Washington state’s capital gains excise tax collections for the 2023 tax year will not provide the boost to education funding it did the year prior when the tax went into effect. 

The total revenue from the capital gains tax in the 2023 tax year is down 47% from the previous year, according to a release from the state Department of Revenue. 

In Benton County, the decline in tax payments was even steeper. In the 2022 tax year, 28 individuals paid nearly $7.8 million in capital gains excise taxes. In 2023, 13 taxpayers paid just under $1.7 million. Franklin County did not have anyone paying the tax in either year. 

The capital gains tax is a 7% excise tax on the sale or exchange of long-term capital assets such as stocks, bonds, business interests or other investments and tangible assets. For tax year 2023 – taxes due in April 2024 – the tax applied after a standard $262,000 deduction of capital gains. 

The tax only applies to individuals and to gains allocated in Washington state.  

Revenue collected by the tax each fiscal year is earmarked for education, with up to $500 million (adjusted for inflation) going to the education legacy trust account, and any remainder deposited into the common school construction account.  

Based on current numbers, no additional funding is anticipated for the common school construction account this year.