Washington state lawmakers have recently approved a "millionaires tax," imposing a 9.9% tax on income exceeding $1 million for individuals and couples. This legislation was passed by the State Senate with just one day remaining in the 2026 legislative session, following an intense 24-hour debate in the State House.
The primary aim of this tax is to mitigate a multi-billion dollar deficit in the state budget. Revenue generated from the tax is earmarked for various initiatives, including funding programs designed to enhance affordability for working families and small business owners. The tax is set to take effect on January 1, 2028, with payments beginning in 2029, and it is projected to affect approximately 21,000 residents in Washington.
Governor Bob Ferguson has expressed his support for the measure, stating that it represents significant progress in addressing economic disparities. He emphasized the potential benefits for families, including funding for free meals for K-12 students. Ferguson noted that the tax would impact less than half of one percent of the state’s population while aiming to improve affordability for millions of Washingtonians.
However, the tax has attracted criticism, with some lawmakers and analysts warning that it could lead to an outflow of high-income earners from the state. Critics argue that the aggressive tax rate may deter business investment and expansion, particularly in the technology sector, which is already faced with high taxation. Notably, former Starbucks CEO Howard Schultz announced his relocation from Seattle to Florida, a move some speculate may be influenced by the new tax policy.
As the bill awaits the governor's signature, discussions continue about its potential implications for Washington’s economy and its high-income residents.