As you may be aware, the state of Washington has signed into law a “millionaires’ tax” (S.B. 6346) that imposes a 9.9% tax on annual household income (single or married) above $1 million starting in 2028, with payments beginning in 2029.
Proponents of the tax claim it could raise an estimated $3 to 4 billion per year and would fund initiatives such as education, childcare, tax credits for low-income families, and other public services.
Opponents argue it could hurt economic competitiveness in Washington, prompt wealthy residents to leave the state, and face constitutional challenges based on the state’s long-standing restrictions on income taxes.
The governor signed the proposed tax into legislation on March 30. This legislation marks a major shift in Washington’s tax system, which has historically relied on sales taxes and has never had an income tax. Because it includes an emergency clause, the proposed legislation is exempt from referendum.
The legislation does include exemptions, including the sale of a Qualified Family-Owned Small Business, residential and other real property. It also includes credits for income taxes due to another jurisdiction, Washington state capital gains taxes imposed in same year, Business and Occupation (B&O) taxes, and pass-through entities. In addition, it allows for a charitable contribution deduction of $100,000 (whether filing married or single.)
The impact of the proposed Washington state tax relative to other states will vary based on an individual’s specific circumstances and state of residence. A detailed, side-by-side analysis is required to assess any meaningful impact.
Washington State Estate Tax Rate Rollback
The state of Washington rolled back recent estate tax increases. In 2025, Washington lawmakers increased the top estate tax rate to 35%, among the highest in the United States.
Taxable estates of individuals who pass on or after July 1, 2026, will be subject to a lower top tax rate of 20%, after factoring in the estate tax exclusion amount. However, if someone dies between now and June 30, 2026, the top tax rate of 35% still applies, with an applicable exclusion of $3.076 million. The applicable exclusion amount for individuals passing after July 1, 2026 will be reduced to $3 million.
This legislation was signed into law on March 24, 2026.
We are closely monitoring these developments and will keep you informed of any material updates.
