(Image: CHS)
Washington’s push for an income tax is nearing its next phase — surviving legal challenges.
The Millionaires Tax proposal is at the center of a brewing political fight in the state’s 43rd District including Capitol Hill as Senate Majority Leader Jamie Pedersen will face a reelection battle this summer with labor organizer Hannah Sabio-Howell over complaints of compromises and corporate carveouts under his leadership in Olympia.
While Sabio-Howell says the Pedersen-led compromise doesn’t go far enough by delaying funding until 2029, rolling back needed sales taxes, and not pursuing a broader wealth tax, even the compromise version brought a full 24 hours of debate in Olympia and loud complaints about what opponents say will only be the first step in extending an income tax to everyone.
Washington state lawmakers are advancing Senate Bill 6346, the new “millionaires tax” imposing a 9.9% state income tax on personal annual earnings exceeding $1 million.
The measure passed the State House yesterday and now heads to Governor Bob Ferguson, who has pledged to sign it before the legislative session ends Thursday — but not before demanding the bill include rollbacks on recent sales tax changes.
Slated to take effect in 2029, the state’s first income tax would apply to only to the portion of earnings above $1 million for both single and joint filers. Affecting under 1% of residents, it is estimated to generate up to $3.5 billion annually.
Liability starts with federal adjusted gross income, minus a $1 million standard deduction and specific exclusions for real estate sales, family-owned businesses, and certain pensions.
Supporters say the tax balances Washington’s regressive system, funding free K-12 school meals, expanded tax credits, and eliminating sales tax on essentials. Opponents warn it will drive wealth and businesses out of state and claim the tax is the start of efforts to institute a full income tax in the state.
Given Washington’s history of striking down income taxes, the legislation faces likely constitutional challenges at the State Supreme Court and potential ballot initiatives.
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