Washington Passes Sweeping Tax Code Overhaul, Not Just 'Millionaires' Tax'

New legislation lays groundwork for expanded income tax, affecting residents and businesses beyond just high-earners

Published on Mar. 9, 2026

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Washington state Democrats have passed a new tax package, ESSB 6346, that goes far beyond a simple 'millionaires' tax'. The bill rewrites the state's entire tax code, creating a new Washington taxable-income base tied to federal adjusted gross income and adding a web of state-specific additions, subtractions, deductions, exemptions, credits, sourcing rules, and administrative regulations. Critics argue this lays the groundwork for an expansive income tax regime that will impact a wide range of residents, workers, and businesses, not just the wealthy.

Why it matters

The tax overhaul is seen as a precursor to a broader income tax in Washington, which has long resisted such a measure. By building out the tax infrastructure, Democrats are positioning the state to eventually expand the tax base beyond just high-earners. This raises concerns about businesses and residents leaving the state due to the unstable, punitive, and ideologically-driven tax code.

The details

The headline provision of ESSB 6346 is a new tax on high-income households making over $1 million. However, the bill goes much further, rewriting Washington's entire tax code to create a new taxable-income base tied to federal adjusted gross income. It then layers in a complex web of state-specific additions, subtractions, deductions, exemptions, credits, sourcing rules, apportionment formulas, pass-through entity taxes, and administrative regulations. Critics argue this is not a simple rate increase, but a comprehensive overhaul that lays the groundwork for an expansive income tax regime that will impact a wide range of residents, workers, and businesses beyond just the wealthy.

  • The tax package, ESSB 6346, was passed by the Washington state legislature in March 2026.
  • Governor Bob Ferguson announced he would sign the legislation in early March 2026.

The players

Bob Ferguson

The Democratic governor of Washington state who announced he would sign the tax overhaul legislation.

Washington State Democrats

The majority party in the Washington state legislature that pushed for and passed the sweeping tax code rewrite.

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What they’re saying

“This isn't just a 'millionaires tax' bill. It's a rewrite of the entire tax code to pave the way for an income tax.”

— Ari Hoffman, Commentator (Twitter)

What’s next

The new tax code overhaul is expected to take effect in the coming fiscal year, setting the stage for potential legal challenges and continued political debate over the scope of the changes.

The takeaway

The Washington tax code rewrite goes far beyond a simple 'millionaires' tax', laying the groundwork for an expansive income tax regime that could impact a wide range of residents, workers, and businesses in the state. This raises concerns about an unstable, punitive, and ideologically-driven tax system that could drive businesses and residents to leave Washington.