Washington’s new income tax allows a deduction for charitable contributions, but lawmakers capped that deduction at $100,000. Under RCW 82A.04.310, taxpayers may deduct qualifying charitable contributions when calculating Washington taxable income, but donations above the $100,000 limit provide no additional deduction under the state income tax.
The law creates another consideration for taxpayers thinking about leaving Washington. Under RCW 82A.04.010, residency for purposes of the income tax depends in part on domicile, not simply where someone spends a majority of the year. A longtime Washington resident who moves elsewhere may therefore need to establish that another state has genuinely become his or her permanent home. Washington’s Department of Revenue explains in its domicile guidance that a previous Washington domicile is presumed to continue until the taxpayer establishes otherwise, and that the state may consider a range of facts and circumstances showing whether a person still regards Washington as home. Read the Department of Revenue’s domicile guidance here.
That matters for charitable giving because domicile is based on more than a simple day count. Department guidance has cited continuing social ties to Washington among the circumstances relevant to determining whether Washington remains a person’s permanent home. Continued involvement with Washington organizations, including significant charitable relationships, could therefore become part of the broader factual picture when a taxpayer is trying to demonstrate that he or she has permanently relocated.
The resulting incentive is difficult to ignore. A high-income taxpayer seeking to establish a clear domicile in another state has reason to shift financial, personal, and social ties toward that new state rather than maintain them in Washington. That can include charitable relationships. Combined with the $100,000 deduction cap, the new tax therefore creates two potential pressures on Washington nonprofits: it limits the tax benefit available for very large Washington donations, while giving taxpayers who relocate another reason to establish their charitable and community ties outside Washington.
