Washington State Millionaire Tax (2026): 9.9% Income Tax Explained
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Washington State’s New Income Tax on Millionaire Residents
Washington was one of the few states that did not impose an income tax on its residents. Things changed when Governor Bob Ferguson signed SB 6346 into law on March 30, 2026. The new law imposes a 9.9% tax on individuals earning annual income that exceeds $1 million.
When Does SB 6346 Take Effect?
The law takes effect January 1, 2028, with initial payments due April 2029. The State expects that the “millionaire’s tax” will raise more than $3 billion per year.
Opposition to the Millionaire Tax
The Millionaire Tax has its opponents who will bring a lawsuit arguing the new law is unconstitutional and conflicts with state Supreme Court decision made in 1933 when the Court invalidated a voter-approved income tax. The Citizen Action Defense Fund, led by former Attorney General Rob McKenna, is leading the opposition and will lead the lawsuit.
Who Is Affected by Washington State’s New Income Tax?
The Millionaire Tax is projected to apply to fewer than 0.5% of the Washington residents (20,000 households). Taxpayers who are impacted by the Millionaire Tax should consider potential planning strategies, including residency considerations and income timing.
Tax Planning Considerations for High-Income Residents
- Residency planning (multi-state considerations)
- Income timing (accelerating/deferred income)
- Entity structuring
- Capital gains timing
KBF SALT will monitor the developments and provide updates. For specific guidance, please reach out to the KBF SALT Team:
George Rendziperis – grendziperis@kbfadvisory.com
Nick McMahon – nmcmahon@kbfadvisory.com
Andrew Cole – acole@kbfadvisory.com