Washington State’s Upcoming Income Tax
Seattle — In 2028, Washington state is set to introduce a 9.9% income tax, often referred to as the “millionaire tax,” targeting individuals or households earning over $1 million annually, assuming all hurdles are cleared. Critics argue that such a tax is unnecessary.
“It will only hurt our state,” said Ryan Frost, who heads budget and tax policy at the Washington Policy Center. “Every state that has implemented high-income taxes has seen a decline in state wealth in the last ten years.”
Frost draws comparisons with other states.
“The millionaire tax in Massachusetts was a huge failure,” he noted.
In contrast, Massachusetts already had a flat income tax before voters approved an additional 4% for high earners. However, Massachusetts Senator Jason Lewis, one of the architects behind the millionaire tax, reported, “I would say it’s been more successful than we expected.”
The state saw an extra $2.4 billion in tax revenue for fiscal year 2024, which increased to $3 billion in 2025. Lewis emphasized that the tax has made the state more affordable and has drawn in younger residents.
“I think we effectively utilized these proceeds, making significant advancements on public objectives,” Lewis commented.
But IRS data presents a less favorable picture.
- June 2021: The Massachusetts state legislature passes a bill ensuring the millionaire tax appears on the 2022 ballot.
- November 2022: Voters agree to the millionaire surtax.
- Between 2021 and 2022, the number of millionaire tax filers in Massachusetts dropped by around 5,000.
- January 2023: The Massachusetts Millionaire Tax comes into force. There is no IRS data available beyond 2023.
“I’m not sure how Washington will fare,” Frost said, referring to the 5,000 departures from Massachusetts during the previous year. “Similar to New York’s struggles to retain its wealthy residents, Massachusetts is facing a similar challenge.”
Lewis noted that Massachusetts has a sports culture similar to Seattle’s and expressed no concerns about maintaining professional teams in his state.
KOMO’s Natalie Fahmy questioned Lewis if the tax was prompting residents to leave.
“There’s no evidence to support that,” he responded. “Wealthy people tend to migrate for various reasons. It happens regularly.”
He believes relocation often results from retirement or job changes.
Jim Guarino, a CPA in Boston who assists high earners, suggested that wealthy individuals may be becoming smarter about tax avoidance, similar to some in Washington.
“This is a unique scenario where you might want to think about increasing revenue since 9.9% is on the horizon,” he remarked.
Guarino mentioned that initially, some clients considered leaving the state after the tax passed but faced challenges detaching from their businesses. “They found it difficult to entirely cut ties,” he said.
He added that while the tax might not offer direct benefits, “people are coming to terms with it.”
“They’ve accepted it as just another expense for certain transactions,” he noted.
Other states, including New York and Maine, have implemented similar taxes on high earners, and California is contemplating further tax increases on billionaires.
