Moving from Ontario to Washington State: Taxes, RSUs, and the Tech Corridor

Ontario’s combined federal-plus-provincial top rate runs about 53.53%. Washington charges no state income tax at all. On paper that looks like the cleanest rate drop in this whole content set, and for W-2 salary it is. But Washington isn’t a blank slate: its 7% capital gains excise tax reaches long-term gains above roughly $262,000, and RSU sales, a Canadian brokerage liquidation, or a concentrated stock exit can clear that threshold in a single transaction. This is also the single biggest tech corridor in the set, Toronto and Waterloo engineers heading to Amazon, Microsoft, and Meta in Seattle, Bellevue, and Redmond, so the numbers below are built around that move specifically.

Why is Ontario’s rate so far above Washington’s zero?

Ontario stacks a surtax on top of its own brackets: 20% of basic Ontario tax above roughly $4,991, and a further 36% above roughly $6,387 of basic tax. That’s on top of five graduated brackets topping out at 13.16%, which is why the effective top provincial rate runs closer to 20.5% than the bracket number suggests. Combined with the federal top rate, an Ontario earner at the top lands around 53.53%.

• Washington has no personal income tax bracket, no surtax, and no equivalent mechanism, so wages, bonuses, and vested RSU income that would be taxed at Ontario’s top rate are simply untaxed at the state level once you’re a Washington resident.

	Ontario	Washington
State/provincial income tax	Up to 13.16%, plus 20% and 36% surtax layers	None
Combined top rate (with federal)	About 53.53%	Federal only, no state layer
Capital gains treatment	50% inclusion, taxed at ordinary rates	7% excise tax on long-term gains above about $262,000; short-term gains untouched by the state
Sales tax	13% HST	About 10% combined state and local in King County
Property tax	Roughly 0.6% to 1%, plus Toronto’s municipal land transfer tax on purchase	Roughly 0.9% to 1.1% in King County
Estate tax	None (deemed disposition at death instead)	Graduated 10% to 20% above a $2.193 million threshold

Does Washington’s capital gains tax catch RSU sales?

Yes, and this is the number Ontario movers underweight because “no income tax” reads as the whole story. The tax is an excise tax on long-term capital gains (assets held over a year) above an annually indexed threshold, around $262,000, and the Washington Supreme Court upheld it on that basis in March 2023. Salary, wages, retirement distributions, and real estate sales are excluded outright. What isn’t excluded: selling vested RSU shares, liquidating a non-registered Canadian brokerage account after arrival, or exiting a concentrated position.

• A tech worker whose W-2 owes zero state tax can still owe real money to Washington the year they sell stock.

• Short-term gains (held under a year) aren’t reached by this tax at all, only long-term.

• Timing matters: spreading a large sale across two tax years, rather than one, can keep each year under the threshold.

• The foreign tax credit limitation guide covers how this interacts with Canadian tax already paid on the same shares at departure.

What happens to the Ontario surtax on departure?

It applies in full to your departure-year return, then disappears. Leaving Canada triggers a deemed disposition of most property at fair market value, and half of any resulting gain becomes taxable capital gain on your final T1. Because the province test for an emigrant keys off the last day you actually lived in Ontario rather than December 31, that departure-year gain typically lands in Ontario, at Ontario’s rates, surtax included if the basic tax on it clears the threshold. The departure tax pillar covers the T1161 and T1243 forms, and the broader departure checklist covers the rest of the exit sequence.

• Washington has no matching credit for that Ontario tax; the two systems don’t offset each other, they just both charge on their own terms.
• The US-Canada tax treaty guide covers where relief does and doesn’t apply between the two systems.

Is the RRSP actually simple in Washington?

Simpler than almost anywhere else in this series. The treaty defers US federal tax on RRSP growth until withdrawal, automatically, no election required. The complication in most states is a second layer: California and a handful of others don’t follow that deferral at the state level and tax the plan’s growth every year regardless of what the federal return says. Washington has no state income tax to take that second position with, so there’s no annual addback, no competing claim on the foreign tax credit, and no state return to reconcile against the eventual Canadian withholding.

• The RRSP/TFSA guide covers the federal mechanics, and the first US return guide covers what actually gets reported in year one.

• The TFSA is still federally taxable in the US and generally worth collapsing before departure to avoid ongoing Form 3520/3520-A reporting.

• OHIP continues for up to three months after you stop being an Ontario resident; the provincial health insurance guide covers the coverage gap and the Ontario Health Premium, up to $900 a year, which stops accruing from the year after departure.

What about the B&O tax if I consult or freelance?

Washington has no equivalent to Ontario’s small business rate or personal tax brackets for self-employment income; instead it charges the business and occupation tax on gross receipts, with no deduction for costs. Rates vary by classification, roughly 1.5% for services, lower for retailing and manufacturing. A consultant billing $300,000 in gross receipts at the services rate owes about $4,500 in B&O tax before federal self-employment and income tax even enter the picture.

• This is a different shape of tax than Ontario’s CCPC small business rate (about 11% combined federal-provincial on the first $500,000 of active business income), simpler to compute, worse for thin margins, better for high-margin work.

• If you’re keeping a Canadian corporation running after the move, US federal reporting (Form 5471, GILTI, Subpart F) applies regardless of the B&O question, and B&O itself only bites if the corporation has actual nexus in Washington.

How does the estate tax compare?

Ontario has no estate tax; it relies on the deemed-disposition rule at death instead, taxing accrued gains on the final return rather than the estate itself. Washington does have a state estate tax, graduated from 10% to 20% on estates above a $2.193 million threshold, far below the federal exemption of $13.61 million. A Canadian who becomes a Washington domiciliary with a combined estate above that state threshold is planning for potentially three layers: the Canadian deemed disposition at death, US federal estate tax if the federal exemption is exceeded, and Washington’s own estate tax on top.

• The US estate tax guide covers the federal side in detail.

Where do Ontario tech workers actually land?

Overwhelmingly Seattle, Bellevue, and Redmond. This is one of the largest and most concentrated tech corridors in this entire series: Toronto and Waterloo send a steady flow of software engineers, product managers, and researchers to Amazon, Microsoft, and Meta, often on equity-heavy compensation packages where the RRSP mismatch question and the eventual RSU sale both matter more than the base salary comparison ever does. That equity weighting is exactly why the capital gains excise tax deserves more attention here than in a corridor built around straight salary.

What should I do before the move?

Pull a full year of statements on any non-registered brokerage account before setting a departure date, since that account’s deemed disposition lands on your final Ontario return at Ontario’s rates. Decide the departure date on the facts, since it fixes both the surtax exposure on that final return and the OHIP and health-premium clocks that follow it. Then separately plan the timing of any RSU sales or brokerage liquidations after arrival, because that’s the decision that actually determines whether Washington’s capital gains tax applies at all.

• The generic Canada-to-Washington corridor
• The BC-to-Washington capital gains deep dive
• Leaving Canada permanently: the checklist
• Canada’s departure tax, T1161 and T1243
• What happens to your RRSP and TFSA
• The US-Canada tax treaty explained
• Your first US tax return as a new immigrant
• Moving from Ontario to Texas, the other no-income-tax comparison
• Moving from Alberta to Washington State, the energy-to-tech corridor from Alberta
• Moving from Ontario to Florida, another no-income-tax corridor
• State income tax for cross-border filers, the broader state-by-state picture

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.