Capital gains planning is more than a conversation about taxes. It’s about identity, family, legacy, tradeoffs and non-negotiables. It’s about guarding your pocketbook, but also protecting your heart.
The state of Washington’s decision to increase the capital gains tax in 2025 could force many business owners contemplating a sale to confront the deeply emotional, human questions tied up with their financial decisions. With a 9.9% state capital gains tax layered on top of federal taxes, a business owner’s total tax burden can exceed 30%. That’s often when owners realize navigating this alone could be a costly mistake. Your best bet at making the right decision is to surround yourself with the right experts. The ones who know it’s not just about the numbers, but what matters most to you.
We talked with four seasoned advisors, three tax attorneys and a CPA, who understand that behind every transaction is a person making a critical, once-in-a-lifetime, decision. They see their role as not simply technical but relational. They are guides, leading clients through the thickets, around the quicksand, and on to safer ground.
“One chance”
For business owners in Washington state, the jump in capital gains tax from 7% to 9.9% introduces a level of financial, structural and personal complexity that can reshape an entire exit plan.
This is especially true for founders who might get one shot, one sale, one chance to convert decades of work, sweat and tears into financial security for their retirement, their family, and the next chapter of their lives.
“You work for 15 or 20 years, and you get one chance to sell,” says Joe Wallin, a principal with Carney Badley Spellman and a corporate tax attorney with decades of experience representing startups and investors. “Many don’t get to do this again.”
It’s no wonder that “one chance” is steeped in emotion. Owners must confront monumental decisions. Dirk Giseburt, a tax attorney and partner at Davis Wright Tremaine, talks through a wide range of concerns with his clients such as where they should live, who should inherit and what financial security really looks like for them. And when changing domicile becomes part of the discussion, Giseburt helps clients understand just how closely states examine those decisions. In those conversations, they literally “talk turkey” – as in, where would they want to spend future Thanksgivings?
“You know, where do you spend your holidays?” he says. “What's the relative value of your real estate, here and there? Where do you keep your valuables? And then there are the kind of mechanical things like where you vote and where your cars are registered and where you have your driver's license.”
The emotionally charged questions triggered by the capital gains law could complicate the choices founders and owners are legally required to make. Arming yourself with great advisors and experts will help you lean into the intersection of law and emotion and emerge with your finances and feelings in a safe space.
Raising the stakes
Beginning with tax year 2025, Washington’s long-term capital gains tax has a new tiered rate. Senate Bill 5813 (passed and signed into law this spring) expanded the capital gains tax and made significant changes to the estate tax. The new law represents a continued move toward increasing the state’s reliance on non-sales tax revenue streams. But it also creates potential long-term effects on individuals, business owners, and family-owned enterprises.
For the 2025 tax year and beyond, capital gains will be taxed at:
● 7% on Washington capital gains from $270,000 up to $1 million
● 9.9% on any amount above $1 million
That graduated capital gains tax means a higher rate for wealthier individuals. It could significantly impact investors, entrepreneurs selling businesses, and asset-heavy business owners.
The 9.9% capital gains tax rate is one of the highest in the country. When combined with federal capital gains taxes, a business owner’s tax burden could exceed 30%, depending on the situation.
As a result, many owners are stressed: The new tax law comes at a time when they are already navigating a web of complexity, fatigue and post-pandemic instability.
That’s why a team of advisors is so crucial.
“The numbers make the decision real,” says Dan Gaffney, Principal at Baker Tilly, “but we have to start with what matters most to you.”
Getting down to brass tacks
Behind every technical decision lies an emotional reality. Tax strategy frames options and opportunities as life decisions with tax consequences. Our experts recalled many emotionally charged moments with clients.
Gaffney has heard clients second-guessing whether they timed their exits well or wondering whether to “take the hit” because the emotional cost of moving is too high.
“Emotions will drive all of us, so we try to start with what matters to you and your family and your business,” he said. “A business is something they’ve spent their whole lives building. It's an emotional decision to let it go.
“Sometimes letting it go isn't about maximizing price. It's about, ‘I want to make sure there's a good buyer who’s going to take care of my customers and employees the way I did. That matters more to me than value.’ But it depends. That’s why we start with ‘What do you care about? What do you want to protect? What matters most to you?’ Then you work on structuring a deal to fit that and get the financial security they need, and along the way, pay the lowest taxes possible.”
As the reality of the new law sinks in, it might be tempting to immediately decide to leave the Evergreen State for a place with lower taxes. Florida, Texas, or Nevada might seem to be greener pastures—states where an owner could keep more of their “green” for themselves.
But relocation isn’t always simple. It can be difficult both legally and emotionally. It raises the question: What personal tradeoffs are you willing to make?
As Giseburt says: “You only have one home. That’s the rule of domicile: where your home is in your heart.”
What about setting up a trust? There are many considerations there, too, says Matt Wiese, an attorney with Carney Badley Spellman. “You can avoid the tax with a trust… but after the sale, the proceeds are governed by the trust agreement, not your bank account.” Avoiding the capital gains tax means you give up certain kinds of control down the road, he said.
How you structure the deal matters, and there’s a lot to consider.
“You could have a $10 million sale and walk away with $6 million or a $9 million sale and walk away with $7 million,” says Gaffney. “It all depends on structure.”
Planning ahead
Every expert we talked to recommended that business owners plan ahead. Always. To get in front of an issue before you’re in the thick of it.
“The best advice is to plan early,” Wiese says. “Think about your options, your exit strategy, options for your business, as soon as possible, and evaluate them.
“The more time you give yourself, the more value you can create in your business and the more you can structure a deal a certain way.”
Don't go it alone
Our experts all say that a multi-advisor model is best. Lawyers understand trust law, domicile rules and corporate structure. CPAs understand federal tax treatment, timing, net gains, and deal modeling.
We couldn’t agree more. In our role as fractional CFO, we frequently discuss succession and exit plans with our clients and help them assemble the team that’s right for them.
Surrounding yourself with experts will guide you toward clarity. Financial decisions are personal, emotional and consequential. Washington state’s capital gains tax amplifies that pressure, adding extra pitfalls on the road to your best future. But with the right guides you can find the path that’s best for you.
“We’re not here just to do the tax return,” says Gaffney. “We need to know what you really care about.”
