Washington voters will soon decide whether to repeal the state’s tax on capital gains , which is paid by some of the state’s wealthiest residents. Why it matters: If voters opt to nix the tax by approving Initiative 2109 , the state will lose more than $2 billion in revenue for child care programs and education over five years, according to a state fiscal analysis .
State of play: Fewer than 4,000 Washington taxpayers paid the capital gains tax last year, per the state Department of Revenue.
- About 3.8 million individual income tax returns were filed in Washington in 2021, the most recent year of IRS data available .
How it works: The tax applies to profits from selling capital assets, such as stocks and bonds, if those profits exceed $250,000 per person (or per married couple) in a year.
- Sales of retirement accounts, real estate and certain small businesses are exempt, and the tax applies only to the portion of capital gains that exceed the $250,000 threshold.
- The first $500 million raised by the capital gains tax each year is earmarked for early learning and education programs, with anything above that going toward K-12 school construction.