Washington business owners planning a sale that will trigger the state’s capital gains tax now have a new option: paying it early. HB 1376, which took effect June 11, 2026, lets taxpayers prepay their Washington capital gains tax up to six months before the filing deadline.
What happened
HB 1376 passed the Washington House with overwhelming bipartisan support – a 97-0 vote – before becoming Chapter 191 of the 2026 session laws. The bill does two things: it allows taxpayers who expect to owe Washington’s capital gains excise tax to submit a prepayment up to six months ahead of the standard due date, and it modifies how “federal net long-term capital gain” is calculated by excluding certain Internal Revenue Code sections from the state’s reportable-gain definition.
The state’s capital gains tax return is normally due April 15, alongside the federal deadline, under the framework Washington established with ESSB 5096. HB 1376 doesn’t change that deadline – it just gives taxpayers the option to pay ahead of it without losing out on interest treatment for the early payment.
Why it matters
For most individual taxpayers, an early-payment option is a minor convenience. For a business owner mid-sale, it’s more useful than it sounds. Washington’s capital gains tax applies to long-term gains above the state’s annual exemption threshold, and a business sale or major asset disposition can generate a tax bill large enough to affect how you plan the rest of the transaction. Being able to prepay – rather than sitting on the liability until the following April – gives sellers a cleaner way to set aside proceeds and avoid a cash-flow surprise at filing time.
What this means for small business owners
If you’re negotiating the sale of your business, a piece of commercial property, or a significant investment position this year, talk to your bookkeeper or CPA about whether prepaying under HB 1376 makes sense for your situation. It won’t change how much tax you ultimately owe, but it can simplify the accounting: instead of carrying a large estimated liability on your books through year-end, you close it out closer to the actual sale date. That’s one less moving piece to manage during a transaction that already has plenty of them.
It’s also worth having your advisor walk through the bill’s second provision – the adjustment to how “federal net long-term capital gain” is calculated – since it can affect exactly how much of a given sale counts as reportable gain under state law.
The bottom line
HB 1376 doesn’t lower anyone’s tax bill, but it gives Washington business owners more control over when they pay it. If a sale or major asset event is on your calendar this year, ask your accountant whether prepaying makes sense for your cash-flow plan.
