Washington State Supreme Court Rules on Capital Gains Tax
On Friday, March 24th, 2023, the Washington State Supreme Court ruled that the capital gains tax passed back in 2021 is constitutional.
The 7% tax applies to the sale of assets such as stocks, bonds, business interests, or other investments that result in a profit of over $250,000.
Over the past year, lawsuits challenged the new measure as a form of income tax, which is prohibited in the Washington state constitution. However, the court ruled 7-2 that it is constitutional as it is labeled as an excise tax.
WHAT DOES THIS MEAN FOR WASHINGTON-BASED BUSINESS OWNERS?
Any owners that sold their business in 2022 or profited $250,000-plus in the sale of financial assets will owe a 7% capital gains tax on April 15th, 2023.
Current business owners under an LOI or going to market with their business should also be aware of the new tax.
If you are based in Washington state, BDR strongly recommends you contact your accountant or tax attorney for professional guidance on dealing with this new capital gains tax, both now and in the future.
Want to learn more about this ruling? Read the article featured in the Seattle Times.
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