ESSB 6346 — Washington's new income tax law — is enacted, scheduled to take effect January 1, 2028, and faces a constitutional challenge in court. If your wealth is built around Washington and you don't want to fund it through Olympia, the window to plan is now, not in 2027.
A note before you book: please share only the names of the parties and a brief, non-confidential description of your issue. Confidential details should wait until we’ve completed a conflicts check and signed a written engagement agreement.
Where the law stands today
- Enacted. ESSB 6346 passed the legislature in 2026 and was signed into law.
- Referendum blocked. The Washington Supreme Court unanimously ruled the referendum effort could not proceed.
- Constitutional challenge pending. A lawsuit by the Citizen Action Defense Fund (the McKenna-Talmadge action) is now the only legal path to stop the law before it takes effect.
- Effective date: January 1, 2028. That is the date the income tax begins applying — not the date to start planning.
- What it does: imposes a state income tax structure aimed at high earners and certain capital events, with provisions including a marriage threshold that creates a real planning issue for high-earning couples and a duty-day apportionment regime that affects professional athletes and other multi-state earners.
I've been writing about ESSB 6346 since the bill was introduced — the builders tax framing, the WA Supreme Court ruling on the referendum, the AGO public records, and the constitutional path. This page is the service version: what I do for people who want a plan, not just commentary.
Who actually needs to plan
| Situation | What planning looks like |
|---|---|
| Founder approaching liquidity (M&A, secondary, IPO in next 1–3 years) | Domicile change strategy timed to the transaction; QSBS coordination |
| High-income W-2 earner (engineers, executives, professionals) | Residency planning, deferred comp timing, possible relocation |
| Married couple at the high-income threshold | Marriage penalty analysis; filing-status and entity strategies |
| Wealth holder considering a trust strategy | Non-grantor trusts, situs questions, and the constitutional landscape |
| Professional athlete or multi-state earner | Duty-day apportionment analysis under the new regime |
| Not sure if you're exposed | Diagnostic call to map your facts against the statute |
What I do
- Diagnostic memos — a written analysis of your specific exposure under ESSB 6346, with a recommended plan
- Domicile change strategy — timing, documentation, and execution for moving residency before 2028 (or before a liquidity event)
- Trust and entity structuring — non-grantor trusts, situs planning, and entity choice for income shifting
- QSBS coordination — for founders, integrating Section 1202 planning with WA tax planning so the two don't undercut each other (see QSBS attestation services)
- Pre-transaction planning — timing a sale, secondary, or exercise to minimize exposure
- Litigation watch advisory — for clients whose plan depends on whether the constitutional challenge succeeds, ongoing updates as the case progresses
How I price it
Engagements vary widely depending on the work. Common ranges:
- Diagnostic memo: flat fee, typically $2,500–$5,000
- Full domicile change plan with execution support: $10,000–$25,000
- Trust/entity restructuring: scoped after diagnostic, typically $15,000+
- Ongoing advisory retainer: monthly, for clients with complex exposure or pre-liquidity timing
I'll quote a flat fee or retainer scope after the intake call.
Why hire me for this
- I'm the public voice on ESSB 6346. Builders-tax framing, GeekWire op-eds, X and LinkedIn analysis, the constitutional path, the marriage penalty issue, the duty-day apportionment problem — I've been first or near-first on every angle of this law.
- I've been working on WA state tax issues for 25+ years, including the 2023 Quinn v. State litigation and the original drafting of the equity crowdfunding law.
- LL.M. in Taxation (NYU) — actual tax credentials, not just startup-lawyer credentials.
- I coordinate with QSBS planning. Most WA founders looking at this also have Section 1202 stock. Treating them as one problem instead of two saves money and avoids contradictory advice.
Process
- 20-minute intro call. I scope the situation and quote a fee.
- Document request. Recent returns, current residency facts, liquidity timeline, family structure.
- Diagnostic memo or plan delivered in 2–4 weeks.
- Execution support as needed — coordinating with CPAs, wealth managers, and counsel in your destination state.
FAQ
Is there a Washington state exit tax?
Not yet. ESSB 6346 is enacted but doesn't take effect until January 1, 2028, and it faces a pending constitutional challenge. The popular shorthand "exit tax" is somewhat misleading — the law is a state income tax structure with provisions that effectively create an exit-tax-like dynamic for some asset holders and high earners.
Do I have to pay the Washington exit tax if I move out of state?
The answer depends on when you change domicile, where your income is sourced, and what the final implementing regulations look like. Planning the timing and documentation of a move is the central question for most people who call me about this.
When does the Washington exit tax take effect?
January 1, 2028. That is the effective date of the income tax provisions of ESSB 6346.
Can the Washington exit tax be blocked before then?
Possibly. The referendum path was foreclosed by a unanimous Washington Supreme Court ruling. A constitutional challenge brought by the Citizen Action Defense Fund (the McKenna-Talmadge action) is now the only remaining legal path. I track this litigation closely and advise clients on planning that works in either outcome.
Should I move out of Washington now to avoid it?
That is a personal decision driven by your facts, your timing, and your willingness to bet on (or against) the constitutional challenge. The point of the diagnostic call is to give you a clear picture so you can decide — not to push you toward a specific answer.
Do you also handle QSBS for the same client?
Yes. WA tax planning and QSBS Section 1202 planning interact in ways that matter — particularly for founders timing a liquidity event. I handle both, and clients save time and money by not coordinating across firms.
Book a 20-minute call → | wallin@carneylaw.com