Washington State's Proposed Millionaires Tax: A Legislative Overview

Washington state lawmakers have introduced a significant income tax proposal targeting high earners, specifically a 9.9% tax on individual income exceeding $1 million. This legislation, encapsulated in House Bill 2724 and Senate Bill 6346, is positioned as emergency legislation, which, under the Washington Constitution, prevents it from being subjected to a referendum. The proposed tax is set to take effect on January 1, 2028, with the first payments due in April 2029.

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The proposed tax aims to generate approximately $3.7 billion annually, with funds earmarked for various public services, including education, healthcare, and tax relief for small businesses and low-income families. Specifically, 5% of the revenue would support public defense funding, while the remainder would bolster the state general fund. The legislation also includes provisions to expand the Working Families Tax Credit and eliminate sales tax on hygiene products starting in 2029.

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Governor Bob Ferguson has expressed skepticism regarding the current form of the proposal, stating it does not adequately address tax relief for residents and small businesses. He advocates for a more substantial return to taxpayers, suggesting that only about 7% of the generated revenue would benefit residents directly. Ferguson's concerns highlight a divide between his vision for the tax and the legislative framework proposed by Democratic leaders, who believe they can pass the bill without bipartisan support.

WA millionaire tax would bypass voters, but Ferguson won’t support it yet

Republican lawmakers have vehemently opposed the millionaire tax, framing it as detrimental to small and medium-sized businesses. They argue that the tax could lead to economic harm and warn that the $1 million threshold may not remain fixed, potentially leading to broader taxation in the future. Critics also question the constitutionality of the tax, citing a 1933 state Supreme Court ruling that deemed graduated income taxes unconstitutional. They contend that the emergency clause preventing a referendum could face legal challenges.

Washington State Mulls a Millionaire's Tax

Despite the opposition, Democratic leaders assert that public sentiment may favor the tax, particularly as it aims to rectify Washington's regressive tax structure, where lower-income households pay a higher percentage of their income in taxes compared to wealthier individuals. The proposed tax is seen as a step towards a more equitable tax system, with proponents arguing that it would alleviate financial burdens on working families.

Ferguson rejects WA lawmakers’ initial crack at income tax legislation

The legislative session runs until March 12, 2026, and discussions are ongoing regarding potential amendments to the tax proposal. The outcome remains uncertain, with both sides preparing for a contentious debate over the future of Washington's tax structure. If passed, the millionaire tax will likely face challenges both in the courts and at the ballot box, as opponents mobilize to contest its implementation.

Washington State Mulls a Millionaire's Tax

• “This proposal does not come close to doing that.” — Governor Bob Ferguson

WA millionaire tax would bypass voters, but Ferguson won’t support it yet

• “We have an opportunity to take a giant step forward by funding public schools, health care, and services that people across the state are counting on by increasing taxes on a few thousand very wealthy people and cutting taxes for millions more,” — Senate Majority Leader Jamie Pedersen

WA millionaire tax would bypass voters, but Ferguson won’t support it yet

• “But while this one is framed as a tax on millionaires, it’s only a tax on millionaires this session. It will quickly become a tax on regular people like you and me.” — House Minority Leader Drew Stokesbary

Gov. Bob Ferguson sends WA Democrats back to drawing board on ‘millionaires tax’

• “We don't have a revenue problem. We have a spending addiction problem,” — Representative Travis Couture

Washington State Mulls a Millionaire's Tax

This legislative initiative marks a pivotal moment in Washington's fiscal policy, reflecting broader national trends toward taxing wealthier individuals to address systemic inequities in tax burdens.

Washington State Mulls a Millionaire's Tax