When combined with federal taxes, top earners could face a staggering 57.9% marginal tax rate.
IMPORTANT UPDATE: As os March 3rd, A full House vote is expected soon, possibly within the coming days.
Washington has long stood apart as a no–income tax state. That identity is now under serious challenge.
Despite voters shutting it down completely 2 years ago, Washington State Senators took it upon themselves to keep it OFF the public ballot by voting on February 16, 2026, to pass the “Millionaires Tax” bill. Senate Bill 6346 passed on the Senate floor, moving it to the House of Representatives for further consideration.
The 27-22 vote, which took place on Presidents Day, (a cheeky move to counter the President’s tone on taxes), was brought to the floor before it could go to the people’s vote. This new proposal would impose a 9.9% income tax on earnings above $1 million. Supporters call it a “millionaire’s tax.”
Bill Details: Senate Bill 6346, sponsored by (D) Senator Jamie Pedersen, is designed to fund schools and health care while changing the state’s tax structure.
Critics warn: it would give Seattle the highest combined state and local top income tax rate in the nation—more than 18% before federal taxes are even considered. And, don’t forget that taxes like this never stay at the intended bracket of income.
WA residents also argue, the state should do better with proper spending habits, as there have been many Recent Tax Increases in WA State in the last decade alone.
If enacted, the measure would represent a historic shift in Washington’s tax structure—and it comes just two years after voters rejected a broader income tax proposal at the ballot box.
The Highest Local Top Rate in the Country?
Under the proposal, high earners in Seattle would face a combined state and local marginal rate of 18.037% on wage income and restricted stock units (RSUs).
For comparison:
- Seattle, WA (proposed): 18.037%
- New York City, NY: 14.776%
- Portland, OR: 14.7737%
- California (statewide): 14.6%
That would put Seattle at the top of the list nationwide.
When you include federal income tax (37%) and the 2.9% Medicare tax, the total marginal rate would approach 57.9% for affected taxpayers.
What’s Already on the Books?
Washington is no longer entirely income-tax free.
The state already imposes:
- A 9.9% capital gains tax on gains above $1 million
- A 0.58% WA Cares payroll tax
- A 1.13% Paid Family & Medical Leave tax (capped at the Social Security wage base)
The City of Seattle Taxes add:
- The JumpStart Payroll Expense Tax (up to 2.557%)
- A 5% Social Housing Tax on income above $1 million
Although payroll taxes are technically remitted by employers, economists widely agree they are ultimately borne by employees through lower wage growth and compensation adjustments.
Layer a new 9.9% income tax on top of this structure, and Seattle’s combined top rate becomes the highest in the country.
Who Would Actually Pay This Tax?
Despite the “millionaire” label, very few Washingtonians earn $1 Million purely in salary, however the legislators were asked to put it into law that it would be capped to no one making under $1 Million, and legislators wouldn’t sign it in to law. This opens up the door for any income to be taxed down the road.
For high-income filers in Washington, income typically comes from:
- Capital gains (31.8%)
- Wages and RSU vesting (28.0%)
- Interest and dividends (19.1%)
- Pass-through business income (18.7%)
This matters because much of the tax burden would fall on:
1. Tech Employees Receiving RSUs
Washington’s economy is heavily driven by companies like Amazon and Microsoft, along with hundreds of startups.
Restricted Stock Units (RSUs) are a major component of compensation in the tech sector. When those shares vest, they count as ordinary income.
Here’s the catch: RSU income can be “lumpy.”
At startups, employees often receive “double-trigger” RSUs that vest all at once upon an IPO or acquisition. Someone could work five years earning far less than $1 million annually—then suddenly have $1 million+ in income in a single year when the company goes public.
Under the proposed tax, that one-time event would trigger the 9.9% surcharge.
2. Small Business Owners
Washington has more than 670,000 small businesses employing nearly half the state’s workforce.
Many are structured as pass-through entities, meaning profits are taxed on the owner’s personal return. A 9.9% state income tax on top of Washington’s existing Business & Occupation (B&O) gross receipts tax would significantly increase the effective tax burden on entrepreneurs.
Critics argue this creates a “worst of both worlds” system:
- High business taxes
- Plus a new high-rate personal income tax
Didn’t Washington Voters Reject an Income Tax?
Yes. One of the hugest, complete and utter ‘REJECTIONS’ by voters in WA state history.
In 2024, Washington voters rejected Initiative 2109, which sought to repeal the state’s newly enacted capital gains tax. That vote came after years of political and legal battles over whether income taxes are permissible under the state constitution.
Historically, Washington voters have rejected income tax proposals multiple times at the ballot box. The state constitution has long been interpreted as prohibiting a graduated income tax without constitutional amendment.
The current proposal, however, is moving through the Legislature rather than being referred to voters.
How Was This Advanced Legislatively?
The proposal is being introduced and debated within the Washington State Legislature, where Democrats hold majorities in both chambers. Unlike a citizen initiative, a tax bill requires:
- Majority approval in the Washington House of Representatives
- Majority approval in the Washington State Senate
- The governor’s signature
Governor Bob Ferguson has publicly expressed support for exploring a 9.9% tax on income above $1 million.
Notably, while some supporters have floated the idea of a constitutional amendment to prohibit taxes below $1 million, such an amendment would require a two-thirds legislative vote and voter approval statewide. As of now, the income tax proposal itself does not automatically go to voters unless lawmakers choose to refer it or a citizen referendum qualifies for the ballot.
Slippery Slope Concerns
Many states originally enacted income taxes only on high earners. Over time, those taxes broadened.
Opponents argue that once the constitutional barrier is lowered—or judicial interpretations shift—future legislatures could expand the tax downward.
Even Governor Ferguson has acknowledged the constitutional debate by suggesting a possible amendment to protect incomes below $1 million, though such a safeguard has not been formally tied to passage of the tax.
Economic Impact: Risk to Washington’s Competitive Edge
Washington’s lack of a traditional income tax has long been a competitive advantage—especially in attracting tech talent and entrepreneurs.
High-growth firms and mobile professionals have options. States like Texas and Florida levy no state income tax. If Washington imposes one of the highest top marginal rates in the country, critics warn that:
- Future expansions may occur elsewhere
- Startups may relocate
- High earners may change residency
- Investment may shift out of state
For a state heavily dependent on innovation-driven growth, even marginal changes in tax competitiveness can have outsized effects.
The Bigger Question
At its core, this debate isn’t just about a 9.9% tax.
It’s about whether Washington is fundamentally redefining its tax identity.
For decades, Washington operated without a traditional income tax. Voters have repeatedly expressed skepticism toward income taxation. Yet policymakers are increasingly turning to progressive income-style taxes to fund housing, climate initiatives, and social programs.
Whether this proposal passes or not, one thing is clear:
Washington’s tax debate is far from over.
How to Take Action: Stop the Washington “Millionaire’s Tax” (SB 6346)
The proposed “Millionaire’s Tax” (SB 6346) is moving quickly through the Washington State Legislature. If you want to ensure your voice is heard and help turn this bill down before the session ends on March 12, here is exactly how you can take action right now.
1. Register Your Official Opposition (The “Sign-In”)
The most critical step is to get your name on the official legislative record. You can “sign in” as opposed to the bill without having to testify in person.
- Where to go: Washington State Legislature Committee Sign-In Portal
- What to do: Select “Senate” or “House” (depending on the current committee hearing), find SB 6346, and select “I would like my position noted for the legislative record.”
- Select Position: Choose “CON” to officially register your vote against the tax.
2. Contact Your Local Representatives
Your district’s representatives need to know that their constituents oppose this measure.
- Call the Hotline: Dial 1-800-562-6000. You can leave a brief message for your Senator and both House Representatives at once. Tell them you are a constituent and you want them to vote “No” on SB 6346.
- Send an Email: Use the Legislative Member Email Form to send a personalized message. Focus on how this tax might impact local investment or small businesses.
3. Testify in Committee
If you want to share your specific story, you can sign up for remote or in-person testimony.
- Sign up via the same CSI Portal used for signing in.
- Keep your comments brief (usually 1–2 minutes) and focused on the economic risks of the bill.
4. Support Organized Efforts
Join the groups currently leading the ground game against the tax to stay updated on rallies and new developments:
- NFIB Washington: Active in representing small business owners against this legislation.
- Let’s Go Washington: Focused on mobilizing voters to stop income-related taxes.
- Online Petitions: Sign and share the Stop Washington’s Millionaire Tax petition to help build public momentum.
Time is short. The legislative session is scheduled to adjourn on March 12, 2026. Because this bill includes a “necessity clause” that may prevent a future public referendum, the most effective time to stop it is now, while it is still on the floor.
Read the Guide to Oppose SB6346 From Expanding
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