Washington’s Newly Minted Millionaire Tax Challenged as Unlawful

Washington state’s income tax on high earners met its first court challenge alleging it’s an illegal tax on property Thursday, two weeks after its enactment.

“Washington state can have an income tax if it follows the rules for property taxes,” said Orrick, Herrington & Sutcliffe LLP partner Rob McKenna, who filed the suit on behalf of affected citizens and business groups.

“It has to be uniform and no higher than 1%" under a series of state supreme court rulings, the former Washington attorney general said at a press conference.

Gov. Bob Ferguson (D) signed the 9.9% levy on about 30,000 taxpayers who make more than $1 million a year into law March 30. The measure, referred to as the millionaires’ tax, strikes Washington from the list of states without an income tax, leaving just eight.

The graduated income tax structure violates the state constitution’s requirement that taxation be uniform across those in the same class, according to the complaint filed in Washington Superior Court, Klickitat County. State law also bars taxing property, which has long been defined to include income, the challengers argued.

“Voters have expressed strong, clear preferences for the existing law for many, many decades,” McKenna said.

The case’s implications go beyond a tax on the wealthy because upholding the millionaire’s tax could open the door to income taxes that apply to everybody, he said.

Opponents have argued that the tax will make Washington less competitive than other states and will prompt high earners to flee the state. But proponents point to Washington’s regressive tax structure and budget issues to argue that the tax—predicted to raise almost $4 billion a year—is necessary.

Another legal challenge seeking to put the tax before voters is currently pending before the Washington Supreme Court.

Lawmakers are hoping the narrow scope of this law will help it survive both attacks.

The levy will apply beginning in 2028 with the first taxes due in 2029.

Citizen Action Defense Fund and Talmadge/Fitzpatrick also represent the challengers.

The case is Petter v. State, Wash. Super. Ct., docket number unavailable, complaint filed 4/9/26.