Washington is about to make the most significant fiscal shift in its history — moving from a no-income-tax state to a 9.9% tax on income over $1 million, effective January 1, 2028.
For a tech executive earning $3 million, that’s an additional $198,000 in state tax every year. For founders sitting on appreciated stock, the stakes are even higher.
This guide is written for people who need to act before 2028 — not scramble after it.
What’s actually changing
Senate Bill 6346 creates a new 9.9% tax on “Washington taxable income” — a figure derived from federal AGI with specific Washington modifications. It’s not a simple tax on everything you earn, and the planning opportunities are in the details.
What the guide covers
QSBS remains the most powerful tool available. For qualifying founders, IRC §1202 can turn a $15 million exit into zero federal and state tax. Most founders don’t know whether they qualify — or have already disqualified themselves without realizing it.
The PTE election can cut your effective rate by a third. Business owners who elect to pay tax at the entity level can make the Washington tax federally deductible, reducing the effective rate from 9.9% to approximately 6.2%.
Cliff planning works for those near the threshold. If your income is close to $1 million, a single move — like maximizing a cash balance retirement plan — can eliminate the Washington tax liability entirely.
Domicile change is an option, but only if done right. Changing your domicile to Florida or Texas eliminates the tax — but half-measures won’t survive a Department of Revenue audit. The guide explains exactly what a defensible domicile change requires.
Not sure whether your stock qualifies as QSBS? A single disqualifying fact can cost founders millions in tax-free exclusion. Our QSBS Issue-Spotting Review is designed to identify exactly these risks before they become irreversible.
Why 2026 and 2027 are the critical years
By the time the tax takes effect in 2028, many of the most effective planning windows will already be closed. Equity restructuring, gain timing, and domicile changes all require lead time. The guide lays out a concrete timeline for each strategy.
Get the guide
The Washington State Tax Planning Guide for High Earners is available now. It covers the specific rules, planning strategies, and timelines you need to protect your wealth before 2028.
Ready to talk through your specific situation? Book a free 20-minute call to discuss what these changes mean for you.
For ongoing analysis of Washington state tax developments, see the Washington State Taxes hub.
