From 164ba8f8834756380b1ef72ae279b9636b155ab8 Mon Sep 17 00:00:00 2001 From: PavelMakarchuk Date: Mon, 13 Jul 2026 13:16:09 -0400 Subject: [PATCH 1/2] Apply WA capital gains 9.9% tier only from 2025 The ESSB 5813 (Ch. 421, Laws of 2025) 2.9% surcharge over $1,000,000 begins January 1, 2025 (Sec. 101; Sec. 301: 'applies to taxes imposed in calendar year 2025'). The bracket was defined only from 2025-01-01, and core backfills first bracket values to the timeline start, so the 9.9% tier leaked into 2022-2024, overcharging 2.9% on the excess over $1M. Adds explicit 2022 values (flat 7%) and year-pair tests. Fixes #9022 Co-Authored-By: Claude Fable 5 --- changelog.d/fixed/9022.md | 1 + .../capital_gains/rate/incremental.yaml | 5 +++- .../wa/tax/income/wa_capital_gains_tax.yaml | 25 +++++++++++++++++++ 3 files changed, 30 insertions(+), 1 deletion(-) create mode 100644 changelog.d/fixed/9022.md diff --git a/changelog.d/fixed/9022.md b/changelog.d/fixed/9022.md new file mode 100644 index 00000000000..1e4a706fb6f --- /dev/null +++ b/changelog.d/fixed/9022.md @@ -0,0 +1 @@ +- Applied Washington's capital gains 9.9% tier only from 2025; ESSB 5813 (Ch. 421, Laws of 2025) imposes the additional 2.9% over $1,000,000 beginning January 1, 2025, and the rate was a flat 7% in 2022-2024. diff --git a/policyengine_us/parameters/gov/states/wa/tax/income/capital_gains/rate/incremental.yaml b/policyengine_us/parameters/gov/states/wa/tax/income/capital_gains/rate/incremental.yaml index 56ee15b53cf..5e2e240a662 100644 --- a/policyengine_us/parameters/gov/states/wa/tax/income/capital_gains/rate/incremental.yaml +++ b/policyengine_us/parameters/gov/states/wa/tax/income/capital_gains/rate/incremental.yaml @@ -5,8 +5,11 @@ brackets: rate: 2022-01-01: 0.07 - threshold: - 2025-01-01: 1_000_000 + 2022-01-01: 1_000_000 rate: + # Flat 7% before ESSB 5813 (Ch. 421, Laws of 2025) added the + # 2.9% surcharge tier beginning January 1, 2025. + 2022-01-01: 0.07 2025-01-01: 0.099 metadata: diff --git a/policyengine_us/tests/policy/baseline/gov/states/wa/tax/income/wa_capital_gains_tax.yaml b/policyengine_us/tests/policy/baseline/gov/states/wa/tax/income/wa_capital_gains_tax.yaml index b11351199f8..f9488394320 100644 --- a/policyengine_us/tests/policy/baseline/gov/states/wa/tax/income/wa_capital_gains_tax.yaml +++ b/policyengine_us/tests/policy/baseline/gov/states/wa/tax/income/wa_capital_gains_tax.yaml @@ -68,3 +68,28 @@ state_code: WA output: wa_capital_gains_tax: 0 + +- name: 2023 gains over one million are taxed at a flat 7 percent, with no 2025 surcharge tier (pe-us 9022) + period: 2023 + absolute_error_margin: 0.01 + input: + long_term_capital_gains: 2_262_000 + state_code: WA + output: + # Standard deduction: $262,000 + # Taxable LTCG: $2,262,000 - $262,000 = $2,000,000 + # RCW 82.87.040 (2022-2024): flat 7% -> $140,000 + # (the ESSB 5813 2.9% tier over $1M begins January 1, 2025) + wa_capital_gains_tax: 140_000 + +- name: 2025 gains over one million pay the additional 2.9 percent on the excess (ESSB 5813 Sec. 101) + period: 2025 + absolute_error_margin: 0.01 + input: + long_term_capital_gains: 2_278_000 + state_code: WA + output: + # Standard deduction: $278,000 + # Taxable LTCG: $2,000,000 + # 7% x $2,000,000 + 2.9% x $1,000,000 = $169,000 + wa_capital_gains_tax: 169_000 From c3e9e89c360cdb99e280c9e117d356d4ef382c5f Mon Sep 17 00:00:00 2001 From: PavelMakarchuk Date: Wed, 15 Jul 2026 12:20:28 -0400 Subject: [PATCH 2/2] Move changelog fragment to top-level changelog.d/ naming convention Co-Authored-By: Claude Fable 5 --- .../{fixed/9022.md => wa-capital-gains-tier-backfill.fixed.md} | 0 1 file changed, 0 insertions(+), 0 deletions(-) rename changelog.d/{fixed/9022.md => wa-capital-gains-tier-backfill.fixed.md} (100%) diff --git a/changelog.d/fixed/9022.md b/changelog.d/wa-capital-gains-tier-backfill.fixed.md similarity index 100% rename from changelog.d/fixed/9022.md rename to changelog.d/wa-capital-gains-tier-backfill.fixed.md