Q. WA does have a capital gains tax, with a $500/couple exclusion, on the sale of property. Is this tax deductible in OR?
A Yes, but not exactly. You do not get a deduction, you get a credit on the OR return. The credit is for tax paid to two states on the same income (the capital gain). The credit is the lesser of the WA tax or the portion of your OR tax attributable to the capital gain. So, it's possible that the credit from OR may be less than the tax paid to WA.
