Taxes in Federal Way
Washington's no state income tax applies to Federal Way residents the same as any other Washington resident, layered with the statewide capital gains excise tax on high earners and Federal Way's new 10.5% combined sales tax, effective July 1, 2026.
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Learn moreNo state income tax -- and the statewide capital gains excise tax nuance
Washington has no state personal income tax. As documented in full in washington.js, this coexists with a real, current, legally upheld capital gains excise tax on high earners (7% on long-term gains above an inflation-indexed threshold, 9.9% above $1 million), applying to Federal Way residents the same as any other Washington resident.
Federal Way's new 10.5% combined sales tax, effective July 2026
Federal Way's combined sales tax rose from 10.4% to 10.5% effective July 1, 2026, after the city council unanimously approved a new local public-safety sales tax at its April 2026 meeting -- earmarked specifically for the Federal Way Police Department and related public-safety/criminal-justice initiatives. This is a real, current, and specifically time-stamped local tax change worth understanding as current news rather than a static historical rate.
King County's property tax structure
Federal Way sits in King County and shares the countywide average effective property tax rate of approximately 0.83% documented in the companion bellevue-wa.js and redmond-wa.js records -- the highest of Washington's 39 counties, reflecting the county's elevated home values.
No state estate or inheritance tax on smaller estates; Washington does levy a state estate tax
Washington levies no state inheritance tax, but does levy a state estate tax on sufficiently large estates (a statewide fact, not Federal Way-specific) -- confirm current guidance directly for any actual estate-planning decision.
Key takeaways
- Washington has no state income tax, but its statewide capital gains excise tax (7%-9.9%) applies to Federal Way residents with sufficiently large gains.
- Federal Way's combined sales tax rose to 10.5% effective July 1, 2026, funding a new local public-safety initiative.
- King County's ~0.83% effective property tax rate -- the state's highest -- applies to Federal Way.
- Washington levies a state estate tax on sufficiently large estates, though no state inheritance tax.
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