Washington state lawmakers passed a 'millionaires tax' on Wednesday, imposing a 9.9% tax on income over $1 million for individuals or couples in a household [1]. The State Senate approved the measure with a day left in the 2026 legislative session, following a contentious 24-hour debate in the State House [1]. The bill is expected to impact 21,000 residents and aims to address the state's multi-billion dollar budget deficit, as well as fund programs to improve affordability for working families and small business owners [1]. The legislation is scheduled to take effect on January 1, 2028, with tax payments beginning in 2029 [1].
Governor Bob Ferguson, who has supported the measure, stated that the bill 'represents historic progress in rebalancing our unfair system' and will 'send significant dollars back to Washington families and small businesses' [1]. He emphasized that the tax will apply to less than one half of one percent of Washingtonians but will make life more affordable for millions, including funding free breakfast and lunch for all K-12 students in the state [1].
A Tax Foundation analysis indicated that the proposed tax would result in a top rate of more than 18% on wage income and restricted stock units (RSU) vesting in Seattle, making it the highest rate in the United States [1]. Washington state currently has 695,695 small businesses and nearly 360,000 employees in technology-related jobs, according to the Small Business Administration and Washington State Department of Commerce [1].
Critics have raised concerns that the aggressive tax could lead to an exodus of high-income earners and damage Washington's economy. Jared Walczak, a senior fellow at the Tax Foundation, warned that the tax could drive expansion and existing jobs to other states, particularly affecting the tech sector, which is already subject to high business taxes [1]. Republican lawmaker Andrew Barkis argued that if major companies like Starbucks or Boeing reduce their presence in Washington, high-paying jobs will leave the state [1]. Former Starbucks CEO Howard Schultz announced that he and his wife are moving from Seattle to Florida, citing the tax as a factor [1].
CONCLUSION
Washington's passage of the millionaires tax marks a significant policy shift, with substantial implications for high-income earners and the state's tech sector. While supporters highlight its potential to address budget deficits and improve affordability, critics warn of possible wealth flight and economic harm. The market impact is expected to be high, particularly for affected industries and residents.