IP26-645 does not expressly repeal chapter 82.87 RCW, Washington’s capital gains tax. Its broader prohibition on taxes measured by individual income creates a separate statutory question. It is too categorical to say the capital gains tax necessarily survives unchanged—or necessarily disappears—if the initiative passes.
The measure expressly targets the new 9.9% individual income tax scheduled to begin in 2028. The Attorney General’s explanatory statement identifies that tax as the only tax explicitly listed for repeal and separately describes the broader prohibition. Those two features need to be analyzed together.
For ballot qualification and litigation developments, see the Initiative 645 tracker. This article addresses the statutory question; a ruling about ballot disclosure does not resolve the initiative’s eventual effect on capital gains.
What IP26-645 actually repeals
Section 2 of the initiative is an express repeal list — 66 enumerated sections, every one of them from chapter 238, Laws of 2026. That's ESSB 6346, the bill Governor Ferguson signed on March 30, 2026 imposing a 9.9% tax on income above $1 million starting January 1, 2028.
The repeal list is surgical. It takes out the income tax itself while leaving in place the parts of ESSB 6346 that cut taxes: the Working Families Tax Credit expansion, the small-business B&O relief, and the sales tax exemptions for diapers, hygiene products, and over-the-counter drugs.
Chapter 82.87 RCW is absent from the express repeal list. That supports an argument for continued operation of the capital gains tax, but it does not by itself resolve whether the initiative’s broader operative language would prohibit that tax. Read the initiative text.
So why does everyone think it kills the capital gains tax?
The question arises from the initiative’s broad definition of income and its prohibition on taxes measured by individual income. These provisions reach beyond the express repeal list.
Section 3 defines income for Title 82 to include monetary gains or benefits derived from an individual’s capital, labor, property or other sources. The capital gains tax is codified in that title.
Section 4 prohibits state and local taxes imposed on individual income, its receipt, or measured by that income. The official explanatory statement describes this prohibition separately from the express repeal of the new income tax.
Section 6 directs liberal construction of the prohibition. That instruction is part of the textual argument for reading the measure broadly.
The phrase “measured by” matters because Quinn v. State upheld the capital gains tax as an excise on a sale or exchange rather than a property tax. My inference is that the new language supplies an argument that an otherwise constitutional excise could nevertheless be barred by a later statute. Quinn did not decide that later statutory question.
The competing readings
The continued-tax reading: The initiative expressly repeals specified provisions of the new income-tax law while leaving chapter 82.87 unlisted. The State could argue that the remaining statutes should operate together and that Quinn’s excise-tax classification helps distinguish the capital gains tax from the prohibited taxes.
The prohibition reading: The new definition and the “measured by” language could reach an excise calculated from individual capital gains even though the initiative does not enumerate chapter 82.87 for repeal. The liberal-construction clause reinforces that argument. A constitutional classification does not automatically defeat a separate statutory prohibition.
My assessment is that the express repeal list is meaningful evidence, but it is insufficient to promise that the capital gains tax survives unchanged. The broader text deserves substantive analysis, and its effect may require judicial resolution if the measure passes.
There is also a separate durability issue: this is a statutory initiative, and article II, section 41 of the Washington Constitution governs later legislative amendments. A future legislature’s ability to change the law does not answer what the initiative would mean when it first takes effect.
Ballot language and the disclosure litigation
Ballot-title, explanatory-statement and public-investment-disclosure proceedings address what voters are told and the procedures governing that material. They should not be described as a merits ruling on whether the initiative would bar the capital gains tax.
Use the Secretary of State’s measure page for the official text and ballot materials, and the Initiative 645 tracker for dated litigation updates.
What this means for your planning
Use current law as the planning baseline. Do not omit Washington capital gains tax from a sale model merely because Initiative 645 may pass. If it passes, reassess the effective-date language, transaction timing, agency guidance and any court rulings before changing filing or payment positions. See the Washington capital gains tax guide.
Analyze QSBS independently. Under the current capital-gains framework, federally excluded Section 1202 gain is outside the federal net long-term gain used as the state starting point. Verify qualification and any taxable remainder. That analysis does not require predicting the initiative’s eventual interpretation. WAC 458-20-301.
The new income tax is the express repeal target. The official explanation states that passage would repeal the tax scheduled to begin in 2028. Model the current-law outcome and the repeal scenario separately; the vote has not yet occurred. Attorney General’s explanatory statement.
Domicile still matters. A genuine move, Washington-source income and the timing of a liquidity event require their own factual analysis. Use the domicile strategy guide alongside the law in effect for the transaction.
If you're a Washington founder or executive approaching a liquidity event and want to talk through how the initiative affects your specific situation, schedule a 20-minute call.
This post is for general information and is not legal or tax advice for your specific situation.
Statutory analysis revised September 9, 2026. Interpretive assessments above are analysis, not a prediction of a court ruling.
