AN ACT Relating to repealing the capital gains income tax;
HB 1665 would repeal Washington’s capital gains income tax. The bill states legislative findings that the tax encourages out-of-state migration, reduces the state’s economic competitiveness, and disproportionately affects economic activity and individuals and families who lack the means to avoid its impact. It declares that repealing the tax would help Washington remain an attractive place to live, invest, and do business, while encouraging retention and attraction of talent and investment.
To carry out that policy change, the bill creates a new section repealing the existing capital gains tax provisions in state law and repeals a broad set of related statutes in the Revised Code of Washington. Those repeals include provisions governing findings and intent, definitions, revenue distribution, the tax on long-term capital assets, exemptions, deductions, the qualified family-owned small business deduction, charitable donation deductions, other taxes and credits, allocation of long-term capital gains and losses, filing requirements and penalties, joint and separate filer liability, tax administration, criminal penalties, annual adjustments, and credits related to the sale or exchange of long-term capital assets. The act would take effect October 1.
The bill’s impact would be to eliminate the state capital gains tax and remove the statutory framework supporting its administration and enforcement. That would directly affect taxpayers with long-term capital gains, the Department of Revenue’s administration of the tax, and any revenue streams or credits tied to the tax. It would also alter state fiscal policy by removing a tax source that currently applies to certain capital gains transactions.
Because there were no committee transcripts or recorded votes provided, the available context shows the bill’s stated rationale but not any formal debate. The bill text itself reflects a strongly favorable view of repeal, emphasizing competitiveness, fairness, and economic growth. The absence of discussion or voting history means no opposing arguments are documented in the provided materials, though the repeal of a state tax would typically raise revenue and budget concerns for critics.
HB 1665 would repeal Washington’s capital gains income tax and strike a wide range of related statutory provisions from state law. This would remove the tax’s definitions, exemptions, deductions, filing rules, penalties, administration provisions, and associated credits, while also ending the legal framework used by the Department of Revenue to assess and collect the tax. The bill would primarily affect taxpayers with long-term capital gains, as well as state revenue collections and tax administration.
The bill text is strongly supportive of repeal, framing the capital gains tax as harmful to competitiveness, innovation, and economic growth, and as disproportionately burdensome to individuals and families. No committee testimony or votes were provided, so there is no recorded opposition or bipartisan sentiment in the supplied materials. Based on the text alone, the bill’s sponsor and findings are clearly pro-repeal and pro-tax-cut.
The main point of contention implied by the bill is whether the capital gains tax should be viewed as a burden that drives away residents, investment, and economic activity, or as a legitimate revenue source that helps fund state government. Supporters of repeal, as reflected in the findings, argue the tax harms competitiveness and fairness. Potential opponents would likely focus on lost revenue, the effect on state services, and the policy choice to exempt capital gains from taxation, but no opposing statements or votes are included in the provided record.