Washington State’s Novel Millionaire Tax Signed Into Law by Governor

Washington has adopted its first income tax after Gov. Bob Ferguson (D) signed into law Monday a bill that applies a 9.9% levy on the roughly 30,000 taxpayers in the state who make more than $1 million a year.

The measure, dubbed the millionaires’ tax, will likely be challenged quickly in court and at the ballot box, as have previous legislative attempts to institute an income tax in the state. Lawmakers are hoping the narrow scope of this law will help it survive those challenges.

The legislation creating the tax cleared the legislature March 11.

Opponents, including several business groups, have expressed concern that the tax will make the state less competitive compared to other parts of the US. But proponents have pointed to Washington’s regressive tax structure and budget issues as signs that an income tax is needed. Washington was one of nine states in the country without an income tax.

“This is truly a historic step forward on re-balancing our tax code. It’s the right thing to do for Washington’s working families. It’s the right time to do it, and it’s the right policy,” Ferguson said in a press conference before signing the bill.

The new tax is set to take effect in 2029.

The legislation also institutes an array of tax breaks intended to help low-income families and small businesses.