Washington Small Businesses Fear New 'Millionaires Tax'

Owners say the state's new tax on high-income earners could hurt their ability to reinvest in their companies.

Apr. 5, 2026 at 9:58am

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Business owners in Washington state are expressing concerns about the state's new 'millionaires tax' that will impose a 7% tax on high-income individuals and couples. Small business owners fear the tax will limit their ability to reinvest profits back into their companies, hampering growth and job creation.

Why it matters

The new tax is part of a broader effort by Washington state to increase funding for education and social services, but small business advocates argue it could undermine the state's economic recovery by discouraging investment and entrepreneurship.

The details

The 'millionaires tax' will apply a 7% tax on individuals with annual income over $1 million and couples filing jointly with income over $2 million. Supporters say the tax will generate hundreds of millions in new revenue, but small business owners worry it will make it harder for them to expand their operations, hire new workers, and make critical investments.

  • The new 'millionaires tax' was passed by the Washington state legislature in March 2026 and will take effect on January 1, 2027.

The players

Washington State Legislature

The state's legislative body that passed the new 'millionaires tax' law.

Small Business Owners in Washington

Business owners in the state who are concerned the new tax will limit their ability to reinvest in their companies.

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What they’re saying

“This tax is going to make it really hard for us to grow our business and create new jobs. We're already dealing with inflation and supply chain issues - this is just another obstacle we have to overcome.”

— Sarah Johnson, Owner, Johnson's Hardware Store

“The state says this is about fairness and funding important programs, but for small businesses like mine, it's going to mean tough choices about investments and hiring.”

— Michael Chen, Owner, Chen's Accounting Services

What’s next

The new 'millionaires tax' is scheduled to take effect on January 1, 2027. Small business groups in Washington have indicated they may challenge the law in court, arguing it unfairly targets entrepreneurs and job creators.

The takeaway

The debate over Washington's 'millionaires tax' highlights the ongoing tension between the need for new revenue sources and the concerns of small business owners about the impact of higher taxes on their ability to invest and grow. As the state seeks to fund education and social services, it will need to balance those priorities with supporting a vibrant small business community.