Millionaires face a new tax after the Washington vote

A state tax fight just got real

Washington lawmakers have passed a bill to create a 9.9% tax on income above $1 million, and it has been delivered to Gov. Bob Ferguson, who says he plans to sign it. If enacted, it would mark a significant shift for a state that has long operated without a broad personal income tax on wages.

The debate is drawing national attention because several Democrat-led states are pursuing new or higher taxes on top earners, while many Republican-led states continue to push for income-tax reductions.

What the bill actually does

Senate Bill 6346 would tax Washington taxable income over $1 million per household at 9.9%. The official bill summary and tax analyses say it is set to take effect on January 1, 2028, with the first payments due in 2029.

That means a household earning just over the line would not pay 9.9% on all its income. The tax would apply only to the amount above the $1 million threshold.

How many people would pay it

Supporters describe the measure as narrowly targeted. Reports on the bill have said it would affect about 0.5% of Washington residents.

Estimates of how many filers that represent can vary, but one recent published estimate put the impact at about 20,000 households. The affected group would include many high-income earners, such as executives, investors, and other top earners.

Why Democrats pushed it now

Supporters argue Washington’s tax system places a heavier burden on working- and middle-income residents.

In national coverage, House Majority Leader Joe Fitzgibbon said Washington has had an “extremely regressive” tax structure and framed the proposal as a way to shift more of the responsibility to top earners.

Supporters have also argued the measure would help fund public priorities while pairing the new tax with other forms of tax relief. The Department of Revenue fiscal estimate projects the measure would raise billions annually once fully in effect.

Where the money would go

Gov. Ferguson said the revised plan would expand the Working Families Tax Credit to 460,000 additional households. He also said it would provide relief for some small businesses and help support child care and school meal programs.

That is one reason supporters argue the bill is bigger than a simple tax increase. They are selling it as a swap, asking the highest earners to pay more, so lower-income families and some employers pay less or get more help.

The political fight was intense

The House vote followed a marathon debate lasting more than 24 hours, during which the measure passed by a narrow margin.

The Senate then gave final approval, and recent coverage says the bill reached the governor on March 13. That rapid finish showed how hard Democratic leaders were pushing to get it done before the 2026 session ended.

This is not the same as the capital gains tax

Washington currently taxes certain long-term capital gains under a separate system. Under Department of Revenue guidance, the tax rate is 7%, with an additional 2.9% on gains above $1 million, bringing the top rate to 9.9% on the portion above that threshold.

Senate Bill 6346 would create a broader tax on income above $1 million, not just capital gains. Opponents argue that the shift would move Washington closer to a broader income tax structure, while supporters say it updates a tax code they consider outdated.

The legal battle may start fast

The bill is widely expected to face immediate legal challenges. Axios noted that Washington court rulings have long treated income as property, and under the state constitution, property must generally be taxed at a uniform rate.

That is why critics say a graduated income tax is unconstitutional in Washington. Democratic leaders argue the courts should revisit that old reasoning, setting up a likely showdown in the state Supreme Court.

Voters may get another say

Even if the governor signs the bill, the fight may not stop in court. Axios reported that a ballot measure to repeal the tax is likely, putting the issue back before voters who have a long history of rejecting state income tax proposals.

That history matters. Washington voters have rejected income tax ideas 10 times since the 1930s, including a 2010 proposal that would have applied to higher earners and directed money to education and health care.

Supporters point to other states

Backers of millionaire taxes have an answer to the flight argument: they say other states have already shown wealthy-earner surtaxes can raise serious money. AP reported that Massachusetts has brought in about $6 billion since voters approved its surtax in 2022.

That example gives Washington Democrats a ready-made comparison. They can argue that taxing top earners is no longer a fringe idea, especially in blue states trying to protect schools, transit, and family programs.

Business leaders see a real risk

Opponents argue the bill could make Washington less attractive to some high earners and employers.

Reuters reported that Seahawks general manager John Schneider said the new tax is “going to sting” from a recruiting standpoint, noting Washington’s lack of an income tax has been a competitive advantage.

Business and tech critics make similar arguments, saying Washington’s historic lack of a broad wage tax has been part of the state’s appeal compared with higher-tax states.

Why 2028 matters so much

The delayed start date is a big part of the politics here. Because the tax would not begin until 2028, critics say it does little to address Washington’s immediate budgetary pressures, even if it raises a lot later.

Supporters see the later launch differently. They argue the runway gives the state time to prepare, gives taxpayers time to plan, and gives courts time to weigh the law before the first payments come due in 2029.

With 44% of Washington employers considering a move, check out what is driving the pressure and what it could mean for jobs, investment, and the state’s business future.

Other states are watching closely

Washington’s move could ripple far beyond Olympia. AP reported that lawmakers in places like California, Rhode Island, Minnesota, and Michigan are also considering or using high-earner tax ideas as affordability and budget pressures grow.

That means this is more than a local tax story. If Washington survives both court review and political backlash, it could become a model for other states that want more revenue from top earners without raising broad-based taxes on everyone else.

As California’s wealth tax fight grows louder, check out what this billionaire pushback could change for the state’s tax future, business climate, and high-income residents.

Could this become the model more states use to tax top earners, or will Washington voters and courts shut it down first? Share your thoughts and your view in the comments.

This slideshow was made with AI assistance and human editing.

Read More From This Brand:

• Trump Sends $12 Billion to Farmers Hurt by His Trade War With China
• USA cities where going out at night is off-limits
• Exploring America’s first federally funded highway through Maryland’s scenic towns