Compare taxes and see how much you save moving from Colorado to Washington
Washington State has no income tax on wages, saving $4,400 per year versus Colorado’s 4.4% flat rate on $100,000 of earned income. However, Washington carries several hidden tax costs that Colorado does not: a 7% capital gains tax on gains above $262,000, a $2.193 million estate tax threshold, a Business and Occupation (B&O) gross receipts tax on businesses, and Seattle’s 10.25% combined sales tax rate. Colorado’s 2.9% state sales tax is the lowest in the US. For wage earners, Washington wins clearly on income tax; for investors and business owners, the comparison is less clear-cut.
Flat Income Tax
Flat 4.4% state income tax on all wage income; Denver adds local sales tax
No Wage Income Tax
No income tax on wages; 7% capital gains tax only on gains above $262,000
At $100,000 income:
That is $367/month back in your pocket!
| Income | CO Tax | WA Tax | Savings | 10-Year |
|---|---|---|---|---|
| $50,000 | $2,200 | $0 | $2,200 | $22,000 |
| $75,000 | $3,300 | $0 | $3,300 | $33,000 |
| $100,000 | $4,400 | $0 | $4,400 | $44,000 |
| $150,000 | $6,600 | $0 | $6,600 | $66,000 |
| $250,000 | $11,000 | $0 | $11,000 | $110,000 |
| $500,000 | $22,000 | $0 wages ($16,590 cap gains if applicable) | $22,000 (wages only) | $220,000 |
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Talk to a CPA About Your State Move →Washington State has no income tax on wages or salaries. However, since 2023 Washington levies a 7% capital gains tax on net long-term capital gains above $262,000 per year. This means wage earners pay 0%, but investors with large stock sales or business disposals may owe significant Washington state tax on gains above the threshold.
Washington has a state estate tax on estates above $2.193 million (2026), with rates ranging from 10% to 20% — the highest top rate of any US state. Colorado has no state estate tax. For a $5 million estate, Washington could owe approximately $700,000-$800,000 in state estate tax that would not apply in Colorado. This makes Colorado significantly better for wealth transfer planning.
Washington’s Business and Occupation (B&O) tax is a gross receipts tax applied to all business revenue — not profit. Service businesses pay 0.471% on every dollar of revenue, regardless of whether the business is profitable. Colorado has no equivalent tax. The B&O tax is a meaningful cost for freelancers, consultants, and small business owners operating in Washington.
For pure income tax savings, Washington wins — saving a $150,000 tech worker $6,600/year vs Colorado. Seattle also offers Amazon and Microsoft HQ proximity and some of the highest tech salaries in the US. However, Seattle’s 10.25% sales tax, $2.19M estate tax threshold, and capital gains tax reduce the advantage for those with stock options or investment portfolios. Denver offers lower sales taxes, no estate tax, and better outdoor recreation access.