Ferguson signs Washington income tax targeting millionaires
Add Axios as your preferred source to
see more of our stories on Google.
Photo illustration: Axios Visuals. Photo: Alexi Rosenfeld/Getty Images
Gov. Bob Ferguson signed a new tax on high earners into law Monday, ending Washington's run as one of the few states without an income tax on the books.
Why it matters: The tax, which won't be imposed for nearly two years, is likely to face legal and political challenges, even as supporters say it will make the state's tax code fairer.
Zoom in: Starting in 2028, Senate Bill 6346 will impose a 9.9% tax on annual income over $1 million.
- The new law, which supporters call a "millionaires tax," is expected to raise more than $3 billion per year.
- About 20,000 households will pay the tax, according to legislative estimates.
- The $1 million threshold will rise over time with inflation.
What they're saying: Ferguson said the tax will affect less than 0.5% of Washington residents, while helping pay for "key programs that make Washington state great," such as education and health care initiatives.
- "If you are fortunate enough to earn $900,000 in a year, you will not be taxed under this legislation," Ferguson said Monday, shortly before signing the tax bill into law.
- Senate Majority Leader Jamie Pedersen (D-Seattle) called the measure the "most substantial progressive tax reform in our state's history."
- "We've asked working families for far too long to shoulder far too much of the tax burden for the things that we all care about, and we have not asked enough of our wealthiest neighbors," Pedersen, the bill's prime sponsor, said during the bill signing ceremony.
What's inside: The measure includes tax breaks for small businesses and expands a sales-tax rebate for low- to middle-income families.
- It will also eliminate the sales tax on diapers, over-the-counter drugs, and personal hygiene products like shampoo and deodorant.
- 5% of the revenue will go into a dedicated fund for child care programs.
Yes, but: Opponents — including many Republican lawmakers — say the measure doesn't go far enough to reduce taxes for everyday people.
- They also argue the income tax is unconstitutional. Past state court rulings have treated income as property, which the state constitution says must be taxed uniformly.
- Critics warn the tax will eventually be expanded to apply to people earning less than $1 million a year.
- An "income tax on anyone is bound to become an income tax on everyone," Senate Republican Leader John Braun wrote in a blog post this month.
What's next: Opponents are expected to try to repeal the tax via a citizen ballot measure — and to challenge the law in court.
Go deeper: Washington's new income tax faces hurdles