Washington’s new 9.9% income tax on income above $1 million is now law—but it may never actually take effect.
Governor Ferguson signed SB 6346 on March 30, 2026. Within hours, the Citizen Action Defense Fund (CADF) announced it retained former Attorney General Rob McKenna to lead a constitutional challenge, and a repeal measure is being pushed for the November 2026 ballot. The lawsuit will ask the court to declare SB 6346 unconstitutional and prevent its enforcement.
If you are a high earner, founder, investor, or business owner in Washington, here’s the core litigation story and what it should mean for planning.
The constitutional argument—why challengers think they win
The legal attack is simple and old: in 1933, the Washington Supreme Court held in Culliton v. Chase that income is “property,” which triggers the State Constitution’s uniformity requirement—property must be taxed at the same rate. A graduated income tax (higher rates for higher income) doesn’t fit.
That precedent, combined with repeated voter rejection of income-tax proposals and the backdrop of Initiative 2111 (the statutory income-tax ban later repealed to make room for SB 6346), is why challengers believe the case is theirs unless the Supreme Court changes course.
Former Chief Justice Gerry Alexander and former Justice Phil Talmadge have publicly argued the constitutionally “clean” way to adopt an income tax is through amendment, not statute—which is a tall political lift.
What makes this challenge different—and potentially stronger
The Supreme Court upheld the 2021 capital gains tax in Quinn v. State largely by treating it as an excise tax on the sale of assets, not a tax on property.
SB 6346 is different. It explicitly taxes “the receipt of Washington taxable income.” That reads like a direct tax on income—exactly the kind Culliton says is property. The challengers’ best point is that the legislature can’t re-label a property tax to sidestep uniformity.
Supporters appear to be betting that a future court will overrule nearly 100 years of precedent. That’s not impossible—but it’s not a safe bet either.
The legal timeline—what to watch
This will be a multi-year fight, likely decided by the Washington Supreme Court.
Filing (days).
CADF says it expects to file within days, likely in superior court (possibly in a strategically chosen county).
Preliminary injunction (weeks–months).
Challengers may seek an injunction to halt implementation while the case proceeds. Less urgency than the capital gains litigation because the tax doesn’t start applying until 2028, but early relief could still be sought to avoid Department of Revenue buildout.
Superior court ruling (months–a year+).
Expect a summary judgment fight on the core constitutional question. In the capital gains case, the trial court ruled the tax unconstitutional before the Supreme Court reversed on direct review.
Washington Supreme Court (likely 2027–2028).
This is the main event. The Court could reaffirm Culliton, distinguish it, or overrule it.
The ballot track (parallel).
Let’s Go Washington is gathering signatures for a repeal on the November ballot. A successful repeal could moot the lawsuit.
Planning right now—how to think about uncertainty
Do not assume the law will be struck down.
The capital gains tax faced a serious challenge and the Supreme Court upheld it 7–2. Plan as if the law could take effect January 1, 2028.
Do not make irreversible moves yet.
The challenge is serious, and the ballot campaign adds real risk. Major decisions—relocating domicile, restructuring a business, or accelerating income—should be modeled carefully, not rushed. If you're evaluating residency, make sure you understand the 30-day rule and why it's confusing.
Example: Timing a liquidity event
If you’re considering realizing a large liquidity event in late 2027 versus early 2028, the question is whether it’s worth incurring costs (financial and otherwise) to accelerate income ahead of 2028, given the real possibility the tax is struck down or repealed. Build the model before you move.
You have time.
The 9.9% applies to income earned beginning January 1, 2028, with first returns due April 2029. We should have much more clarity before then.
November 2026 could reshape the court.
Five Supreme Court seats are on the November 2026 ballot. The composition of the court that ultimately hears this case could materially affect the outcome. The current court upheld the capital gains tax 7-2. If challengers hope for a different result on the income tax, the composition of the bench after November 2026 could matter as much as the legal arguments themselves.
FAQ: Quick answers (because you shouldn’t have to guess)
Q: Does this affect 2026/2027 income?
A: No. The law applies to income earned starting January 1, 2028, with first returns due April 2029.
Q: How “new” is this for Washington?
A: Washington has long avoided a broad income tax, and a century of precedent treats income as property subject to uniformity. This is a direct challenge to that framework.
Q: Why is the capital gains tax different?
A: The Court upheld it as an excise tax on selling assets. SB 6346 is written as a tax on receiving income—much harder to call “excise.”
Q: What happens if voters repeal it in November 2026?
A: The repeal could end up mooting or complicating the lawsuit. Practically, it would remove the new tax unless/until the legislature re-enacts something else.
Q: What should I do right now?
A: Model exposure, plan as if it might happen, but don’t take irreversible actions without checking domicile rules, residency requirements, and timing/costs. There is time.
The stakes
If the Court overturns Culliton, it would not just rescue SB 6346—it would open the door to a broader graduated income tax in Washington, potentially far beyond this one statute.
Bottom line
The law is real and on the books, but it’s immediately under serious constitutional attack and faces a parallel repeal effort. The next 12–24 months will likely decide whether Washington truly becomes an income-tax state.
I will continue tracking the litigation and ballot effort and will post updates as the case develops.
