Comparison•2025 Tax Year•Last verified: January 2026
California vs Washington: Side Hustle Tax Comparison 2025
Compare California and Washington taxes for freelancers and gig workers. Washington has no state income tax - see how tech workers and freelancers can save.
California and Washington are both tech powerhouses—but their tax policies are worlds apart. For tech freelancers and side hustlers, Washington offers the unique combination of a thriving tech ecosystem AND no state income tax.
California's state income tax reaches up to 13.3%, while Washington has no state income tax at all. This makes Seattle and the broader Washington area increasingly attractive for California tech workers who can work remotely or are willing to relocate.
**Why This Comparison Matters:**
Washington is a top destination for California tech workers, offering a rare combination:
- **Zero state income tax**: Washington has no income tax vs California's up to 13.3%
- **Major tech hub**: Seattle area hosts Amazon, Microsoft, and hundreds of startups
- **Similar culture**: Pacific Northwest shares much culturally with the Bay Area
- **Remote work friendly**: Many WA tech companies pioneered remote work policies
For freelance developers, designers, and other tech side hustlers, Washington offers the ability to tap into a major tech ecosystem while keeping significantly more of your income.
Side-by-Side Tax Comparison
| Metric | California | Washington |
|---|---|---|
| State Income Tax Rate | 1% - 13.3% (progressive) | 0% (no income tax) |
| Common Rate for Tech Workers | 9.3% | 0% |
| Capital Gains Tax | Taxed as income | 7% over $270K |
| State Tax Filing Required | Yes (Form 540) | No |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $25K Side Hustle* | ~$11,358 | ~$9,033 |
| Annual Savings (WA vs CA)* | — | ~$2,325 |
| Sales Tax (State + Avg Local) | 8.82% | 10.25% |
| Tech Job Market | Excellent (SF/LA) | Excellent (Seattle) |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
California Analysis
**California Tax Analysis for Side Hustlers**
California's high tax rates particularly impact tech workers, who often have substantial W-2 salaries pushing side hustle income into higher brackets.
**Key California Tax Facts (2025):**
- **Tax Type**: Progressive (9 brackets)
- **Rate Range**: 1% to 13.3%
- **Common Rate for Tech Workers**: 9.3% (income $68K-$349K)
- **Mental Health Services Tax**: Additional 1% over $1 million
**Example**: Tech worker with $120,000 W-2 salary and $25,000 from freelance development (net of expenses) in California:
- Federal SE Tax: ~$3,533
- Federal Income Tax on side income: ~$5,500
- California State Tax: ~$2,325
- **Total Tax on Side Hustle: ~$11,358** (45.4% effective rate)
High earners in tech feel California's taxes most acutely, as side hustle income stacks on top of already-high W-2 income.
Washington Analysis
**Washington Tax Analysis for Side Hustlers**
Washington is one of nine states with no state income tax, making it particularly attractive for high-earning tech workers with side hustles.
**Key Washington Tax Facts (2025):**
- **State Income Tax**: 0%
- **Tax Type**: None
- **Capital Gains Tax**: 7% on gains over $270,000 (not applicable to most side hustlers)
- **B&O Tax**: Applies to businesses, but most freelancers under the threshold
**Example**: Same scenario—$120,000 W-2 salary and $25,000 from freelance development (net of expenses) in Washington:
- Federal SE Tax: ~$3,533
- Federal Income Tax on side income: ~$5,500
- Washington State Tax: $0
- **Total Tax on Side Hustle: ~$9,033** (36.1% effective rate)
**Savings vs California: ~$2,325/year** on $25,000 of side hustle income.
Washington's trade-offs include higher sales taxes (up to 10.5% in Seattle), higher cost of living in Seattle (though cheaper than SF), and gray, rainy weather that isn't for everyone.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between California and Washington to compare.
Which State Is Right for Your Side Hustle?
**California May Be Better If You:**
- Work in industries centered in SF/LA (certain VC, entertainment, biotech)
- Need access to Sand Hill Road or Hollywood connections
- Prefer California's climate and lifestyle
- Have Prop 13 protected property
- Have established networks you can't replicate in Seattle
**Washington May Be Better If You:**
- Work in tech and can tap into Seattle's ecosystem
- Are comfortable with Pacific Northwest weather
- Want to eliminate state income tax while staying in a major metro
- Work remotely and don't need CA physical presence
- Are earlier in career and building new networks anyway
**Important Considerations:**
1. **Tech-to-tech is easiest**: Moving within tech between CA and WA is common and accepted. Your network won't question it.
2. **Seattle isn't cheap**: While cheaper than SF, Seattle's cost of living has risen significantly. Factor in housing costs, not just taxes.
3. **Weather is real**: Seattle's gray, drizzly weather from October-April affects many transplants. Visit in winter before committing.
4. **Capital gains tax**: Washington's 7% capital gains tax on gains over $270K could matter if you have stock options or plan to sell a business.
5. **California audit risk**: As always, genuinely relocate. CA audits former residents, especially high earners. Establish true WA residency.
6. **Remote-first companies**: Many Seattle tech companies were remote-friendly before COVID. You may find more flexibility than with SF-based companies.
Frequently Asked Questions
How much will a tech freelancer save moving from California to Washington?
Savings scale with income. A tech worker with $100K+ W-2 salary and $25K in freelance income could save $2,000-$2,500+ per year in state taxes alone. Higher earners in the 9.3% CA bracket save even more. Over a 5-year period, that's $10,000-$15,000+ in your pocket instead of Sacramento's.
Does Washington have any income tax at all?
Washington has no traditional income tax on wages or self-employment income. However, in 2022 Washington implemented a 7% tax on capital gains over $270,000. This generally doesn't affect side hustle income—it applies to investment gains like stock sales. Most freelancers won't be impacted.
Is Seattle's cost of living worth it compared to staying in California?
Seattle is expensive but still cheaper than San Francisco. The tax savings alone often cover the cost-of-living difference. For example, saving $2,325/year in state taxes is like getting a 2%+ raise. Combined with 10-20% lower housing costs than SF, most tech workers come out ahead in Seattle financially.
Related Comparisons
Sources
- • California Franchise Tax Board - 2025 Tax Rates
- • Washington State Department of Revenue
- • IRS Publication 334 - Tax Guide for Small Business
- • US Census Bureau - State-to-State Migration Flows
- • Tax Foundation - State Tax Data 2025