What are the differences between resident and non-resident taxation?
The main difference between resident and non-resident taxation in Washington is in the rate of taxation. Residents are taxed on their worldwide income, while non-residents are taxed only on income derived from Washington sources. Resident taxation is based on total income, including income from all sources, such as wages, investment income, and business income. Initially, the amount of income to be taxed is determined, then deductions and exemptions are applied, and finally, the remaining amount is taxed at progressive tax rates that vary from 0% to 9.3%. Non-resident taxation is based on income from Washington sources, such as wages and business income earned in Washington. Deductions and exemptions are applied, then the remaining amount is taxed at a flat rate of 8.9%. Furthermore, residents are subject to state taxes on retirement income, while non-residents are not. In addition, residents must pay tax on the gains from the sale of property owned in Washington, while non-residents only pay tax on the gain from the sale of property located within Washington. In summary, Washington residents are taxed on their entire taxable income, while non-residents are taxed at a flat rate on income derived from Washington sources. Residents are also subject to state taxes on retirement income and capital gains from the sale of property located in the state, while non-residents are exempt from these taxes.
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