an annual standard deduction, rising to 9.9% on the largest gains.
Who has to file in Washington
Only individuals whose Washington-allocated long-term capital gains exceed the year's standard deduction owe the excise tax or file its return — most Washington crypto holders with modest gains file nothing with the state. The tax reaches individuals directly and through interests in pass-through or disregarded entities that sell long-term assets. There is no Washington income tax return for anyone; staking income, mining income, wages, and short-term gains create no Washington filing duty at all.
The federal layer comes first
Every state discussion starts with the federal return, because the IRS decides what counts as a taxable event in the first place. Selling crypto for dollars, trading one coin for another, or spending crypto is a disposition: you compute gain or loss as proceeds minus cost basis, and the one-year holding line separates short-term from long-term results. Staking and mining rewards are ordinary income at fair market value when you gain dominion and control over them. Federal reporting runs through Form 8949 and Schedule D, summarized in our how-to-report guide, and the rate tables live in the 2026 capital gains guide. Washington's excise tax then starts from your federal long-term result — the state return is built from your federal net long-term capital gain, with Washington adjustments, and a copy of the federal return must accompany it.
How Washington taxes crypto
Washington's capital gains tax is structured as an excise tax on the privilege of selling or exchanging long-term capital assets (RCW 82.87), which is how it coexists with the state's ban on a graduated income tax. It applies to long-term gains only: assets held more than one year. Crypto held long-term is an intangible capital asset like a stock or bond, and gains are allocated to Washington when the owner is domiciled in Washington.
The mechanics: start with your federal net long-term capital gain, apply Washington adjustments, subtract the standard deduction — $250,000 in statute, adjusted annually for inflation ($270,000 for 2024, $278,000 for 2025; use the DOR's published figure for the year of your sale) — and pay 7% on the remainder. Legislation enacted in 2025 (ESSB 5813) added a further 2.9% on taxable Washington gains above $1 million, so the combined rate above that line is 9.9%. The $1 million breakpoint is not inflation-indexed.
Real estate, assets in retirement accounts, depreciable business assets, and a few other categories are exempt; gains from selling a qualified family-owned small business and large charitable donations get their own deductions. Short-term crypto gains, staking rewards, and mining income are not capital assets sold long-term, so the excise does not touch them — and no other Washington tax does either, for individuals. Looking ahead: a new 9.9% tax on income above $1 million was enacted to begin in 2028; it does not apply to 2026 income, but Washington's "no income tax" label now has an expiry date worth watching.
2026 Washington rates at a glance
| Income type | Washington treatment |
|---|---|
| Income tax (wages, staking, mining) | None |
| Short-term capital gains | None — the excise tax covers long-term gains only |
| Long-term gains up to the standard deduction | 0% (deduction: $278,000 for 2025; 2026 figure set by DOR) |
| Long-term gains above the deduction, up to $1M taxable | 7% excise tax |
| Taxable long-term gains above $1,000,000 | 9.9% (7% + 2.9% additional tax, from tax year 2025) |
Washington capital gains excise tax, individuals. The standard deduction is one amount per individual, married couple, or domestic partnership, adjusted annually for inflation — confirm the 2026 amount in the DOR's updated-amounts table before filing.
Where crypto lands on the Washington return
File the Washington capital gains return electronically through My DOR (SecureAccess Washington), attaching a copy of your federal return for the same year — the Department of Revenue requires e-filing and electronic payment. The return is due the same day as your federal return; a federal extension plus an electronic extension request through My DOR extends the filing date (not the payment date). Only individuals who actually owe the tax must file.
Washington-specific gotchas
- The deduction is not a filing threshold for everyone. It is subtracted once per individual or couple — spouses filing jointly share one standard deduction, not two.
- Short-term is genuinely free; long-term is not. Washington flips the usual planning: the federal system rewards holding past a year, Washington starts charging at exactly that point for large gains.
- Domicile allocates the gain. Intangible assets like crypto are allocated by the owner's domicile. Selling after a genuine move out of Washington generally takes future gains with you; selling before the move does not.
- The 2026 deduction may differ from 2025's $278,000. The DOR publishes inflation-adjusted amounts each year — using last year's number is an easy, avoidable error. Starting with tax year 2026, the DOR also allows prepaying the tax up to six months before the due date.
- Underpayment penalties bite. Paying less than 80% of the tax due by the deadline triggers the substantial underpayment penalty — large one-off gains need an in-year estimate, not an April surprise.
What to do: Washington checklist
- Pull your records together. Export every exchange and wallet history and save any Form 1099-DA you received — brokers report proceeds for 2025 sales, and the basis box may be blank or wrong.
- Reconcile before you compute. Run each 1099-DA through the free 1099-DA reconciler so the proceeds on the form match your own basis records before anything reaches a return.
- Finish the federal numbers first. Use the crypto tax calculator and the 2026 capital gains guide to get your short-term and long-term totals — {state} starts from them.
- Test the excise threshold before assuming a state filing. Compare your federal net long-term gain with the DOR's standard deduction for the sale year; if the excess is positive, register in My DOR and file the capital gains return with your federal return attached.
- Check estimates and deadlines. A large one-off gain can require estimated payments during the year, not just a balance due in April — see the estimated taxes guide.
- Keep the file. Transaction records, wallet addresses, and basis elections should be kept for years after filing; our record-keeping guide lists what to save.
Frequently asked questions
Sources & verification
- Washington State Department of Revenue — Capital gains tax
- IRS Topic 409 — Capital Gains and Losses
- CryptoTaxAI — Form 1099-DA basis reporting 2026
Rates verified November 2026 against the Washington Department of Revenue (dor.wa.gov); check the current figures again before filing, because states adjust brackets and forms between seasons.
Keep learning
- Crypto taxes by state — compare all 12 state guides.
- Crypto Capital Gains Tax Rates 2026 — the federal short-term vs long-term tables.
- Free Crypto Tax Calculator — estimate your gain before the state layer.