Washington votes to tax millionaires after 90 years with no income tax

Washington Senate passes a millionaires tax

The Washington state Senate passed Senate Bill 6346 on Feb. 16, 2026, by a 27-22 vote.

The bill would impose a 9.9% income tax on household earnings above $1 million a year, making Washington the first of the nine states with no income tax to impose one on high earners.

It now moves to the House. The 60-day legislative session ends March 12, 2026.

Republicans say it puts the state at risk

Republicans warned that a future Legislature could lower the $1 million threshold with a simple majority vote.

They argued the tax could push wealthy residents and businesses out of the state. Some critics called it a new layer on top of billions in taxes already passed in 2025.

Sen. Chris Gildon, R-Puyallup, the lead Republican on the Senate Ways and Means Committee, called it “tax layering,” not reform. Opponents also said the direct tax relief in the bill is too small relative to the revenue it raises.

The bill targets the top earners

Only households earning more than $1 million a year would pay the new tax.

State fiscal estimates put that at about 21,000 filers, less than 1% of Washington households. The tax would apply to adjusted gross income with some modifications.

Long-term capital gains already taxed under the state’s existing capital gains law would be excluded. Non-residents would pay only on income earned within Washington.

Collections would not begin until 2029.

Revenue would fund schools and child care

State fiscal estimates project the tax would generate roughly $3 billion to $3.4 billion per year when fully in effect, with some supporters citing figures as high as $3.7 billion.

Revenue would fund public education, early learning, child care, and health care. Five percent would go to counties for public defense services.

The bill would take effect Jan. 1, 2028.

The bill also cuts taxes for working families

The bill includes more than just a new tax on the wealthy. Sales taxes on grooming and hygiene products like soap and toothpaste would be eliminated.

Small businesses below a set earnings threshold would be exempt from the state’s Business and Occupation tax, and the tax credit for small businesses would double.

The Working Families Tax Credit, a sales tax rebate for lower-income households, would also expand. A floor amendment would also roll back expanded sales taxes on certain services passed in 2025.

Supporters say the current system is unfair

Washington has the second-most regressive tax structure in the country, behind only Florida, according to the Institute on Taxation and Economic Policy.

Households in the bottom 20% of earners pay about 13.8% of their income in state and local taxes. Households in the top 1% pay about 4.1%.

Washington relies heavily on sales, property, and business taxes because it has no personal income tax. Supporters say the new tax would help balance that burden across income levels.

Three Democrats broke with their party

Twenty-seven Democrats voted yes. All 19 Republicans voted no. Three Democrats broke from their party and also voted no:

Sens. Adrian Cortes of Battle Ground, Drew Hansen of Bainbridge Island, and Deb Krishnadasan of Gig Harbor.

Senate Majority Leader Jamie Pedersen, D-Seattle, sponsored the bill. A floor debate that ran about three and a half hours preceded the final vote.

The bill overrides a voter-backed ban

In 2024, the Legislature passed Initiative 2111, which banned state and local income taxes. That measure passed on bipartisan votes of 76-21 in the House and 38-11 in the Senate.

Because lawmakers passed it themselves rather than sending it to a public vote, they can amend it with a simple majority.

SB 6346 would directly amend that ban to allow this specific tax. The bill also includes an emergency clause that blocks opponents from stopping it through a referendum.

Washington voters rejected this idea 10 times

Washington voters have rejected income tax proposals 10 times since 1934.

The only time voters approved one was in 1932, and the state Supreme Court struck that law down the following year, ruling that a graduated income tax violated the state constitution.

Every ballot measure and constitutional amendment since has failed. The most recent defeat came in 2010, when voters rejected Initiative 1098 by a 64-36 margin.

A court fight is likely if the bill passes

The Washington Constitution has been interpreted since 1933 as barring a graduated income tax because the courts treat income as property, which must be taxed at a uniform rate.

But in 2023, the state Supreme Court upheld the capital gains tax, and supporters believe that ruling opened the door for a personal income tax to survive legal review. Opponents disagree.

A legal challenge is widely expected if the bill becomes law. If a court strikes the tax down, the bill’s clause would also void all the tax relief included in it.

The bill still needs the House and governor

The bill moves to the House, where Democrats hold the majority. House Speaker Laurie Jinkins, D-Tacoma, expressed support after the Senate vote.

Gov. Bob Ferguson supports taxing income above $1 million but said the bill needs to return more money to working families and small businesses.

He called for larger tax relief for lower-income residents, expanded Working Families Tax Credit eligibility, and broader small-business exemptions.

The bill could change further in the House before reaching his desk.

The state budget adds pressure to act

Washington plugged a $12 billion budget gap during the 2025 session using new taxes, higher fees, and spending cuts.

A revenue forecast released the same day as the Senate vote showed collections running higher than expected, which could ease the near-term shortfall.

Supporters note the income tax would not help the current budget since collections would not start until 2029. The same day, the Senate also voted 38-11 to roll back estate tax increases passed in 2025.

Lawmakers are weighing spending cuts and revenue changes as the session nears its March 12 end.

This article was created with AI assistance and human editing.

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