Washington State has had no state income tax for years, until now.
On March 12, 2026, the state legislature and Governor Bob Ferguson passed a law imposing a 9.9% tax on income above $1 million, affecting around 20,000 households and expected to generate billions in revenue starting in 2029.
Historically, Washington has been the only democratic state without a state income tax, making up for this lack through high sales rates. Though this has hurt lower-income residents disproportionately, past proposals for income tax have been rejected over 10 times, forcing lawmakers to settle for a ‘millionaires tax.’ Proponents of this law say that the ‘millionaires tax’ will alleviate some of the burden of lower-income residents.
“The revenue made by the tax could be beneficial, as it comes out of the pocket of the rich and can support public welfare programs. My main concern is how it will negatively impact local businesses and force them to relocate,” said Skyline sophomore Harish S.
One major change came after progressive lawmakers removed a sizable tax break for large corporations. These tax breaks would have cost $550 million.
With the extra money made from this tax, lawmakers plan on allocating the revenue toward programs like childcare and early education, aiming to make the tax more politically and socially impactful.
Many companies are now planning to move out of Washington into states with more friendly taxes. Notably, businessman Marc Barros, the CEO of the photography company Moment, voiced his opinions on digital platform X. He said, “You can build a remote team and re-open in Wyoming, removing all of these costs” associated with the increasing amounts of regulation in Washington. Marc will be taking his business’s operations to Wyoming.
All we can do now is wait to see whether the law will be successful. If it is successful, it could serve as a model for other states seeking to shift away from regressive tax systems that penalize lower-income residents.
For more information:
Washington state voters have rejected income taxes 10 times. Is this year different?
Washington state progressives strike big business tax break from ‘millionaire’s tax’
Companies leaving Washington after millionaire’s tax passage
Companies leaving Washington after millionaire’s tax passage
