At Lewis Group CPAs, we often talk to business owners who see state taxes primarily through the lens of sales taxes. For the high net worth individuals and owners of large service businesses we serve, that perspective is simply too narrow now. Washington’s tax code has added two massive, complex liabilities: the new Capital Gains Excise Tax and significant B&O Surcharges. If you’re not planning for these, you’re missing out on a huge opportunity to protect your financial future. We’re not just preparing returns; we’re connecting the dots between your corporate entity and your personal wealth.

The Capital Gains Conversation: Is Your Wealth Really Safe?

Let’s get straight to the 7% excise tax on long-term capital gains over the annual threshold. This tax isn’t just a minor deduction; it’s a direct tax on the liquidity events that define high net worth success. Think about selling that big stock portfolio, exiting a private entity, or liquidating certain investment properties. The potential tax bill is substantial, and ignoring it is like leaving a briefcase full of money on the curb.

This is precisely why mere tax preparation is obsolete. You need a year-round relationship with an accounting firm. Our core tax planning and consulting services focus on strategies that minimize this exposure. We’re talking about nuanced discussions: establishing clear legal domicile, utilizing specific statutory exemptions like the one for real estate, and ensuring every legitimate deduction—like that for a qualified family-owned small business—is secured.

B&O Surcharges: The Hidden Margin Killer for Large Service Businesses

While the capital gains tax targets the individual, the B&O surcharges are quietly hitting the operating margins of large service businesses. Unlike sales tax, which is typically passed on to the consumer, the B&O tax and its surcharges are a tax on gross receipts. For companies clearing the multi-million dollar thresholds, this is a significant, structural increase in the cost of doing business in Washington.

Many of our corporate clients, running sophisticated enterprise-level organizations, are asking: How do we absorb this without slowing down growth? The answer involves drilling into the details of your revenue streams and classification. It’s critical work that goes well beyond basic accounting. Here are the focus areas our business consulting and advisory team concentrates on for mitigation:

• Verifying all service definitions to ensure correct B&O classification and prevent accidental overpayment.
• Strategically reviewing multi-state nexus to properly apportion income subject to Washington B&O.
• Leveraging B&O tax credits—which can sometimes be used against the capital gains tax—to maximize savings.
• Ensuring impeccable documentation to defend against any future Department of Revenue inquiries.

Let me explain: complexity isn’t a barrier; it’s an opportunity for those who get expert advice. We know these changes affect your bottom line, and our goal is to keep as much of your revenue in your company’s hands as possible.

The Intersection of High Net Worth and Corporate Tax Liability

The most important piece of advice we give to our high net worth clients who own substantial businesses is this: you can’t manage your personal capital gains exposure without understanding your corporate B&O situation. The two are interwoven. Imagine trying to control a speedboat with two separate rudders; you’ll just spin in circles. The B&O surcharge impacts the capital value of your company, which, in turn, affects the potential capital gains you’ll realize upon sale.

This holistic approach—where we look at your entire financial life, not just filing a once-a-year return—is the Lewis Group difference. We use tools and strategies that ensure alignment between your personal wealth and corporate tax planning. For official verification of the latest rates and thresholds, we always recommend consulting the Washington State Department of Revenue website.

Honestly, the time for passive accounting is over. Washington has put new hurdles in place, and successfully jumping them requires proactive, sophisticated advice. Your high net worth demands it.

Ready for a Strategic Conversation?

Don’t let Washington’s new tax liabilities erode your wealth or hamstring your business growth. If you are a high net worth individual or the owner of a major service business, let’s discuss how integrated tax and consulting services can secure your financial future. Call Lewis Group CPAs at (360) 896-8221 or reach out via our contact page today. We’re ready to help.