A proposal headed to voters to repeal Washington’s capital gains tax would knock roughly a billion dollars a year from the state budget, money that would otherwise go to early learning and child care programs and school construction, according to new state estimates.
In 2023, the first year of collections, the tax brought in $890 million. The estimates show that eliminating it would leave similar-sized holes in the state budget going forward. But capital gains taxes are a volatile source of tax revenue, prone to up and down swings from year to year, which means that accurately modeling future revenue is difficult.
Initiative 2109 is on track to appear on this November’s ballot. It would repeal the 7% tax on capital gains over $262,000 (up from $250,000 for taxes due last year). These gains generally come from the sale of investments like stocks and bonds or business interests. The tax does not apply to real estate sales.
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