If you earn over $1 million in Seattle, you're looking at a state and local tax rate that will soon exceed 18%. Here's how you get there.
The layers
ESSB 6346 — 9.9%
Washington's new income tax takes effect January 1, 2028. It applies to household income above $1 million at a flat 9.9% rate. Wages, RSU vests, business income, partnership distributions — all of it.
Seattle Social Housing Tax — 5%
Approved by Seattle voters in February 2025 and in effect since January 1, 2025. A 5% tax on compensation above $1 million. RSUs count. Stock option gains do not. If you're the owner, you're paying this.
Seattle JumpStart Payroll Tax — up to 2.557%
In effect since 2021. Applies to compensation above applicable thresholds at companies with significant Seattle payroll. Maximum rate is 2.557%.
WA Cares Fund — 0.58%
Washington's mandatory long-term care insurance payroll tax. Takes effect July 1, 2026. Applies statewide to all wage income.
The total: ~18%
| Tax | Rate |
|---|---|
| ESSB 6346 | 9.9% |
| Seattle Social Housing Tax | 5.0% |
| Seattle JumpStart (max) | 2.557% |
| WA Cares Fund | 0.58% |
| Combined | ~18.037% |
That's before a dollar of federal tax.
Add federal and the number gets uncomfortable
Top federal rate is 37%. Add the 3.8% net investment income tax on investment income and the 0.9% additional Medicare tax on wages above $200,000, and the combined federal rate on wages can reach 40.8%.
Stack that on top of 18% state and local and you're approaching 58% on income above $1 million earned in Seattle.
The RSU problem
RSUs are particularly exposed. They vest as ordinary income, which means they're hit by ESSB 6346, the Social Housing Tax, and federal income tax at ordinary rates — not capital gains rates. A large RSU vest in 2028 could trigger all of these taxes simultaneously.
Stock option gains are carved out of the Social Housing Tax. But most tech workers receive RSUs, not options.
The planning window
ESSB 6346 doesn't take effect until January 1, 2028. The Social Housing Tax is already running. WA Cares starts July 1, 2026.
If you're a Seattle-based founder or executive with significant income expected after 2027, the time to think about this is now — not after the exit.
Questions about your specific situation? Get in touch.
