Washington Gov. Bob Ferguson signed the so-called “millionaires tax” into law in March, creating what would be the first personal income tax in Washington State history if it survives legal and political opposition. Under the new law, earners who make over $1 million must pay a 9.9% income tax on earnings above that threshold.
The tax takes effect on Jan. 1, 2028, with the first payments due in April 2029. An estimated 20,000 to 30,000 Washington households are expected to face the tax, generating an estimated $3 billion or more in annual state revenue.
Funds from the tax will go toward education, health care, and other state services. Specific uses include free school lunches, tax relief for small businesses, and expanded eligibility for the state’s Working Families Tax Credit, adding roughly 460,000 families who would receive payments between $330 to $1,330.
Before it can be fully implemented, the measure faces significant legal and political hurdles. The state Supreme Court previously ruled against personal income taxes in 1933, establishing a long-standing precedent, but backers hope the court will overturn the nearly century-old decision. In 2010, lawmakers passed a tax on incomes over $200,000, but voters rejected it by a margin of roughly 64% to 36%.
This November, Washingtonians will get to cast their vote on the millionaires tax through a ballot initiative. Local groups are also filing legal claims in an effort to invalidate the law through the state Supreme Court. Opponents cite concerns about businesses, tech leaders, and startups potentially relocating out of state.
As voters weigh in and court battles take shape, the measure’s effect on Washington’s economy remains an open question.
This post was based on information found on Puget Sound Business Journal.
