Governor Bob Ferguson signed ESSB 6346 this morning. Washington now has an income tax.
Starting January 1, 2028, Washington will impose a flat 9.9% tax on household income above $1 million. The base is federal adjusted gross income. First returns and payments are due in 2029.
I’ve been writing about this bill since it was introduced and spent months opposing it during the legislative session. Now that it’s signed, here’s what matters.
What You Need to Know
The tax is real, but it doesn’t take effect for nearly two years. The key facts:
- 9.9% on household income above $1 million, effective January 1, 2028
- Base is federal AGI — not just wages. Captures business income, investment income, partnership distributions, and more
- QSBS gains excluded from federal AGI should remain outside the tax base under the bill’s current structure
- The $1 million deduction is per household — married couples share a single deduction (the marriage penalty)
- Legal challenges are virtually certain. The constitutional question is whether this survives the same property-tax analysis the court applied in 1933
- The bill includes a “necessity” clause that blocks a voter referendum
What to Read Next
I’ve published a full series on this law. Here’s where to go depending on your situation:
- The complete breakdown: Washington’s New Income Tax: What Founders, Investors, Athletes, and High Earners Need to Know
- The constitutional fight: Why Washington’s New Millionaire Tax Faces a Serious Constitutional Problem
- Residency and domicile: The 30-Day Rule for Washington Income Tax Residency
- QSBS: QSBS and Washington’s New Millionaire Tax
- Athletes and NIL: Washington’s New Income Tax for Professional Athletes
- Planning: Washington State Income Tax Planning (2026–2028): Complete Guide for High Earners
What Happens Next
Expect a legal challenge to be filed quickly. The core constitutional question — whether this is an excise tax or a property tax on income — will ultimately be decided by the Washington Supreme Court. The tax may be enjoined while litigation proceeds.
In the meantime, the planning window is open. The decisions that matter — QSBS qualification, entity structure, domicile, exit timing — should be made now, not in 2028.
I’ll continue to cover this as it develops.
