Washington state has enacted a new 9.9% tax on annual income exceeding $1 million for individuals or households, marking a significant shift for a state without a personal income tax. The legislation, signed into law by Gov. Bob Ferguson in March 2026, will take effect on January 1, 2028, with payments due in 2029. The delay allows the state to build collection infrastructure and address potential legal challenges.
Core Facts & Immediate Action
State Sen. Jamie Pedersen (D-Seattle), the bill's architect, dismissed concerns that the tax will trigger an exodus of wealthy residents or businesses. Pedersen cited business concerns about other taxes, such as the sales tax on services and estate tax, which were addressed in the last legislative session. He stated there is no evidence the millionaire's tax will cause significant departures.
Deeper Dive & Context
Business Relocation Trends
Despite Pedersen's assurances, some businesses are already relocating. Starbucks announced plans to shift 2,000 corporate jobs from Seattle to Nashville, Tennessee, citing unspecified factors. Former CEO Howard Schultz has criticized Seattle's policies, calling them 'socialist.'
Legal and Implementation Challenges
The tax's delayed implementation is intended to allow the state Department of Revenue to prepare for collection and to navigate potential constitutional challenges. The legislation was pushed through by the Democratic majority during the 2026 session.
Diverse Perspectives
Supporters argue the tax will generate revenue for state programs, while critics warn it could drive away high-earning residents and businesses. Pedersen emphasized that other tax concerns were addressed, but opponents highlight the potential economic impact of the new tax.