Who would really pay Washington’s millionaires tax and when?

A new tax debate heats up

When you hear the words “millionaire’s tax,” you probably have an opinion right away. Now it heads to the House, where the vote count and likely court challenges will decide whether it becomes more than a headline. The debate is moving quickly in Olympia.

The Washington State Senate has passed SB 6346. The bill would create a 9.9% tax on annual income above $1 million. Now all eyes turn to the State House and what happens next.

What the millionaires’ tax would do

The proposal is straightforward: only income above $1 million would be taxed at the 9.9% rate, and income at or below that level would not be taxed under this plan. Anyone earning $1 million or less would not pay this tax. Only income above that threshold would be taxed at 9.9%.

Lawmakers estimate about 30,000 taxpayers would be affected. That’s fewer than one percent of households statewide. Supporters say it targets only the highest earners.

A significant shift for Washington

This matters because Washington has long avoided a broad personal income tax, so this proposal would be a major shift in how the state raises money. It’s one of just nine states without one.

If passed, this would mark a historic change in the state’s tax structure. For decades, Washington has relied heavily on sales and business taxes. This proposal would introduce a new source of revenue tied to personal income.

How much money could it raise

Supporters and state analysts estimate the tax could raise roughly $3.5 billion to $3.7 billion a year once fully implemented, with the tax applying to 2028 income and first payments expected in 2029. That’s a hefty sum for the state budget.

Lawmakers say the funds would support public education, early learning, child care, and health care. They argue this revenue would help close funding gaps. With rising costs in schools and social services, backers see this as a stable funding stream. The promise of billions makes the stakes high.

Tax relief also included

The proposal doesn’t just add a tax. It also includes relief measures. One change would remove the sales tax on grooming products.

Another piece expands small-business B&O relief beginning in 2029, a change supporters say would wipe out or sharply reduce B&O owed by many tiny businesses at the lowest revenue levels. Supporters say these provisions show the bill is not just about raising revenue. They frame it as a broader tax system adjustment.

Supporters call it fair

Senate Majority Leader Jamie Pedersen described the vote as a big step forward. Other Democratic lawmakers say the system should be based on paying according to one’s means. They argue the current structure leans heavily on sales taxes.

Supporters say lower- and middle-income families pay a higher share of their income in taxes compared to wealthier residents. They believe this proposal would make the system more balanced. For them, it’s about fairness.

The governor’s cautious backing

Governor Bob Ferguson has endorsed the idea in the past. He recently said the legislation is moving in the right direction. Still, he has pushed for more revenue to go directly back to families and small businesses.

An earlier version of the bill drew his concern because it did not offer enough relief. Amendments were proposed during debate, though only two were adopted. His support appears steady but measured.

Strong Republican opposition

Republican lawmakers strongly oppose creating any income tax in Washington. Some call it the most significant tax increase in state history. They also argue it could be expanded in the future.

Critics warn that small changes in wording could open the door to a broader income tax. They see the bill as a significant policy shift. The disagreement sets up a tense fight in the House.

Legal challenges expected

Beyond the House vote, legal questions loom. Opponents argue the measure may be unconstitutional under Washington’s tax laws. Court battles could follow if the bill becomes law.

Washington’s constitution has been interpreted to limit certain types of income taxes. That history suggests that any new income-based tax could face legal challenges. The final decision may rest with judges, not just lawmakers.

How other states handle it

If approved, Washington would join states that already apply higher marginal tax rates at very high income levels, although the details vary widely by state. These states apply higher rates to income over certain thresholds. Washington’s proposed 9.9% rate would be in that range.

Supporters say other states have shown such taxes can generate significant revenue. Critics argue that those states also face budget and economic challenges. Comparisons fuel both sides of the debate.

Little-known fact: In 2025, several high-tax states used “top brackets” for high earners. The Tax Foundation tracks these top marginal rates state by state.

Impact on high earners

For affected taxpayers, only income above $1 million would be subject to the new rate. That means someone earning $1.2 million would pay 9.9% on the extra $200,000, not the full amount. Supporters say this limits the reach.

Opponents worry about long-term effects. They argue that high earners could move or shift income strategies. Whether that happens remains part of the broader economic debate.

What happens in the House

The next step is the Washington State House of Representatives. Lawmakers there will debate, amend, or potentially block the proposal. The outcome is far from certain.

If the House passes it, the governor would decide whether to sign it into law. That would trigger preparations for implementation and likely legal filings. The coming weeks could shape Washington’s tax future.

For a closer look at another state tax debate gaining momentum, read more about Ron DeSantis’s double down on Florida property tax changes in a new update.

A defining moment for the state

The question remains: will Washington’s millionaires’ tax survive the House vote and expected legal fights? The answer could redefine how the state funds schools and services. It could also reshape the political landscape.

For residents, this debate touches on fairness, growth, and constitutional limits. Whatever the outcome, the decision will leave a lasting mark. Washington stands at a crossroads in its approach to taxation.

For a closer look at how another major city is weighing higher taxes that could hit everyday spending, read more about how the proposed LA tax increase could make groceries, meals out, and shopping more expensive.

What do you think about who would really pay Washington’s millionaires tax and when? Share your thoughts and drop a comment.

This slideshow was made with AI assistance and human editing.

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