Washington now has a new state income tax on the books. Governor Bob Ferguson signed Senate Bill 6346 into law on March 30, 2026, creating a 9.9% tax on individual or household income exceeding $1 million per year. If your income puts you in that range or if you expect it to by 2028, here’s what to know now, well ahead of the effective date.
When It Takes Effect
The tax doesn’t start until January 1, 2028, with the first payment and filing deadline in April 2029. That gives households time to plan and the earlier you start, the more options you’ll have.
What It Taxes—and What It Doesn’t
This is an income tax, not a wealth tax. It applies to yearly taxable income, not financial assets or net worth. It’s based on federal adjusted gross income with a few key adjustments: federal long-term capital gains are removed from the calculation, and only gains already subject to Washington’s existing capital gains tax are added back in. A credit is available for capital gains tax already paid, so there’s no double taxation on the sale of stocks, bonds, or other financial assets.
Notably, gains from the sale of a home or business aren’t subject to this tax, and real estate or long-term capital assets already exempt under Washington’s capital gains rules stay exempt here too.
Who It Applies To
Washington residents owe the tax on their full “Washington taxable income.” Non-residents owe it only on the portion of income connected to or derived from Washington, unless they qualify for a 5-day safe harbor rule or another explicit exclusion.
The Standard Deduction
Every household gets a $1 million standard deduction regardless of filing status, so income below that threshold isn’t touched. The deduction is indexed for inflation using the Consumer Price Index, with updates each October in odd-numbered years—so the exact threshold will drift upward over time.
Two More Planning Notes
Charitable giving: Households can deduct up to $100,000 per year in gifts to qualified Washington nonprofits.
Federal deduction: If you itemize, any Millionaires’ Tax liability you pay is deductible on Schedule A of your federal 1040, subject to the SALT limitation.
Where the Money Is Going
The state expects the tax to generate roughly $3.5 billion a year, earmarked for expanding the Working Families Tax Credit, doubling the small business B&O tax credit, K-12 education and childcare programs (including free school meals and Fair Start for Kids accounts), various sales tax changes, and general fund programs.
What This Means for You
2028 feels far off, but decisions made well before then around income timing, capital gains realization, and charitable giving can meaningfully change your tax picture. If your household income is approaching or exceeding $1 million a year, now’s a good time to start modeling what this looks like for you.
Have questions about how the Washington Millionaires’ Tax might affect your household? Our team is here to help you plan ahead. Reach out to schedule a conversation.