Washington State Enacts First-Ever Income Tax

New 'Millionaires Tax' Signed Into Law, Faces Legal Challenges

Mar. 30, 2026 at 8:36pm

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A vibrant, abstract painting featuring overlapping geometric shapes and waves of deep blue, forest green, and metallic gold, conceptually representing the political and economic forces surrounding the new income tax law in Washington state.The new 'millionaires tax' law in Washington state has sparked a political and legal battle over the role of taxation and government spending.Olympia Today

Washington Governor Bob Ferguson has signed into law a new income tax that will apply to the state's highest earners making over $1 million annually. The 9.9% 'Millionaires Tax' is expected to fund various initiatives aimed at supporting lower and middle-income families and small businesses, though the law faces an uphill legal battle from Republican opponents.

Why it matters

This marks a historic shift for Washington, which has long been one of the few states without any form of income tax. The new tax is intended to make the state's tax system more progressive, but critics argue it is unconstitutional and will face legal challenges that could ultimately end up before the state Supreme Court.

The details

The new tax will only apply to individuals earning over $1 million per year, including through dual-income households. It is expected to generate significant revenue, with 41.3% going directly back to Washington families and small businesses in the first year through initiatives like free school meals, expanding the Working Families Tax Credit, reducing small business taxes, and eliminating sales tax on essential items like diapers and hygiene products.

  • The new tax will take effect on January 1, 2028.
  • Taxpayers will have until April 2029 to remit payment.

The players

Bob Ferguson

The Governor of Washington who signed the new 'Millionaires Tax' into law.

The Citizen Action Defense Fund

A group that has already filed a lawsuit challenging the new tax as unconstitutional under state law.

Rob McKenna

A former Washington state Attorney General who has criticized the new tax as an unconstitutional 'progressive income tax'.

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What they’re saying

“It's been a long journey to get here, but because of the hard work of so many folks, it's a historic day for Washingtonians.”

— Bob Ferguson, Governor of Washington

“If the State proceeds with the new income tax, it will create a direct conflict with binding precedent and the constitutional protections that safeguard taxpayers. We are preparing to challenge the tax in court.”

— Rob McKenna, Former Washington State Attorney General

What’s next

The state GOP has pledged to launch an initiative to repeal the tax on the November 2028 ballot, which would require gathering over 300,000 signatures by July 2028. Additionally, several lawsuits challenging the tax's constitutionality are already in the works and expected to make their way to the state Supreme Court.

The takeaway

Washington's new 'Millionaires Tax' represents a significant shift in the state's tax policy, but it faces an uphill legal battle from Republican opponents who argue it is unconstitutional. The outcome of these legal challenges could have far-reaching implications for the state's fiscal future and the ongoing debate over progressive taxation.