Washington’s New Millionaires’ Tax: What It Actually Means for King County Home Sellers

Washington State just passed a 9.9% tax on household income over $1 million. If you own a home in Sammamish, Issaquah, or Bellevue, you’ve probably seen the headlines. And you may be wondering whether selling your home just got a lot more expensive.

The short answer NO. Here’s why.

What Washington’s New Tax Laws Actually Say

Washington State made two tax changes in 2026 that are generating real confusion among homeowners.

The first is an increase to the existing capital gains excise tax. Washington already had a 7% capital gains excise tax on investment gains above $262,000, passed in 2021 and upheld by the state Supreme Court. In 2026, that rate was raised to 9.9% on gains exceeding $1 million, retroactive to January 1, 2025.

The second is a new 9.9% income tax on household income exceeding $1 million, effective January 1, 2028 (with first payments due in 2029).

Both are real laws with real financial implications for high earners. Here’s the detail most media coverage has buried.

If you sell your King County home in 2026, 2027, or after the new income tax takes effect in 2028, the proceeds from that sale are not subject to either of these new taxes. The legislators who passed the capital gains excise tax specifically excluded real estate transactions. You can verify this at the Washington Department of Revenue.

Why the Confusion Exists

The problem is that the headlines about Washington’s new millionaires’ tax and the existing capital gains excise tax all get jumbled together in a news cycle that isn’t designed for nuance. A homeowner in Sammamish with $1.2 million in equity reads “Washington passes 9.9% tax on capital gains” and reasonably wonders whether they’re about to lose six figures on their sale.

They’re not.

What the capital gains excise tax does affect is investment income: stocks, bonds, business interests, cryptocurrency. If you’re a tech executive in Bellevue who received $2 million in RSU payouts last year, you have a real tax planning conversation to have. If you’re a homeowner who bought in Sammamish 15 years ago and are sitting on significant equity, your home sale proceeds are in a different category entirely.

The Tax That Does Apply to Your Home Sale

There is one state-level tax that applies to every home sale in Washington, and it’s been around for decades. It’s the Real Estate Excise Tax, or REET.

REET in King County works on a graduated scale based on the sale price. As of 2026:

REET rates as of 2026. Washington State — King County.

On a $1,685,000 Sammamish home sale, you’d pay roughly $9,600 on the first $750,000 at 1.1%, then approximately $11,900 on the portion from $750,001 to $1,500,000 at 1.28%, then roughly $5,088 on the $185,000 above $1.5 million at 2.75%. Total REET: approximately $26,588.

That’s a meaningful cost of sale. But it has nothing to do with the new millionaires’ tax, and it applies whether you’re selling a $400,000 Kent home or a $2 million Bellevue estate.

What the New Tax Climate Actually Affects

The behavioral impact of Washington’s new tax laws is real, even if the direct impact on your home sale isn’t.

High-income tech workers and executives are factoring Washington’s shifting tax environment into relocation decisions. Some are looking at Nevada, Texas, and Florida with new interest. That matters for the high-end buyer pool in Bellevue, Sammamish, and Issaquah, because that buyer pool has gotten somewhat smaller over the past 18 months.

This is a headwind for sellers of luxury properties, not because of any direct tax on the home sale, but because the pool of buyers who can and will pay $2 million or more for a home in King County has contracted modestly. That’s one contributing factor to the price softness you’re seeing at the top end of the market right now.

For mid-market sellers in Renton, Kent, Federal Way, or Auburn, this dynamic is barely a factor. The buyers for a $700,000 to $900,000 home aren’t the ones doing tax climate analysis before deciding whether to move to Texas.

What You Should Actually Be Thinking About Before Selling

If you’re a King County homeowner doing the math on a potential sale, here’s what actually matters from a tax and cost standpoint.

Federal capital gains taxes are a real consideration if you’ve owned your home a long time and have substantial appreciation. The federal exclusion for primary residences is $250,000 for single filers and $500,000 for married couples filing jointly. Gains above that threshold are taxable at federal rates. That rule predates Washington’s new laws by decades.

The 2-of-5-year rule still applies. To claim the federal exclusion, you must have lived in the home as your primary residence for at least 2 of the last 5 years.

Washington REET is a cost of sale that comes off the top. Budget for it.

Standard selling costs in Washington — agent commissions, escrow fees, title insurance, transfer taxes, and pre-listing repairs — typically run 7% to 9% of the sale price. That’s the real number that affects your net proceeds, and it applies to every sale regardless of income level.

I walk every seller through a complete net proceeds analysis before they list. It’s one of the most useful things I do, and it means no one gets surprised at the closing table. See also: Capital Gains on Home Sales in Washington State: What King County Sellers Need to Know.

Frequently Asked Questions

Does Washington’s new millionaires’ tax apply to my home sale?

No. Washington’s capital gains excise tax explicitly exempts real estate. Whether you’re selling a primary residence, rental property, or investment property, the proceeds are not subject to Washington’s capital gains excise tax. The new 9.9% income tax on income over $1 million (effective 2028) also does not apply to home sale proceeds.

What taxes do I actually pay when I sell my King County home?

You pay Washington’s Real Estate Excise Tax (REET) on a graduated scale: 1.1% on the first $750,000, 1.28% on $750,001 to $1.5M, 2.75% on $1.5M to $3M, and 3% above $3M. Federal capital gains tax applies to gains above the $250,000 (single) or $500,000 (married) exclusion if you’ve lived in the home 2 of the last 5 years.

How much does it cost to sell a home in King County in 2026?

Total selling costs typically run 7% to 9% of the sale price, including REET, agent commissions, title and escrow fees, and any pre-listing repairs or staging. On a $1.5M Sammamish home, that’s $105,000 to $135,000 in total selling costs before you account for any remaining mortgage balance.

Will Washington’s new tax laws cause home prices to drop further?

The direct impact on home sale transactions is minimal since real estate is exempt. The indirect effect is real: high-earning tech workers and executives are factoring Washington’s shifting tax climate into relocation decisions, which has modestly reduced the high-end buyer pool in Sammamish, Issaquah, and Bellevue. This is one contributing factor to the luxury price softness currently visible in the data.

Want to Know Your Real Net Proceeds?

Before you decide whether to sell, run the actual numbers. What your home realistically sells for right now, minus REET, minus selling costs, minus any mortgage payoff, is your actual takeaway. That number should drive the decision. Not the headlines.

I do this analysis every day. If you want to know what selling your King County home actually looks like in 2026, I’m happy to walk through it with you.

Gregory Dorrell is a licensed real estate broker (WA License #111862) with Coldwell Banker Bain. This post is provided for informational purposes only and does not constitute tax or legal advice. Consult a qualified tax professional for guidance specific to your situation.