The Seattle Seahawks millionaire tax is Washington’s 7% capital gains excise tax, with a higher 9.9% tier on gains above $1 million, and for Seahawks players it works out to this: nothing is owed on football salary or game checks because Washington has no personal income tax, but a large stock sale, business exit, or venture windfall can produce a real state tax bill. The tax touches investment profits, not earned income.
How the Rate and Deduction Work
Washington began with a flat 7% on long-term capital gains in 2022 under ESSB 5096. Starting with tax year 2025, ESSB 5813 layered a second tier on top.1Washington Department of Revenue. New Tiered Rates for Washington’s Capital Gains Tax The 7% rate applies to the first $1 million of taxable Washington capital gains after the standard deduction, and 9.9% applies to every dollar above that. The 2.9% above $1 million is an add-on to the base rate, not a separate levy, so the effective rate on the higher slice is 9.9%. Neither the $1 million threshold nor the 7% base rate is indexed for inflation.2Washington State Legislature. RCW 82.87.040
Every individual can subtract a standard deduction before any tax is owed. The statutory base is $250,000, adjusted annually for inflation by the Department of Revenue.3Washington State Legislature. Chapter 82.87 RCW – RCW 82.87.060 For tax year 2025, the deduction is $278,000; the 2026 figure will be posted on the Department of Revenue’s website by October 31 of the prior year.4Washington Department of Revenue. Capital Gains Tax
Married couples and registered domestic partners share one deduction. A joint filing does not double it. Both spouses together use the same $278,000 that a single filer uses.3Washington State Legislature. Chapter 82.87 RCW – RCW 82.87.060 For a household with two active investment portfolios, that changes the math.
Salary Is Untouched. Investment Gains Are Not.
The biggest financial reason elite athletes want to play in Washington is unchanged: no state income tax on salary. A Seahawks quarterback earning $50 million pays zero Washington tax on that pay. California’s top marginal rate sits above 13%, and New York is close behind. The capital gains tax does not affect that comparison, because it only applies to profits from selling investments.
Off the field is where it lands. Professional athletes routinely hold venture capital stakes, private equity positions, and equity in operating businesses. A player who sells a $5 million stake in a startup owes Washington capital gains tax on the profit above the 2025 deduction of $278,000, and any portion of the remaining gain above $1 million falls into the 9.9% bracket. Financial planners working with athletes often stage liquidations across multiple tax years to keep annual gains below the higher tier, or pair sales with years that produce offsetting losses.
Who Owes It: Residency and Domicile
Washington’s tax on intangible assets — stocks, bonds, and interests in businesses — applies only to individuals domiciled in the state. A player who spends the season in Seattle but keeps a permanent home and legal domicile in Texas or Florida does not owe Washington capital gains tax on stock sales. A player whose permanent home is Washington owes the tax on investment profits regardless of where the assets themselves sit.
Tangible personal property is different. An asset like a yacht located in a Washington marina at the time of sale can trigger the tax even for a nonresident.
The domicile analysis turns on facts: where you register to vote, where your driver’s license is issued, where your family lives full-time. Athletes splitting time between states need to be deliberate about establishing legal residence, because getting it wrong can produce an unexpected bill on a large asset sale.
What the Tax Does Not Reach
Several asset categories are carved out of the tax entirely. Real estate sales are exempt across the board: any real property transferred by deed, contract, or judgment, regardless of whether it is residential or commercial, how long you owned it, or whether you lived in it.5Washington Department of Revenue. Frequently Asked Questions About Washington’s Capital Gains Tax Selling a home in Bellevue or Mercer Island after a career in Seattle produces no Washington capital gains tax, no matter the profit.
Retirement accounts are also protected. Transactions inside 401(k) plans, IRAs, Roth IRAs, 403(b) annuities, 457(b) deferred compensation plans, and similar vehicles do not generate taxable gains under the statute. If you sell your interest in an entity that owns real estate, the portion of your gain directly attributable to that real property is exempt as well.6Washington State Legislature. RCW 82.87.050 Livestock, timber, and certain agricultural assets are also excluded.
The tax covers long-term capital assets held more than one year, matching the federal “long-term” definition under IRC Section 1222.7Office of the Law Revision Counsel. 26 U.S. Code 1222 – Other Terms Relating to Capital Gains and Losses Anything sold within twelve months of purchase falls outside the Washington tax entirely, though federal short-term treatment still applies.
How Washington Stacks with Federal Tax
Washington’s tax exists alongside the federal tax on capital gains, not instead of it. In 2026, federal long-term rates run 0%, 15%, or 20% depending on taxable income. High earners also owe the 3.8% Net Investment Income Tax once modified adjusted gross income exceeds $200,000 single or $250,000 joint. A player clearing seven figures in gains will almost certainly pay the top 20% federal rate plus the 3.8% NIIT, on top of Washington’s 7% or 9.9%.
Whether the Washington tax reduces the federal bill through the state and local tax deduction is not straightforward. Washington classifies its capital gains levy as an excise tax rather than an income tax, and the federal SALT deduction covers income, property, and sales taxes. A tax professional should evaluate whether any portion qualifies under current federal rules before you count on it.
Filing, Deadlines, and Penalties
Only people who actually owe tax must file. If your long-term gains do not exceed the standard deduction, no return is required. But if you request an extension or make a payment, you must file a return regardless of whether tax is ultimately due.4Washington Department of Revenue. Capital Gains Tax
Returns must be filed electronically through the Department of Revenue’s My DOR portal or approved tax software, with a copy of your federal return attached. The deadline matches the federal due date, typically April 15. A Washington extension requires a federal extension in place and can be requested through My DOR by April 15, but the extension only covers paperwork. Any tax owed is still due by the original deadline.4Washington Department of Revenue. Capital Gains Tax
Penalties climb fast. Late filing runs 5% of the tax due per month or partial month, capped at 25%. Late payment starts at 9% of tax due, rising to 19% after one month and 29% after two.8Washington Administrative Code. WAC 458-20-300 – Capital Gains Excise Tax Overview and Administration Interest accrues on any unpaid balance from the due date until paid. Missing the deadline by two months means owing close to a third of the tax on top of the tax itself, which for a seven-figure gain is a costly oversight.