Washington State Passes New Income Tax Bill

Democratic lawmakers in Washington have approved a bill that imposes a 9.9% income tax on individuals earning over $1 million annually.

This new tax was ratified after more than a day of deliberation and is projected to raise around $4 billion each year. The funds generated will primarily support childcare initiatives and will also exempt certain sanitary products from sales tax.

Governor Bob Ferguson expressed his support for the legislation, indicating he intends to sign it. He believes this move could help make life more affordable for residents.

“This proposal builds on previous progress, including sales tax exemptions for necessary items like diapers and hygiene products, along with significant business tax cuts,” he noted, referencing changes made last week after the proposal was revised.

He added, “The current proposal would extend the Working Families Tax Credit to an additional 460,000 households, directly benefiting working families. Qualifying households could receive state checks ranging from $300 to $1,300. The revised legislation removes the age limit for the program and expands eligibility to any household earning below the state’s defined living wage.”

The law is set to take effect on January 1, 2028, with tax payments beginning in 2029. Approximately 21,000 residents are anticipated to be impacted by this tax.

State House Minority Leader Joe Fitzgibbon described the new tax law as a response to the state’s outdated taxation system. Currently, Washington is one of only nine states without personal or corporate income taxes.

“Reaching this point has been a lengthy process—not just the 24 hours spent debating this specific proposal, but over the past 93 years when Washingtonians have struggled with an ineffective tax system that disproportionately affects lower-income earners,” Fitzgibbon remarked.

Opponents of the tax argue that introducing an income tax after so many years could drive wealthy residents out of the state and negatively impact the economy.

Republicans in Washington resisted the bill, seeking to amend it to require voter approval.

“Washington residents deserve to understand the contents of this bill, including what it lacks, and they should have a say in it,” stated State Representative Peter Abano.

Notably, voters have rejected ten income tax proposals over the years, with the most recent attempt occurring in 2010.

In related news, former Starbucks CEO Howard Schultz, valued at around $3.5 billion, announced during the debate that he is relocating to Florida. Starbucks, a well-known coffee chain founded in Seattle, recently revealed plans to open a new office in Nashville and is also considering relocating some of its Seattle employees.

As it stands, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming are the only states without income tax.