Washington State Approves Millionaires Tax

New 9.9% tax on income over $1 million expected to raise $3-4 billion annually for schools and social services

Mar. 12, 2026 at 3:53pm

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The Washington state legislature has passed a new tax on annual income over $1 million, which is expected to generate $3-4 billion per year for the state's general fund. The tax, which was approved largely along party lines, will be used to fund K-12 education, higher education, and human services programs. The measure also includes provisions to expand the Working Families Tax Credit and eliminate sales tax on certain essential items.

Why it matters

This new 'millionaires tax' is seen as a way to improve equity and fund critical public services, but opponents argue it could drive wealthy residents to leave the state. The debate over taxing the rich has been ongoing in Washington, and this legislation represents a major development in the state's efforts to generate more revenue from high-income earners.

The details

The new 9.9% tax will apply to annual income over $1 million and is projected to affect between 20,000 and 30,000 households in the state. In addition to funding education and human services, a portion of the revenue will be earmarked for child care and early learning programs. The bill also includes provisions to expand the Working Families Tax Credit and eliminate sales tax on diapers, over-the-counter medications, and basic hygiene items.

  • The new tax is set to take effect and start generating revenue in 2029.
  • The state Senate approved the bill on Wednesday, March 11, 2026.
  • The state House of Representatives passed the bill on Tuesday, March 10, 2026.

The players

Bob Ferguson

The governor of Washington state, who has said he plans to sign the millionaires tax bill into law.

Howard Schultz

The former CEO of Starbucks, who recently announced he is leaving Washington state and moving to Florida, which opponents of the tax cite as an example of the potential for wealthy residents to flee the state.

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What’s next

Opponents are already preparing lawsuits and possible ballot measures to try to kill the millionaires tax before it takes effect in 2029.

The takeaway

This new tax on high-income earners in Washington state represents a significant shift in the state's approach to funding public services and addressing income inequality. While supporters see it as a way to improve equity, opponents warn it could drive wealthy residents out of the state, setting up a contentious legal and political battle in the years ahead.