Washington

Washington is one of seven states without income taxes, individual or corporate. The biggest source of state revenue is the general sales and use tax, set at 6.5% with local sales taxes adding on 0.5% to 2.4%. Food and prescription drugs are exempted. The state also imposes a full array of excise taxes covering motor fuels, tobacco products, insurance premiums, public utilities, alcoholic beverages, amusements, pari-mutuels, and other selected items. In 1982 Washington replaced its inheritance tax with an estate tax tied to the federal exemption for state death taxes, and since 2001, has taken action prevent its phase-out in tandem with the phase-out of the federal tax credit by 2007. In 2002, gift and death taxes accounted for 0.9% of total state collections. Other state taxes include various license fees, document and stock transfer fees, state property taxes, and severance taxes (0.3% of state collections in 2002). Most property taxes are collected locally. In all, about 42% of total state and local revenues are collected by local government and taxing units.

The state collected $12.629 billion in taxes in 2002, of which 62.5% came from the general sales tax, 16.2% from selective sales taxes, 11.5% from state property taxes, 5.% from state license fees, and 3.4% from document and stock transfer taxes. In 2003, Washington ranked 18th among the states in terms of combined state and local tax burden, which amounted to about 9.8% of income. The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.