For years, moving from Oregon to Washington was seen as a straightforward tax strategy for high-income earners and taxpayers anticipating an extraordinary taxable income event. Oregon’s high personal income tax rates made Washington’s lack of an income tax look like the clear winner. But as of 2025, the equation has shifted.
With Washington’s relatively new capital gains tax structure, recent changes to its estate tax system, and a broader trend toward wealth-based taxation, the decision is no longer as simple as it once seemed. Families and business owners now face a much more complex financial calculus when weighing a move across the river.
Washington’s Capital Gains Tax: A New Variable
Washington introduced a 7% capital gains tax in 2022, which applies to long-term gains from the sale of stocks, bonds, and business interests. In 2025, the law became more costly for high earners:
- Standard Deduction: Each taxpayer receives an annual exemption of $270,000 (2024 amount, adjusted annually for inflation). Gains below this threshold are not taxed.
- Tiered Rates: Long-term gains above the exemption are taxed at 7% up to $1 million, and at 9.9% on amounts beyond that.
- Excluded Assets: Gains from real estate, depreciable business assets, and certain family-owned small businesses are excluded.
In practice, the tax primarily affects investment portfolios and business owners selling companies that don’t qualify for an exemption. For example, an entrepreneur selling a $10 million business could owe close to $1 million in Washington capital gains tax.
By contrast, Oregon does not impose a separate capital gains tax, profits are taxed as ordinary income, at rates up to 9.9%. The key difference is scope: Oregon applies its tax broadly to all income sources, while Washington targets specific forms of wealth.
Estate Taxes: Higher Exemptions, Higher Rates
Estate planning adds another layer of complexity. Both Oregon and Washington impose state estate taxes, but the thresholds and rates differ significantly.
- Oregon: Exemption of $1 million, with rates ranging from 10% to 16%.
- Washington: As of July 2025, the exemption increased to about $3 million, indexed for inflation. Rates, however, now rise steeply, topping out at 35% for estates above $9 million, up from a prior maximum of 20%.
$7.5 million marks the estimated threshold where the estate tax burden equalizes between the two states. Below this level, Washington’s higher exemption generally results in a lower estate tax burden. Above that threshold, Oregon could leave heirs with less estate tax to pay.
Within Washington alone, the new law also changes outcomes. Estates above $8.8 million will now face a larger estate tax bill than under the prior system due to the new steeper brackets.
Both states tax in-state property held by nonresidents, so ownership structures need review even if domicile is elsewhere.
The Bigger Trend: Wealth-Based State Taxation
Washington’s shift reflects a broader state-level trend: raising revenue by targeting wealth rather than broad-based income. In addition to capital gains and estate tax changes, Washington residents also pay a long-term care payroll tax of 0.58% on all wages, with no income cap.
Other states are experimenting with similar policies, from surtaxes on high earners to new estate tax brackets. For business owners and investors, this means state tax planning increasingly requires attention not only to income but also to the structure and timing of investments, business exits, and wealth transfers.
The New Relocation Equation
For families and entrepreneurs considering relocation, the decision now hinges on several key questions:
- What is the source of income? Wages may still favor Washington, while significant investment or business-sale gains face new taxes.
- What is the size of the estate? Smaller estates may benefit from Washington’s exemption, but larger estates could face higher costs than in Oregon.
- What is the long-term plan? Lifestyle, residency audits, and estate planning structures all play into the ultimate outcome.
Crossing the Columbia River is no longer a guaranteed tax win for current residents. Washington’s capital gains tax and expanded estate tax structure, combined with broader wealth-focused state tax policies, have fundamentally changed the equation.
For high-net-worth individuals, business owners preparing for an exit, or families with significant investment portfolios, the decision now requires a detailed, scenario-based analysis rather than a simple income tax comparison.
The Columbia may only span a mile, but the financial implications of crossing it have become much wider.
Disclosure: This content is for informational purposes only and not investment advice.
