Democratic legislative leaders are finally releasing their long-anticipated proposal to impose an income tax on Washington's wealthiest residents.
The bill, to be formally introduced this week in the state House and Senate, would impose a 9.9% tax on people earning more than $1 million a year, according to a draft of the final legislation and a summary circulated over the weekend and obtained by The Seattle Times.
In return for the new tax aimed at high earners, the bill would cut some other taxes for people and small businesses, including eliminating the sales tax on personal hygiene products.
Democratic leaders are expected to discuss the proposal at a news conference Tuesday in Olympia. A public hearing is expected later this week.
The measure's introduction will kick off what is sure to be a heated debate — and probable legal challenges and ballot fights — over creating an income tax in Washington, which is one of nine states that does not levy one.
We have an opportunity to improve our tax code by making it fall less heavily on both low-income people and on businesses that create jobs. This is an opportunity to do both of those things," said Rep. Joe Fitzgibbon, D-West Seattle, the House Majority Leader, in an interview Monday.
Fitzgibbon is the proposal's lead sponsor in the state House. The Senate bill's chief sponsor is Senate Majority Leader Jamie Pedersen, D-Seattle.
The bill, which Democrats have dubbed a "millionaires tax," would begin taxing income earned in 2028, with the first taxes due in April 2029, according to the summary. It's expected to generate more than $3 billion annually, according to estimates by supporters, though a formal fiscal analysis on the bill has not been released. The tax would apply to roughly 20,000 households in the state.
The legislation aligns broadly with what Democratic lawmakers have publicly described in recent weeks. But the bill text and summary fill in details on how the money would be spent — and what exemptions and tax breaks are offered to offset the new tax aimed at the well-off.
Most of the money generated would go into the state general-fund budget, with a 5% slice dedicated to a new fund to help counties cover rising public defender costs.
The billions in new funding is intended "to maintain and preserve essential government services for Washingtonians, particularly within K-12 education, health care, higher education, and human services," according to the final bill draft.
The tax would only be owed on income of more than $1 million a year, a threshold that would be adjusted annually for inflation based on the Seattle consumer price index. People earning less than that would owe nothing and would not have to file tax returns.
The proposal includes a $50,000 charitable deduction and various credits for other taxes paid, including the state's capital gains tax.
The tax would also apply to people who work in the state only part-time, including visiting professional athletes, based on the income earned while in Washington.
It also includes enforcement provisions, making knowingly evading the new income tax a class C felony, punishable by five years in prison and a $10,000 fine.
While most of the bill deals with imposing the new high-earners income tax, it also lays out a few tax cuts.
The proposal would eliminate the sales tax on personal grooming and hygiene products, such as shampoo, soap and toothpaste, starting in 2029.
It would double the state tax credit for small businesses, exempting firms with gross receipts of less than $250,000 from the state business and occupation tax. It would end a .5% surcharge lawmakers added last year on corporations with more than $250 million in taxable state income a year early, on Dec. 31, 2028.
The bill also would also fund and expand the state's Working Families Tax Credit, which sends annual rebates of up to $1,330 to lower-income families.
Many Democrats and progressive activists have long criticized Washington’s sales-tax reliant tax system for placing a relatively higher burden on poorer residents, while leaving the wealthy comparatively untouched.
Despite such disparities, Washington voters have repeatedly rejected income tax proposals over the years. Most recently, they overwhelmingly voted down a 2010 initiative that would have created an income tax starting at 5% for annual incomes of more than $200,000, while lowering other state taxes.
But since that vote, the state has leaned ever more liberal and Democratic, and supporters of the new bill have cited polling they say shows more voters now support revamping the state's tax code.
The proposal contains no provision for a public vote, though opponents have vowed to seek one. They've also promised legal challenges, pointing to a 1930s Supreme Court decision which struck down a graduated state income tax as unconstitutional.
Last month, Gov. Bob Ferguson threw his support behind the millionaires tax, pledging to sign the proposal if it reaches his desk, as long as it's paired with tax cuts for less well-off Washingtonians.
With Democrats in solid control of both chambers in the Legislature, top lawmakers and the governor have predicted the proposal is likely to pass this year.
Republicans have slammed the proposal, saying the state's fiscal problems are due to overspending, not a lack of tax revenue. Facing a multibillion dollar shortfall, Democrats last year passed a budget plan that included more than $9 billion in higher taxes over four years. This year, lawmakers are staring at another shortfall, estimated at $2 billion.
Critics also warn that Democrats could expand the tax on the wealthy to include more and more Washingtonians in future years.
"Do the Democrats who run Olympia think Washingtonians are fools?" said Senate Republican Leader John Braun, R-Centralia, in a recent commentary predicting what might start as a tax on the wealthy will inevitably become "an income tax on everyone.
The tax proposal is arriving as the 2026 legislative session nears its first cutoff deadlines for bills to clear committee votes.
To stay alive, proposals must pass policy committees by Feb. 4, while fiscal-related bills have a committee-vote deadline of Feb. 9. The 60-day session is scheduled to adjourn March 12.
As of Monday evening, the bill's text had not been posted on the Legislature's website. But the Senate version, Senate Bill 6346, listed 26 Democratic co-sponsors before its formal release.
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