Washington State Senate Passes Income Tax, Governor Expected to Sign

For nearly a century, Washington state stood as one of America's most prominent holdouts against income taxation. That era is now over. After a grueling legislative battle that culminated in a record-breaking 25-hour House floor debate, the Washington State Legislature has passed Senate Bill 6346 — a 9.9% tax on household income exceeding $1 million — and Governor Bob Ferguson has pledged to sign it into law [1][2].

The so-called "Millionaires Tax" represents the most significant change to Washington's tax structure since the state adopted its sales tax in 1935. It arrives amid a $2.3 billion budget shortfall, a deeply regressive existing tax system, and a political moment that its supporters describe as long overdue — and its opponents warn could mark the beginning of a fundamental shift that reaches far beyond the state's wealthiest residents [3][4].

A 93-Year Constitutional Battle, Reconsidered

The story of income taxation in Washington is inseparable from the Great Depression. In 1932, Washington voters approved a graduated income tax at the ballot box, only to see the state Supreme Court strike it down the following year in Culliton v. Chase (1933). In a 5-4 decision, the court ruled that income constituted "property" under the state constitution, and therefore any income tax must adhere to the constitution's strict uniformity requirements for property taxes — effectively barring graduated rates [5].

That ruling has stood for 93 years. Every subsequent attempt to impose an income tax in Washington — and there have been many, including ballot measures in 1934, 1936, 1938, 1942, 1944, 1970, 1973, and 2010 — has been defeated either in court or at the ballot box [5][6].

Stripped of the ability to tax income, Washington built its revenue system around sales taxes and the business and occupation (B&O) tax. The result: a tax structure that multiple independent analyses have ranked among the most regressive in the nation, where the lowest-income households pay roughly 17% of their income in state and local taxes while the wealthiest pay less than 4% [7][8].

But the legal terrain shifted in 2023 when the Washington State Supreme Court upheld the state's 7% capital gains tax in a 7-2 decision, classifying it as a constitutionally permissible "excise tax" on the transaction of selling assets rather than a tax on property [9]. Democrats now point to that ruling as a signal that the current court may be willing to revisit the 1933 precedent — a prospect that has emboldened the push for SB 6346.

What the Bill Does

Senate Bill 6346 imposes a 9.9% tax on adjusted gross household income exceeding $1 million per year, with collections beginning January 1, 2028, and the first tax payments due in 2029 [1][2].

The tax is projected to generate approximately $3.7 billion annually and would affect an estimated 20,000 to 30,000 households — roughly 0.5% of Washington's population [10][11].

The bill includes several provisions designed to prevent double taxation and broaden its political support:

• Credits for taxes paid elsewhere: Taxpayers can claim credits for income taxes paid to other states on the same income
• Capital gains tax offset: Amounts paid under Washington's 7% capital gains tax may be credited against the millionaires' tax
• B&O tax credit: Business owners may credit a portion of their business and occupation taxes against their new income tax liability
• Charitable deduction: Taxpayers may deduct up to $100,000 of charitable contributions [10]

Governor Ferguson initially declined to support an earlier version of the bill, demanding amendments that would deliver tangible benefits to working families [12]. The revisions that secured his endorsement included:

• An expansion of the Working Families Tax Credit to reach 460,000 additional households
• Small business tax relief for nearly 140,000 businesses
• Sales tax exemptions for diapers, hygiene products, and over-the-counter medications
• Earmarking 5% of revenue for childcare and early learning programs
• Funding for free breakfast and lunch for all public school students [12][2]

"The key north star was dollars back to the people," Ferguson said in explaining his decision to back the amended bill [2].

The Marathon Vote

The House debate on SB 6346 was extraordinary by any measure. Beginning around 5:30 p.m. on March 9, lawmakers debated continuously for more than 24 hours before the final vote was cast at approximately 6:10 p.m. on March 10 — setting a modern record for the longest unbroken floor session in chamber history [1][13].

Republicans introduced more than 80 amendments, proposing exemptions for farmers, lower tax rates, a higher income threshold of $2 million for couples, and requirements that the measure be put before voters for ratification. Democratic leadership held firm, adopting only a handful of amendments — exemptions for tribal income, libraries, and some healthcare services [13][14].

The final House tally was 51-46, with every Republican voting no and eight Democrats breaking with their caucus to oppose the measure [3][14]. The bill then returned to the Senate for concurrence on the House amendments, where it passed on a party-line vote and was sent to the governor's desk [15].

"As a state, we're struggling to fund these vital services and we are in desperate need of structural tax reform," said Rep. April Berg (D-Mill Creek), the bill's House sponsor [13].

Republicans were blunt in their opposition. "While the title of the bill is a tax on millionaires, it's my belief this is a tax on Washingtonians," said Rep. Joshua Penner (R-Orting) [13]. Rep. Jim Walsh warned that lawmakers risked "chasing the next revolution away" by upending Washington's long-standing tax traditions [14].

Source: GDELT Project

Data as of Mar 12, 2026CSV

The Budget Crisis That Forced the Issue

The Millionaires Tax did not emerge in a vacuum. Washington lawmakers entered the 2026 legislative session staring down a $2.3 billion shortfall in a proposed $79 billion two-year budget. Declining revenue projections — driven by lagging home sales and lower-than-expected collections from sales and capital gains taxes — accounted for roughly $1.7 billion of the gap [16].

Simultaneously, the costs of maintaining current services swelled by approximately $12.6 billion over four years due to inflation, rising caseloads in safety net programs, expansion of early learning, and workforce costs [16].

Governor Ferguson's initial supplemental budget proposal attempted to bridge the gap through $797 million in agency cuts, ending two corporate tax exemptions, redirecting unspent money, and drawing $1 billion from the state's Rainy Day Fund [16]. But the structural mismatch between Washington's revenue streams and its spending obligations — a gap critics have warned about for years — made a broader revenue solution increasingly difficult to avoid.

The state's reliance on sales tax revenue, which accounts for roughly half of all public revenue, makes Washington uniquely vulnerable to economic downturns that depress consumer spending [7].

Where Washington Now Stands Among the States

If the 9.9% rate takes effect as written, Washington's top income tax rate would place it among the higher-taxing states for top earners — though still below California's 13.3% and Hawaii's 11.0%, and roughly comparable to New York's 10.9% [17].

However, Washington's tax would be unusual in its structure: a flat rate applied only above $1 million, with no tax at all on income below that threshold. Unlike most state income taxes, which apply graduated rates across all income brackets, Washington's approach taxes only the state's wealthiest residents.

Washington currently has a median household income of $94,605 — the fifth-highest in the nation, well above the national median and substantially higher than fellow no-income-tax states like Florida ($73,311), Texas ($75,780), and Nevada ($76,364) [18]. The passage of SB 6346 will reduce the number of states without an income tax from nine to eight, leaving Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.

Legal and Political Challenges Ahead

The signing of SB 6346 is almost certainly the beginning, not the end, of the battle over income taxation in Washington. Opponents have telegraphed at least three major avenues of challenge [4][6]:

Constitutional litigation. Critics argue that SB 6346 violates the state constitution's uniformity clause and the 1933 Culliton v. Chase precedent. While the 2023 capital gains tax ruling suggested the current Supreme Court may take a more permissive view of taxation, that decision specifically characterized the capital gains tax as an excise — not an income tax. Whether the court will extend that reasoning to a straightforward tax on personal income remains an open question [9][6].

Initiative 2111. Washington voters passed Initiative 2111 in 2024, which explicitly prohibits the state, counties, cities, and other local jurisdictions from imposing or collecting income taxes [6]. Democrats contend that the legislature can repeal or amend initiatives after two years, which would make I-2111 subject to legislative override in 2026. Republicans argue that overriding a clear expression of voter intent undermines democratic legitimacy.

Ballot referendum. Opponents may attempt to gather signatures to refer the law to voters for a repeal vote. However, the bill includes a clause designating a portion of its provisions as "necessary for the support of the state government and its existing public institutions" — a designation that under state law could shield the measure from referendum [13][4].

The business community has been vocal in its opposition. The Washington Roundtable, the Association of Washington Business, and numerous tech leaders have warned that the tax represents a "seismic shift" that could undermine the state's competitive advantages [3][4]. A billboard truck circled the Capitol building during the debate carrying anti-tax messaging [4].

In one of the most controversial legislative moves of the session, Senate Majority Caucus Chair Bob Hasegawa (D-Tukwila) introduced Senate Bill 6358, which would strip the legal existence of any corporation, LLC, or nonprofit that spent money opposing a ballot measure — while exempting labor unions. The bill drew sharp criticism and highlighted the intensity of the political fight surrounding the tax [19].

Source: U.S. Census Bureau, American Community Survey 2023

Data as of Mar 12, 2026CSV

The Equity Argument

Supporters of the Millionaires Tax frame it as a matter of basic fairness. Under Washington's existing tax structure, a household earning less than $25,000 per year pays roughly 17% of its income in state and local taxes, while a household earning more than $500,000 pays less than 2% [7][8].

"It's going to help feed our people...provide behavioral health. It's going to fill the gaps," said Rep. Lisa Parshley during the House debate [14].

The Institute on Taxation and Economic Policy (ITEP) has historically ranked Washington as having the most regressive tax structure in the nation, though recent changes — including the capital gains tax and property tax adjustments — have modestly improved that ranking [8].

Proponents argue that the Millionaires Tax, combined with the Working Families Tax Credit expansion and sales tax exemptions, represents the most significant step toward tax progressivity in Washington's history.

What Comes Next

Governor Ferguson is expected to sign SB 6346 in the coming days. The tax would take effect January 1, 2028, with the first returns due in 2029 — a timeline designed in part to allow the state to build administrative infrastructure and, potentially, to weather the legal challenges that are certain to come [2][16].

The constitutional question will likely reach the Washington State Supreme Court within a year or two of the law's enactment. If the court upholds the tax — overturning or distinguishing the 93-year-old Culliton precedent — it would not only secure the Millionaires Tax but also open the door for future legislatures to expand the income tax to lower income brackets, a prospect that opponents have warned about from the beginning [6][4].

If the court strikes it down, Democrats may be forced to pursue a constitutional amendment — a path that would require two-thirds supermajorities in both chambers and a vote of the people.

Either way, Washington's tax debate has entered a new phase. The question is no longer whether the state will attempt an income tax, but whether the legal and political system will allow one to stand.