For decades, Washington has stood out as one of the few U.S. states without a personal income tax. That could change soon. In early 2026, state lawmakers introduced legislation proposing a new income tax on households earning over $1 million annually, often referred to as the “Millionaires Tax.”
Key Details of the Proposal:
- Rate & Threshold: The proposed tax would be 9.9% on household income above $1 million, with lower-income households unaffected.
- Estimated Revenue: The tax is projected to generate $3.5–$3.7 billion annually, intended to fund education, healthcare, and working-family tax relief programs.
- Timeline: If passed, the law could be implemented starting in 2028, with first collections in 2029.
- Legislative Status: The Washington State Senate has already passed the bill in a close 27–22 vote, and it is currently under consideration in the House.
If the proposed Washington State income tax passes, high-earning individuals and business owners — especially S-Corp or pass-through entity owners — should start thinking proactively. Staying informed now can help you make strategic decisions and avoid surprises if the tax is implemented in 2028.