9 Reasons People Are Leaving Washington, According to Those Who Left

Twenty-four percent of Washington employers say they’re now considering moving their business out of state, according to a spring 2026 survey from the Association of Washington Business.

That’s nearly triple the share who said the same thing sixteen months earlier.

Another 55% are weighing a move of their own personal address to a different state.

Here’s what the people already gone say pushed them out of Washington.

Note: This is general information, not financial or tax advice. Tax rates, exemptions, and rankings are subject to change, so confirm the current figures with the Washington State Department of Revenue.

1. Washington’s Sales Tax

Marc Barros didn’t wait for Washington’s new millionaires’ tax to take effect before packing up his Seattle photography-equipment company this year.

He blamed something more basic.

Barros named Seattle’s 10.5% combined city and state sales tax as one of the costs he could no longer justify, in a public post explaining why he was moving his company, Movement, out of state.

Washington’s statewide average lands at 9.57% once every local rate is folded in, the third-highest combined rate in the country behind only Louisiana and Tennessee, according to the Tax Foundation’s midyear 2026 update.

Groceries are exempt, but nearly everything else a shopper buys carries that markup.

Shoppers near Vancouver have long crossed the Columbia River into Portland for anything big enough to make the drive worth it, one of the state’s oldest tax workarounds.

2. Capital Gains Tax

Half the business owners answering Washington’s own spring 2026 survey say they’re now weighing a move out of state, and the capital gains tax sits high on the list of reasons why.

The Association of Washington Business (AWB) found that 55% of business leaders are now considering moving their personal residence to another state, up from 44% the previous quarter.

In Spokane County, a short drive from the Idaho border, that figure hit 67%.

Two-thirds, in one county.

The tax itself applies once long-term gains clear the state’s standard deduction, $278,000 for 2025 and adjusted for inflation every year, taxed at 7% up to $1 million and 9.9% above it under the graduated structure lawmakers adopted in 2025.

Retirement accounts, real estate sales, and qualifying family businesses are exempt.

Stock and investment gains aren’t, and attorneys who represent Washington founders say changing state residency before a big sale has become routine exit planning, not a rare move.

Routine, not rare.

3. Washington’s Estate Tax

For twelve months, Washington carried the highest state estate tax rate in the country.

Lawmakers pushed the top rate to 35% in 2025, then rolled it back to 20% starting July 2026.

It exempts about $3 million.

That’s a fraction of the federal exemption, and many families who never thought of themselves as wealthy enough to plan around it now do.

Estate planning attorneys say some Washington clients are establishing residency in states with no estate tax at all, like Nevada or Texas, to keep a future estate out of Washington’s reach.

4. B&O Tax on Small Business

Marc Barros named one more Washington tax when he explained his move out of state: The Business and Occupation (B&O) tax, which charges a business on its total sales, not its profit.

The state’s Service and Other Activities rate rises to 2.1% once a business’s prior-year gross income in that category tops $5 million, up from 1.75% under a law that took effect in October 2025.

Smaller operations pay less: 1.5% under $1 million in gross income, 1.75% between $1 million and just under $5 million.

None of the tiers allow a deduction for rent, payroll, or the cost of goods sold.

“When you add up all the costs to run a business in WA [Washington] we can’t afford it,” Barros wrote when he announced the move, adding that a remote team based elsewhere would let him drop those costs entirely.

That structure is a big reason Washington’s corporate tax setup ranks 47th of 50 states on the Tax Foundation’s 2026 State Tax Competitiveness Index.

Low-margin businesses feel it hardest.

5. Unemployment Insurance Costs

Every Washington employer pays unemployment insurance (UI) tax on the first $78,200 of each worker’s wages in 2026, the highest taxable wage base of any state.

Hawaii is next, and it stops at $62,000.

Workers never see this cost.

Washington’s average employer UI tax rate is projected to rise 37% over three years, and the state ranks 49th of 50 on the Tax Foundation’s unemployment insurance component.

Run that wage base and rate together, and a Washington employer owes roughly $1,056 in UI tax per worker this year, the same Bellevue Chamber of Commerce analysis found.

A new employer in Texas owes about $243 on that same worker; in Florida, about $189; in Arizona, about $160.

Four to six times higher, for the same hire.

The Tax Foundation’s 2026 State Tax Competitiveness Index names Washington’s “high UI taxes and uncompetitive UI tax structure” by name as a drag on the state’s overall business tax ranking.

6. Home Prices Outrun the Nation

A $601,545 price tag now sits on Washington’s typical home, according to Zillow’s Home Value Index for July 2026.

In King County, that same index puts the typical home at $812,132.

That’s roughly 62% above the $371,774 national figure the same index reports.

Sellers walk away ahead.

Washington became the single biggest source of new residents moving into Idaho in early 2026, supplying 25% of the state’s domestic in-migration and edging out California for the top spot, according to a Redfin relocation-search and Census-data analysis published by a Boise realty firm.

A quarter of Idaho’s newcomers, from one state.

Seattle-area buyers making that move save roughly $300,000 on average, the same analysis found, since Boise’s median home price sat near $500,000 in late 2025 against Seattle’s $750,000-plus.

7. Cost of Living Above 100

Grocery bills, energy costs, and property taxes are exactly what one longtime Seattle radio host pointed to this year when he said he understood why so many people were leaving Washington.

He’d lived there 27 years.

Washington’s cost of living registered 114.6 on the Missouri Economic Research and Information Center’s index for the first quarter of 2026, where 100 marks the national average.

Transportation costs run 31% above the national mark, the single biggest driver of that score.

Groceries, housing, and health care all land above the line too.

The same year that cost score came in, roughly 193,000 adults moved out of Washington, nearly matching the 191,000 who moved in.

8. Exodus of High Earners

More than 13,300 Washington households earning above $200,000 left the state in 2021 and 2022, and only 11,800 moved in to replace them, according to a SmartAsset analysis of IRS migration data.

A net loss of about 1,579 households.

Tenth-worst outflow in the nation.

Common destinations include Idaho, Texas, Nevada, and Florida, other low-tax states, which makes the loss notable: Washington itself charges no wage income tax, yet it still lost high earners to states running the same setup.

Fewer high earners left behind means a thinner base to cover the state’s next budget.

9. Still Near the Bottom

Washington gained a spot on the Tax Foundation’s 2026 Index this year, moving from 46th to 45th out of 50 states.

The improvement had more to do with Maryland’s own tax hikes than with anything Washington changed.

Barely an improvement.

Forty-fifth is still nearly last place.

The index still ranks Washington’s sales tax 49th of 50, its unemployment insurance taxes 49th, and its corporate tax structure 47th, the same B&O setup and UI wage base already pushing some employers toward the exits.

Next year’s index will have to reckon with a new income tax on top earners that hadn’t even passed when this one was calculated.

Growth Without the Movers

Washington’s population crossed 8 million residents for the first time in 2025, growing by about 73,000 people from July 2024 to July 2025, the seventh-fastest growth rate of any state.

That number needs an asterisk.

International migration accounted for more than half of that growth, and births added much of the rest.

Domestic migration, movement between Washington and other states, contributed comparatively little to the total, even as the departures described above kept rising.