Washington's New Income Tax: The Complete Guide for Founders, Investors, and High Earners
By Joe Wallin | April 9, 2026 | Updated continuously as the law develops
On March 30, 2026, Governor Ferguson signed ESSB 6346 into law, creating Washington's first broad-based income tax: a 9.9% levy on adjusted gross income above $1 million, effective January 1, 2028. For founders, investors, executives, and high earners in Washington, this changes everything — from entity structure to exit timing to domicile planning.
I've been writing about Washington tax developments more intensively than anyone, and this page organizes all of my coverage into a single resource. Whether you're a founder planning a liquidity event, an employee with stock options, a retiree, a remote worker, or a professional athlete with Washington-source income, you'll find the analysis you need below.
Start Here: The Essentials
Washington's New Income Tax: What Founders, Investors, Athletes, and High Earners Need to Know — The comprehensive overview of ESSB 6346. This is the article I point everyone to first: the tax rate, the threshold, what counts as income, the marriage penalty, the effective date, and what you should be doing now.
Washington's New Tax Reality: Why 2028 Changes Everything for High Earners — A high-level look at why the 2028 effective date creates a two-year planning window, and what high earners should prioritize before the tax kicks in.
Washington's 9.9% Income Tax: What High Earners Must Do Before 2028 — The action-oriented version: specific strategies to implement before January 1, 2028, organized by urgency.
Governor Ferguson Signs Washington's Income Tax Into Law — The announcement and immediate implications.
Who Owes the Tax: Residency and Sourcing Rules
The 30-Day Rule for Washington Income Tax Residency — Washington's residency rules are unusual. This article explains the 30-day presumption and why it creates confusion for people who split time between states.
Washington Income Tax: What Happens If You Move Mid-Year? — If you're thinking about moving to avoid the tax, the timing matters enormously. This article covers part-year residency, sourcing rules, and the traps that catch people who move too late.
Washington's New Income Tax and Remote Workers: Who Owes What? — Remote work has made state tax nexus incredibly complicated. If you live in Washington but work for an out-of-state company — or vice versa — this is essential reading.
Washington's New Income Tax for Professional Athletes — The "jock tax" rules for professional athletes earning income from games played in Washington.
How Washington's "Visiting Pro Athlete" Tax Would Actually Work — The mechanics of allocating income for athletes playing in Washington.
The Marriage Penalty and Household Dynamics
Washington's New Income Tax: The Marriage Penalty Explained — The $1 million threshold applies at the household level for married couples. This creates a significant marriage penalty, and this article walks through the math and the planning implications.
What's Taxable: Income Types and Asset Classes
How Washington's New 9.9% Income Tax Applies to Stock Options and RSUs — For startup employees and executives with equity compensation, the interaction between option exercise timing and the income tax is critical.
Stock Option Exercise Timing: Planning Before Washington's 2028 Income Tax — A deep dive into the timing strategies for exercising options before vs. after the tax takes effect.
Are Real Estate Gains Subject to Washington's New 9.9% Income Tax? — Yes, with some nuances. This article covers the real estate implications, including 1031 exchanges and primary residence exclusions.
Crypto and Digital Assets Under Washington's 9.9% Income Tax — How digital asset gains are treated, and what crypto holders need to know about the $1 million threshold.
Is Retirement Income Subject to Washington's 9.9% Income Tax? — How the tax applies to Social Security, pensions, 401(k) distributions, and IRA withdrawals.
Deferred Compensation and Washington's New 9.9% Income Tax — How deferred compensation arrangements interact with the tax, and planning strategies for executives.
Entity Structure and Business Planning
C Corp vs. S Corp vs. LLC: How Washington's New Income Tax Changes the Entity Choice Calculus — The entity structure decision now has a massive state tax dimension. This article reframes the classic entity choice analysis for the new tax reality.
Washington's New Income Tax and Pass-Through Business Income — How the tax applies to S-Corps, LLCs, and partnerships, and the planning opportunities for pass-through owners.
The Pass-Through Entity Tax Election, Explained — Washington's PTE election can provide a workaround for pass-through business owners. This article explains the mechanics and whether it makes sense for you.
Structure Determines Your Tax Outcome — A strategic overview of how entity structure, QSBS planning, and timing decisions interact to determine your total tax exposure.
QSBS and Washington's Income Tax
Does QSBS Avoid Washington's New 9.9% Income Tax? (Yes — For Now) — The good news for founders: gains excluded under Section 1202 don't enter Washington's tax base.
QSBS and Washington's New Millionaire Tax — A deeper look at how QSBS interacts with the $1 million threshold, including partial exclusion scenarios under the OBBBA.
QSBS Is Alive and Well in Washington State — A comprehensive analysis of Washington's treatment of Section 1202 gains.
Washington's Capital Gains Tax and QSBS: A Founder's Guide — How QSBS interacts with Washington's existing 7% capital gains tax.
Planning Strategies: What to Do Before 2028
Roth Conversions Before 2028: The Window Is Closing — Converting traditional retirement accounts to Roth before the tax takes effect can save significant money. This article explains the math.
Installment Sales and Structured Exits — How to spread gain across multiple tax years using installment sales to manage the $1 million threshold.
Charitable Giving Strategies to Reduce Your Washington Income Tax — How strategic charitable giving — including donor-advised funds and charitable trusts — can reduce your Washington tax liability.
Tax Loss Harvesting to Manage Washington's $1 Million Threshold — How to use capital losses to keep your AGI below the $1 million threshold, or minimize the amount exposed to the 9.9% rate.
Estate Planning Before 2028 — How the income tax changes the calculus for estate planning, including gifting strategies and trust structures.
ING Trusts Won't Save You from Washington's Income Tax. Here's What Might. — A popular planning technique that probably won't work here, and the alternatives that might.
The Domicile Question: Should You Leave Washington?
How to Change Your Washington Domicile to Avoid the Income Tax — If you're seriously considering leaving Washington, this is the definitive guide to changing your domicile: what it requires, how states challenge it, and the common mistakes people make.
Washington vs. California: A Tax Comparison — How the two states compare on income tax, capital gains, and overall tax burden for founders.
Washington vs. Oregon vs. Nevada: A Tax Comparison for West Coast Founders — The three-state comparison for founders evaluating where to base themselves.
Compliance: Filing, Payments, and Mechanics
How to Make Estimated Tax Payments Under Washington's New Income Tax — The mechanics of estimated tax payments, including the quarterly schedule and safe harbor rules.
Washington's New Millionaire Tax: When Would the First Payment Be Due? — The timeline for the first estimated payments and annual filings.
The Legal Challenge: Will the Tax Survive?
The Washington Supreme Court Just Fast-Tracked the Income Tax Referendum Case — The latest on the legal challenge to the income tax.
Why the Lawsuit Against Washington's Income Tax Has a Real Chance — A legal analysis of the constitutional arguments against the tax.
The Washington Income Tax Legal Challenge: What to Expect and When — A timeline of the legal proceedings and what to watch for.
Why Washington's New Millionaire Tax Faces a Serious Constitutional Problem — The constitutional issues that could invalidate the tax.
The First Lawsuit Against Washington's Income Tax Is Being Filed Today — Breaking coverage of the initial legal challenge.
Historical Context and the Broader Picture
From Seattle's Unconstitutional Income Tax to Washington's Statewide Millionaires Tax — How we got here: the history from Seattle's failed income tax to the statewide legislation.
Will Washington's Income Tax Rate Go Up? (History Says Yes) — A look at how other states' "temporary" or "millionaire-only" income taxes evolved over time.
Why State Income Taxes Almost Always Raise Less Than Promised — The revenue projections, and why they may fall short.
Other Washington Tax Developments
Seattle's New B&O Tax: How Higher Rates Are Designed to Work — Seattle's business tax changes and how they interact with the state income tax.
Governor Ferguson Signs Estate Tax Rollback — The estate tax changes signed alongside the income tax legislation.
Washington Just Banned Noncompetes — The noncompete ban and its implications for startups.
Washington's Proposed Statewide Payroll Tax — Other tax proposals that could affect Washington employers.
Navigating Washington's 2026 Tax & Business Legislation — The broader legislative landscape for 2026.
Stay Current on Washington Tax Developments
Washington's tax landscape is evolving rapidly. The legal challenge to the income tax is ongoing, regulations are still being written, and the legislature may make additional changes before the 2028 effective date. I cover every significant development on this blog and through my newsletter.
If you need help with Washington state tax planning — whether it's entity structure, exit timing, domicile analysis, or QSBS strategy — I'm happy to talk.
Book a free introductory call to discuss your situation.
