Washington State Passes First-Ever Millionaires Tax After Decades of Debate

After a historic 25-hour debate on the House floor, Washington state has passed a bill imposing a 9.9% tax on personal income exceeding $1 million annually. This marks the first time the state will levy an income tax in its 136-year history, potentially reshaping its tax structure and funding for vital public services. The bill passed on March 9th with a vote of 52-46, and was signed into law by Governor Bob Ferguson on March 15, 2026.

A Long Road to Tax Reform

Washington has long been an outlier among U.S. States, relying heavily on sales and business taxes rather than income tax. Previous attempts to introduce an income tax date back to 1932, when a voter-approved initiative was overturned by the state Supreme Court on constitutional grounds. Another attempt in 2010 failed to gain traction. The state’s current tax system has been consistently ranked as one of the most regressive in the nation, with lower-income residents bearing a disproportionately higher tax burden. According to the Institute on Taxation and Economic Policy, the bottom 20% of earners in Washington pay an effective tax rate over three times higher than the top 1%.

Key Provisions of the New Tax

The new law applies a 9.9% tax to personal income above $1 million per year, impacting approximately 21,000 filers – less than 1% of the state’s population. It is projected to generate between $3.5 and $4 billion annually, beginning in 2029. Alongside the millionaires tax, the bill as well includes provisions for tax relief aimed at lower and middle-income families, including sales tax exemptions on essential items like diapers, over-the-counter medications, and personal hygiene products, as well as an expanded Working Families Tax Credit.

Political Hurdles and Future Challenges

The path to passage was fraught with political challenges. Republicans mounted a significant opposition, introducing 81 amendments during the 25-hour House debate in an attempt to stall or block the bill. Even within the Democratic party, there was not unanimous support for the measure. Despite these hurdles, lawmakers ultimately secured enough votes for passage in both the House and Senate.

However, the fight is not over. Representative Brianna Thomas acknowledged the need for the law to withstand potential legal challenges, including a likely review by the state Supreme Court, and a possible vote of the people. “There are many miles to go before this is actually the law of the land,” she stated.

National Trend Towards Wealth Taxation

Washington’s move aligns with a growing national trend towards taxing high-income earners and wealth. Similar proposals are gaining momentum in other states, including California, where a ballot initiative proposes a one-time 5% tax on residents with a net worth exceeding $1 billion. At the federal level, Senator Bernie Sanders and Representative Ro Khanna have introduced the “Make Billionaires Pay Their Fair Share Act,” which would impose a 5% annual wealth tax on the wealthiest Americans.

Economic Impact and Reactions

The passage of the tax has sparked mixed reactions. Some business leaders have expressed concerns about its potential impact on the state’s economic climate, with some high-net-worth individuals considering relocating. Billionaire Howard Schultz, founder of Starbucks, recently announced his move to Miami, though he has not directly linked it to the new tax. Amazon founder Jeff Bezos also moved to Miami in 2023, costing the state an estimated $954 million in tax revenue in 2024 alone. However, supporters of the tax argue that it is a necessary step towards creating a more equitable tax system and funding essential public services.