PolicyEngine · hua7450 · Jul 16, 2026 · Jul 13, 2026 · Jul 15, 2026 · Jul 16, 2026
diff --git a/changelog.d/wa-capital-gains-tier-backfill.fixed.md b/changelog.d/wa-capital-gains-tier-backfill.fixed.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
@@ -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
@@ -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
Original file line number	Diff line number	Diff line change
		@@ -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.