Washington State has introduced a notable update to its capital gains tax that could directly impact investors – particularly those with sizeable gains or ownership in closely held businesses.
What’s Changing?
Effective January 1, 2025, the top capital gains tax increased from 7% to 9.9%. This increase comes from a new 2.9% surcharge applied to long-term capital gains that exceed $1 million above the standard exemption threshold.
This change applies to common long-term assets held by our clients, including:
- Stocks
- Bonds
- Mutual Funds & ETFs
How This May Impact Investors:
Higher Tax Liability
Investors with large brokerage accounts, concentrated stock positions, or those selling appreciated assets may face a higher tax obligation going forward.
Key Exemptions
Certain assets remain exempt from the tax, including:
- Real estate
- Retirement accounts (e.g., 401(k)s, IRAs)
Planning Considerations
With the added complexity and potential for increased taxes, proactive financial planning is critical. Consulting with a financial advisor or tax professional can help identify opportunities to reduce your tax exposure and plan more effectively.
Why It’s Important
If you’re considering rebalancing your investments or anticipating a major financial event, it’s important to understand how this policy shift could impact you. At Chaney Capital Management, we’re committed to helping our clients adapt to new tax developments and make sound financial decisions with confidence.
Curious how Washington’s new capital gains tax might impact you? Contact our team for a personalized assessment.
Written by:
Chase Matriotti
Investment Advisor Representative
