Washington's new personal income tax (ESSB 6346) imposes a 9.9% tax on income above a $1 million standard deduction. The deduction is $1 million per individual — except that spouses and registered domestic partners share one $1 million between them, whether they file jointly or separately. Not two. One per couple. For married filers, that single structural choice builds a meaningful marriage penalty into the Washington income tax that will affect tens of thousands of high-earning Washington couples starting in 2028.
This post explains how the marriage penalty works, why it exists in this form, and what planning options exist for couples who will be hit by it.
The math, in one example
Consider two Washington high-earning professionals. Each earns $700,000 of W-2 income per year. Under ESSB 6346:
- If they are unmarried and each files individually: Neither clears the $1M threshold on their own. Combined state income tax: $0.
- If they are married and file jointly: Combined AGI of $1.4M against one $1 million deduction. Taxable amount: $400K (the excess over $1M). State income tax: $39,600.
- If they are married and file separately: The statute answers this directly: spouses share a single $1 million deduction regardless of filing status, so filing separately does not double the threshold. How the shared deduction is allocated between two separate returns awaits DOR guidance, but the combined result is the same: approximately $39,600, split between the two returns.
The penalty on this representative couple: $39,600 per year, every year, for as long as both spouses are Washington residents earning at this level. Over a 15-year career, that is nearly $600,000 of additional state tax attributable solely to being married.
Why ESSB 6346 was structured this way
The drafting history of ESSB 6346 shows the legislature explicitly chose one deduction per married couple rather than one per spouse. Two reasons were offered publicly:
- Revenue. A per-filer $1M threshold would have exempted a meaningful number of high-earning dual-income couples. Revenue projections would have dropped.
- Simplicity. A single deduction per married couple mirrors federal AGI reporting conventions for joint filers, avoiding the need for a separate Washington filing status regime.
The marriage penalty was, in other words, a feature of the tax design, not an oversight. It is consistent with several other state high-income taxes (including Oregon's top bracket and California's upper brackets) that either flatten the brackets for joint filers or impose outright marriage penalties in the top ranges.
How big does the penalty get?
The penalty scales with how close the couple's combined income is to $1M and how concentrated the income is between spouses. A few representative cases:
- $600K + $600K = $1.2M combined: Taxable excess $200K. Tax: $19,800. Unmarried combined tax: $0. Marriage penalty: $19,800/year.
- $700K + $700K = $1.4M combined: Taxable excess $400K. Tax: $39,600. Unmarried combined tax: $0. Marriage penalty: $39,600/year.
- $900K + $900K = $1.8M combined: Taxable excess $800K. Tax: $79,200. Unmarried combined tax: $0. Marriage penalty: $79,200/year.
- $1.5M + $0 (single-earner couple): Taxable excess $500K. Tax: $49,500. Unmarried combined tax: $49,500 (the earner would hit $500K over the $1M solo threshold). Marriage penalty: $0.
The penalty is largest when both spouses earn roughly equally at levels just below $1M each. It is zero or near-zero when one spouse earns all the income, or when one spouse earns significantly less.
The year-to-year volatility problem
For couples whose income is roughly stable from year to year, the penalty is predictable and chronic. But a larger set of Washington couples — founders, investors, equity-compensated executives — have a different problem: episodic high-income years.
A founder couple with modest cash comp plus a large RSU vest in 2028 might see the couple's combined AGI spike to $5M in a single year before returning to $600K the next. In that spike year, the earning spouse clears the $1M deduction alone, married or not. The question is whether the $1M deduction applies per spouse or once per couple when the non-earning spouse contributes very little.
A large income spike does not automatically create a large marriage penalty. At the initial $1 million deduction and 9.9% rate, the penalty attributable solely to sharing the standard deduction cannot exceed $99,000 annually. It reaches that maximum when each person has at least $1 million of income before the standard deduction, holding other adjustments constant. If one person earns everything and the other earns nothing, this deduction-based penalty is zero. Other deductions, credits, and capital-gains interactions require separate analysis.
Planning responses
No planning option eliminates the marriage penalty for a couple that remains married. But several can materially reduce exposure:
1. Time major recognitions around the marriage
For engaged couples with a major liquidity event on the horizon, the sequencing of the wedding and the transaction matters. Closing a large sale before the wedding means the seller's income passes the individual $1M threshold. Closing after the wedding combines the couple's income against one deduction.
This is awkward to put in writing. It is nonetheless real. For couples with an anticipated 2028+ transaction of meaningful size, the tax savings of closing pre-marriage can reach six figures.
2. Balance income distribution between spouses
If both spouses have independent income sources, the total tax does not change based on who earns what (the couple's income pools against one deduction). But for spouses with flexibility — partners in a family business, spouses of founders with equity, couples with family investment partnerships — allocating income toward the lower earner can pull a couple back below the $1M deduction in marginal cases.
3. Maximize retirement deferral
401(k), 403(b), and defined benefit plan contributions reduce federal AGI. Washington's income tax is on federal AGI. Every dollar contributed is a dollar out of this year's Washington tax base — though qualified-plan distributions are taxed when received, so this is deferral, not permanent exclusion. For couples just over the $1M deduction, aggressive retirement-plan funding can push them back under.
4. Front-load charitable giving
Charitable contributions do not reduce federal AGI (they reduce taxable income via itemized deduction). But donor-advised fund bunching combined with appreciated-asset giving can reduce the realized gain that would otherwise flow into AGI.
5. Use non-grantor trusts for a portion of family investment income
For couples whose investment income alone pushes them over the couple's shared $1M deduction, a non-grantor trust sitused outside Washington can shift that investment income out of the spouses' combined AGI. See Trust Planning for Washington High Earners.
6. Change domicile
The cleanest solution, as with every aspect of ESSB 6346: leave Washington. A dual-earner couple that moves to Texas before the 2028 tax year saves the full $39,600+ per year, every year. For couples in the prime earning decade of their careers, that is a meaningful number. See How to Leave Washington.
Will the legislature fix this?
Marriage penalty design features in state income taxes tend to be durable. The federal government eliminated its marriage penalty on most brackets in 2018, but did so by doubling the brackets entirely — which was revenue-negative and politically expensive. Washington's ESSB 6346 was drafted with one deduction per married couple specifically to maximize revenue. Legislative reversal would cost the state several hundred million dollars per year and would have to find alternative revenue.
Plan on the marriage penalty being a permanent feature of the law unless and until political economy changes.
Takeaways
- Washington's new personal income tax creates a real marriage penalty because the $1M deduction is shared by spouses, not doubled.
- The penalty is largest for dual-earner couples with roughly equal incomes in the $600K–$1M each range.
- A single-earner couple at the same total income pays the same tax either way; marriage is not penalizing.
- Planning options exist — retirement deferral, non-grantor trusts, domicile change — but most cap the damage rather than eliminate it.
- Domicile change is the one option that fully eliminates the penalty for couples willing and able to move.
For the full picture of ESSB 6346, see the Complete Guide. For relocation: How to Leave Washington.
Last reviewed: July 7, 2026. Nothing in this article is legal or tax advice. ESSB 6346 regulations are pending; DOR guidance on allocating the shared $1 million deduction between separate returns has not yet issued.
