Key Facts About Crypto Tax in Seattle
Washington runs the strangest state tax structure in crypto: no income tax at all, but a 7% excise tax on long-term capital gains above an indexed deduction, $278,000 for 2025, rising to 9.9% on taxable gains over $1 million. Short-term gains and staking income escape the state entirely. Holding-period proof, per lot, decides whether Washington taxes a sale at all.
- Washington has no personal income tax on wages, but since 2022 it levies a 7% excise tax on long-term capital gains above an annually indexed deduction, $278,000 for 2025.
- A 2025 Washington law added a 2.9% surtax, so long-term gains above $1 million of taxable gain are taxed at 9.9%, retroactive to January 1, 2025.
- Washington's capital gains tax applies only to long-term gains: short-term crypto gains, staking rewards, and mining income face no Washington tax at all.
- A $500,000 long-term crypto gain costs a Seattle resident about $134,540 in combined tax versus $119,000 in Austin and $185,500 in San Francisco.
- Amazon is headquartered in Seattle and Microsoft in neighboring Redmond, and their engineers hold RSU wealth next to some of the deepest personal crypto portfolios on the West Coast.
- Count On Sheep delivers CPA-ready 8949, Schedule D, and Schedule 1 inputs for Seattle investors. Your CPA files, or you file with TurboTax.
Seattle crypto investors face a state tax structure no other state has: Washington taxes no wages and no short-term gains, but levies a 7% excise tax on long-term capital gains above a $278,000 deduction for 2025, rising to 9.9% on taxable gains over $1 million. Holding period, proven per lot, decides whether Washington taxes a sale at all. Count On Sheep, a USA-based team with former Big 4 leadership, rebuilds wallet, exchange, and DeFi history into CPA-ready Form 8949, Schedule D, and Schedule 1 inputs for Seattle investors, with the lot-level dates that drive both the federal return and the separate Washington capital gains filing. We do not file. Your CPA files, or you file with TurboTax.
Phone: (858) 434-7547
Why Seattle crypto investors need a specialist
Seattle is an engineer town with a tax structure that exists nowhere else. Washington taxes no wages and no short-term gains, then taxes large long-term gains through an excise tax with its own deduction, its own return, and its own audit trail. Per-lot dates carry more weight here than in any other state.
The investor base is heavy on software money. Amazon's headquarters anchors South Lake Union, Microsoft sits across the lake in Redmond, and Google, Meta, and a long tail of startups run large Seattle engineering offices. The typical client profile is an engineer with vesting RSUs, a decade-old Coinbase account, a hardware wallet, and a few years of DeFi experiments across chains. Each piece is manageable; the combination is what breaks consumer software.
The tax structure is the part outsiders get wrong. Washington's capital gains excise tax took effect in 2022, survived the state Supreme Court in March 2023, and survived the voters in November 2024 when Initiative 2109 failed. It applies a 7% rate to long-term gains above the standard deduction, $278,000 for 2025, and a 2025 law added 2.9% on taxable gains over $1 million. Real estate and retirement accounts are exempt. Crypto is not: it is intangible property, allocated to Washington when the owner is domiciled here at the time of sale.
The mechanics reward documentation obsessively. Only long-term gains count, so a lot's acquisition date determines whether a sale is Washington-taxable at all. The deduction means lot selection changes the state bill: a Seattle investor who realizes $270,000 of long-term gains in 2025 owes Washington nothing, while $500,000 of the same gains owes $15,540. Specific identification, supported per lot, is what turns those decisions from guesses into filings.
The deliverable covers both governments. We rebuild wallet, exchange, and DeFi history into per-lot Form 8949 detail, Schedule D totals, and Schedule 1 items, with holding periods documented well enough to drive the federal return and the separate Washington capital gains filing. Your CPA files both, or you file federally with TurboTax and handle the state return with the numbers we hand you.
What crypto gains actually cost in Seattle
Seattle residents pay federal capital gains of up to 23.8% including the net investment income tax. Washington adds no income tax on wages or short-term gains, but long-term capital gains above the 2025 standard deduction of $278,000 face a 7% excise tax, with a 2.9% surtax on taxable gains over $1 million.
What a $500,000 long-term crypto gain costs a top-bracket resident
| City | State + local tax | Federal (LTCG + NIIT) | Total tax | Extra cost vs Austin |
|---|---|---|---|---|
| Seattle | $15,540 (7% above deduction) | $119,000 (23.8%) | $134,540 | +$15,540 |
| San Francisco | $66,500 (13.3%) | $119,000 (23.8%) | $185,500 | +$66,500 |
| Austin | $0 | $119,000 (23.8%) | $119,000 | Baseline |
Illustrative math at top rates. Federal assumes the 20% long-term rate plus the 3.8% net investment income tax. The Seattle figure applies Washington's 7% to the gain above the 2025 standard deduction of $278,000. Taxable gains over $1 million pay 9.9% on the excess. Short-term gains face no Washington tax but are taxed federally as ordinary income.
Federal conformity in Washington
The Washington tax starts from federally reported net long-term capital gains, so federal characterization and per-lot holding periods flow directly into the state calculation. Real estate and retirement accounts are exempt; crypto, as intangible property, is covered and allocated by domicile at the time of sale.
What this means in practice: Washington is the only state where holding period decides whether the state taxes a gain at all. Long-term lots above the deduction pay 7% to 9.9%; short-term lots pay Washington nothing but face federal ordinary rates up to 40.8%, so nobody should hold short on purpose. The real lever is proof: per-lot acquisition dates, specific identification, and clean transfer reconciliation determine both the federal rate and the entire Washington bill. That documentation is the deliverable.
What we untangle for Seattle crypto investors
Four steps, start to finish
From anywhere in Washington.
Connect
You connect read-only access to your exchanges and share wallet addresses. CSV exports work too.
Reconcile
We pull and reconcile every wallet, exchange, and DeFi interaction into one ledger with cost basis, holding period, and proceeds per lot.
Specialist Review
A senior crypto tax professional reviews edge cases. Manual basis splits, DeFi classifications, bridge events, restaking, NFTs.
CPA-Ready Reports
You get CPA-ready Form 8949, Schedule D, Schedule 1 inputs (and Schedule C for mining), plus full workpapers. Hand to your CPA, or load into TurboTax.
Clean files, ready for your CPA
When the crypto tax work is done, you receive a tidy package: Form 8949 detail, Schedule D totals, Schedule 1 inputs for staking and airdrops, and the workpapers behind every number. That goes straight to your CPA, or into TurboTax.
Talk through your crypto tax situation first.
Every wallet, exchange, and DeFi history is different. Start with a consultation so we can understand the work, confirm what your CPA needs, and outline the cleanest path forward for your Washington return.
Common questions, Seattle edition
Do you have an office in Seattle?
No. Count On Sheep is headquartered in San Diego and serves Seattle clients remotely through a secure portal, video calls, and read-only exchange access. The deliverable is the same CPA-ready package we build for clients in all 50 states.
Does Washington tax my crypto?
Only one slice of it: net long-term capital gains above the standard deduction, $278,000 for 2025, taxed at 7% and at 9.9% above $1 million of taxable gain. Wages, short-term gains, staking rewards, and mining income face no Washington tax.
Do you file the Washington capital gains return?
No. The Washington return is filed with the Department of Revenue separately from the federal return. We deliver the reconciled numbers behind it: per-lot long-term gains with documented holding periods. Your CPA files, or you file yourself.
What is the standard deduction for 2025?
$278,000 of net long-term capital gains, indexed annually for inflation. Only gains above that amount are taxed, which is why lot selection and disposal timing are worth real money for Seattle investors with large positions.
Are short-term crypto gains taxed in Washington?
No. The excise tax applies only to long-term gains. Short-term gains still face federal ordinary rates up to 37% plus the 3.8% net investment income tax, which is far more than the Washington layer, so holding short to dodge the state tax is bad math. Your CPA runs that analysis; we supply the per-lot data.
How does the 9.9% rate work?
A 2025 law added a 2.9% surtax on taxable long-term gains over $1 million, on top of the base 7%, retroactive to January 1, 2025. The first $1 million of taxable gain stays at 7%. Large exits now have a real state planning dimension in Washington.
Do my RSUs count toward the capital gains tax?
Vesting is wage income, which Washington does not tax. But if you sell vested shares after holding them more than a year, those long-term gains join your crypto gains in the same Washington calculation. The combined number is what crosses or misses the deduction.
I moved to Seattle from California. Which state taxes my gains?
Washington allocates intangible gains by domicile at the time of sale, and California taxes what you sold while still a Californian, with the FTB auditing exactly that timeline. Per-lot disposal dates against the move date are the record both states end up asking about.
Are staking rewards taxable in Seattle?
Federally yes: ordinary income at fair market value when received, reported through Schedule 1. Washington does not tax them, but the received value becomes cost basis, and a later long-term sale of those coins can be Washington-taxable. We track both ends of that chain.
What do I need to get started?
Exchange access or CSV exports, wallet addresses for every chain, RSU sale history if you want the combined picture, prior returns that touched crypto, and your move date if you relocated. We scope the work on a free consultation call.
About the Count On Sheep team
Count On Sheep is a USA-based team of crypto tax professionals. Former Big 4 accountants and CPA leadership, now crypto-native blockchain tax experts. We do hands-on crypto tax work for high-volume investors, funds, founders, and active traders, including Washington residents from Seattle, Tacoma, Bellevue and beyond.
We don't file taxes. We don't replace your CPA. Most CPAs don't do crypto, that's the gap we fill. We bridge DeFi and TradFi to produce the 8949, Schedule D, and Schedule 1 inputs your CPA can drop into your return.
Ready to get your crypto tax handled and CPA-ready?
Book a free scoping call or call us directly. We serve Seattle investors remotely, wherever your wallets live.