Washington State Millionaires Tax: Everything You Need to Know in 2026

Disclaimer: This article is general information, not tax or legal advice. The law is new, implementation guidance is still developing, and the result depends on a taxpayer's facts. Consult a qualified tax professional or attorney before acting.

Prepared and fact-checked by the Your Tax Base editorial team using the enacted session law, official legislative history, Washington Department of Revenue guidance, and the cited court order.

Washington has enacted a new 9.9% tax on Washington taxable income. The shorthand name is the “millionaires tax,” but the final calculation is more precise than “9.9% of earnings above $1 million.” It starts with federal adjusted gross income, applies Washington-specific modifications and deductions, and taxes the resulting positive Washington taxable income.

The law matters most to high-income Washington residents, founders and pass-through business owners, executives with equity compensation, and nonresidents with significant Washington-source income. This guide explains what the final statute says today and clearly separates enacted rules from questions the Washington Department of Revenue still has to implement.

Washington Millionaires Tax: Quick Answer

• Status: Enacted as ESSB 6346, Chapter 238, Laws of 2026.
• Signed: March 30, 2026.
• Tax begins: January 1, 2028.
• Rate: 9.9% of positive Washington taxable income.
• Standard deduction: $1 million per individual; spouses and state-registered domestic partners share $1 million total.
• First annual returns: Generally due with federal tax-year 2028 returns in 2029.
• Agency guidance: Additional Department of Revenue notices, rules, forms, and filing instructions are still being developed.

What Changed Since the Bill Was Proposed?

Early versions and news reports described a proposal moving through the Legislature. The official timeline is now complete:

1. February 16, 2026: The Senate passed the bill, 27 to 22.
2. March 9, 2026: The House passed an amended bill, 51 to 46.
3. March 11, 2026: The Senate concurred in the House amendments, 27 to 21.
4. March 30, 2026: Governor Ferguson signed the bill.
5. June 11, 2026: The act's general effective date arrived, although several sections have different dates.
6. January 1, 2028: The 9.9% tax itself begins to apply.

The distinction between the act's general effective date and the tax's start date is important. Signing the law in 2026 did not make 2026 income subject to the new tax.

Who Is Subject to the Washington Millionaires Tax?

Washington Residents

For a resident individual, the law generally allocates income from all sources to Washington before the statute's modifications and deductions. The law defines a resident in two principal ways:

• Washington domicile: An individual domiciled in Washington is a resident unless all three statutory absence conditions are met for the entire tax year: no permanent place of abode in Washington, a permanent place of abode outside Washington, and no more than 30 days spent in Washington.
• Abode plus presence: A person not domiciled in Washington is a resident if the person maintains a place of abode in Washington and is physically present in the state for more than 183 days during the tax year. Any part of a calendar day counts as a day.

These are statutory tax rules, not a checklist that automatically determines domicile for every legal purpose. A domicile analysis is fact-intensive and considers the person's actual home and intent, not merely a mailing address.

Part-Year Residents and Nonresidents

A part-year resident generally includes all income while a resident plus Washington-source income while a nonresident. A nonresident includes specified Washington-source income, which can include:

• wages for services performed in Washington;
• income from a Washington business, trade, profession, or pass-through entity;
• rents, short-term gains, and other amounts tied to Washington real or tangible property;
• certain business-related intangible income; and
• other categories specifically allocated by the statute.

The law includes a limited exception for many nonresidents who perform services in Washington on five or fewer days, with special rules and exceptions. Nonresidents also receive a prorated $1 million standard deduction rather than automatically receiving the full amount.

How the $1 Million Deduction Works

The law provides a $1 million standard deduction from Washington base income:

• An individual generally receives a $1 million deduction.
• Spouses and state-registered domestic partners share a combined $1 million deduction, whether they file jointly or separately.
• A nonresident or part-year resident's deduction is reduced using the statutory allocation fraction.

The Department of Revenue must make the first inflation calculation in October 2029 and then in October of each odd-numbered year. The adjusted amount takes effect for taxes due in the following calendar year. It is therefore inaccurate to describe the deduction as automatically increasing every year.

How the Washington Millionaires Tax Is Calculated

The final session law uses this broad sequence:

1. Start with federal adjusted gross income.
2. Apply Washington modifications. These address long-term capital gains and losses, certain bond interest, net-income taxes deducted in computing federal AGI, carryovers, federal obligations, incomplete-gift nongrantor trusts, tribal income, and other items.
3. Allocate or apportion income. Residents and nonresidents have different sourcing rules.
4. Apply deductions. These include the $1 million standard deduction and, when requirements are met, a charitable-contribution deduction of up to $100,000. Spouses and domestic partners share the $100,000 charitable limit.
5. Multiply positive Washington taxable income by 9.9%.
6. Apply available nonrefundable credits.

A personal itemized federal SALT deduction is not automatically added back to federal AGI. The final statute instead addresses net-income taxes deducted in computing federal adjusted gross income and certain B&O or public utility taxes associated with a credit. This is one reason a simplified online calculation should not replace a return-level review.

Capital Gains, Real Estate, Business Sales, and Retirement Income

Long-Term Capital Gains

The new law does not simply tax every long-term gain twice. It generally removes long-term capital gains included in federal AGI and then adds back Washington capital gains subject to tax under Chapter 82.87 RCW, along with the Chapter 82.87 standard deduction used in that calculation. A credit may then be available for Washington capital gains tax imposed for the same year.

Long-term gains and losses from sales or exchanges exempt under RCW 82.87.050 are not included in this add-back. That preserves relevant existing capital-gains exclusions, including specified real-property transactions. The qualified family-owned small-business deduction under the existing capital-gains framework may also affect the amount added back.

Do not translate that rule into “all real estate is exempt.” Washington-source rent, short-term gains, and other real-property income can still enter the new tax calculation. Transaction type and holding period matter.

Retirement and Public-Pension Income

Retirement income is not categorically exempt. The final act specifically amended a number of Washington public-retirement provisions so their prior state-tax protections do not exempt benefits from the new Title 82A tax. If a retirement distribution is included in federal AGI, a taxpayer should not assume it is excluded without identifying a specific applicable rule.

Available Tax Credits

Subject to detailed limits, the law provides nonrefundable credits for:

• income tax paid to another jurisdiction on qualifying income also included in the Washington base;
• Washington B&O or public utility tax paid on income included in both tax calculations;
• Washington capital gains tax imposed for the same tax year; and
• qualifying pass-through entity tax attributable to a participating owner.

These credits cannot reduce the tax below zero. Unused amounts generally cannot be refunded or carried forward or backward. Each credit has its own calculation and anti-duplication rules.

The Pass-Through Entity Election

Beginning in 2028, an eligible partnership, LLC, or S corporation may elect to pay the 9.9% tax at the entity level on qualifying taxable income attributable to participating owners.

• The election is made annually.
• Once filed, it is irrevocable for that tax year.
• It must be filed by the Department of Revenue's deadline and no later than June 15 of the tax year.
• An entity may identify participating and nonparticipating owners.
• A participating owner may receive a nonrefundable credit, subject to the law's limits and add-back rules.

The election does not erase an owner's federal distributive income, and the Washington statute does not guarantee a federal deduction. Any federal benefit depends on federal law in effect for that year and the taxpayer's circumstances.

Returns, Payments, and Implementation Dates

• Tax year: The tax first applies to income beginning January 1, 2028.
• Return due date: A taxpayer who owes the tax generally files on the due date for the federal income-tax return.
• Extension: A federal filing extension extends the Washington filing deadline, but it does not extend the payment deadline.
• Electronic filing: Returns and supporting documents generally must be filed electronically, subject to a good-cause waiver.
• No tax due: An individual who does not owe the tax is not required to file this return under the new chapter.
• Estimated tax: Estimated payments generally apply when projected tax exceeds $5,000, but no estimated payments are required before July 1, 2029.

The Department of Revenue's 2026 legislation page says more special notices are coming. Taxpayers should expect forms and administrative details to evolve before the first filing season.

Is the Washington Millionaires Tax Constitutional?

The enacted law imposes the levy on the “receipt of Washington taxable income.” It also amended Initiative 2111 so that initiative's prohibition on personal-income taxes does not apply to the new Title 82A tax while the household standard deduction remains at least $1 million. The act contains a provision making major portions null and void if a court of final jurisdiction invalidates the tax-imposition section.

In May 2026, the Washington Supreme Court issued an order in Heywood v. Hobbs concerning whether ESSB 6346 was subject to referendum. The court expressly said that case did not decide the constitutionality of the tax. The responsible conclusion is therefore limited: the referendum order should not be presented as a final ruling either upholding or invalidating the tax itself.

Where the Revenue Goes

The statute directs collections to the state general fund to support the tax-relief provisions enacted with the law and public investments in K-12 education, health care, human services, and higher education. Beginning July 1, 2029, five percent of revenue collected in the previous fiscal year is transferred to the Fair Start for Kids account.

The final law also includes an expanded Working Families Tax Credit, higher small-business B&O credits, a higher filing threshold, and sales/use-tax exemptions for specified diapers, over-the-counter drugs, and grooming and hygiene products. Earlier claims about annual sales-tax holidays or a blanket $300,000 B&O exemption do not describe the enacted bill.

What Potentially Affected Taxpayers Should Do Now

1. Confirm whether 2028 income could enter the Washington base. Review wages, equity compensation, business income, retirement distributions, trusts, capital transactions, and Washington sourcing.
2. Model the final statute, not a headline threshold. The $1 million deduction applies after statutory modifications and allocation rules.
3. Review entity choices with an adviser. A pass-through election can change the payment and credit mechanics, but its state and federal effects are fact-specific.
4. Keep contemporaneous residency and travel records. Domicile, a Washington abode, and days in the state can all matter. Any portion of a day counts under the statute.
5. Recheck official guidance. Department of Revenue forms and rules are not yet final for the 2028 filing year.

Do not accelerate income, restructure a business, make a large charitable gift, or move solely because of a general article. Those decisions can create federal, state, legal, and financial consequences that outweigh any projected Washington tax effect.

Can Moving Out of Washington Change the Result?

A genuine domicile change before a relevant tax year can change resident tax treatment. It does not automatically eliminate Washington tax exposure:

• An address change alone does not establish a new domicile.
• A nondomiciliary with a Washington abode and more than 183 days in the state can still be a resident.
• A nonresident can still owe tax on specified Washington-source income.
• A move must be real, documented, and consistent with the taxpayer's conduct.

For the documentation side of a genuine move, read our guides to establishing residency in a no-income-tax state and proving a domicile change. These guides are educational and do not determine whether a move is appropriate for you.

Your Tax Base provides Florida address and residency-documentation support for people who are genuinely establishing a Florida domicile. The service does not make a paper-only move valid and does not eliminate tax on income that remains sourced to Washington. Review plans and eligibility.

Frequently Asked Questions

Does Washington state have an income tax now?

Washington enacted ESSB 6346, Chapter 238, Laws of 2026, on March 30, 2026. The new 9.9% tax applies to the receipt of Washington taxable income beginning January 1, 2028. It therefore does not apply to 2026 income merely because the law has been signed.

Who has to pay the Washington millionaires tax?

An individual owes the tax when the law applies and the person has positive Washington taxable income after the statutory modifications and deductions, including the $1 million standard deduction. Residents generally include income from all sources. Nonresidents include specified Washington-source income and receive a prorated standard deduction. Spouses and state-registered domestic partners share one $1 million deduction.

What income is excluded from the Washington millionaires tax?

The law starts with federal adjusted gross income and makes detailed modifications. Long-term capital gains are first removed, then Washington capital gains subject to the existing capital-gains tax and the standard deduction used in that calculation are generally added back. Long-term gains and losses from sales or exchanges exempt under RCW 82.87.050 remain out, and the qualified family-owned small-business deduction can also matter. Retirement and public-pension income is not categorically exempt. Taxpayers should not assume that every real-estate or business transaction is excluded.

When does the Washington millionaires tax take effect?

The tax applies beginning January 1, 2028. Tax-year 2028 returns are generally due on the federal return due date in 2029. An extension to file does not extend the time to pay. Estimated payments are not required before July 1, 2029.

How is the Washington millionaires tax calculated?

Start with federal adjusted gross income, apply the additions, subtractions, allocation rules, and deductions in the enacted law, subtract the available $1 million standard deduction and any allowable charitable deduction, then multiply positive Washington taxable income by 9.9%. Apply available nonrefundable credits afterward. This is not simply 9.9% of federal income above $1 million.

Can I avoid the Washington millionaires tax by moving to another state?

A genuine domicile change can alter resident tax treatment, but moving is not established by an address change alone. Washington's statutory residency rules also consider an abode and days in the state, and a nonresident may still owe tax on Washington-source income. Get fact-specific tax and legal advice before relying on a move.

What is the Washington pass-through entity tax election?

Beginning in 2028, an eligible pass-through entity may make an annual, irrevocable election to pay 9.9% on qualifying taxable income attributable to participating owners. The election is due by the department's deadline and no later than June 15 of the tax year. Participating owners may claim a nonrefundable credit, subject to the statute. Any federal tax effect depends on then-current federal law and the taxpayer's facts.

Has a court ruled that the Washington millionaires tax is constitutional?

The Washington Supreme Court's May 2026 order in Heywood v. Hobbs concerned whether ESSB 6346 was subject to referendum. The court expressly stated that the constitutionality of the tax was not before it. Do not treat that referendum order as a decision upholding or invalidating the tax itself.

Primary Sources

• Washington State Legislature: ESSB 6346 bill history
• Chapter 238, Laws of 2026: final session law
• Washington Legislature: final bill report
• Washington Department of Revenue: 2026 tax legislation
• Governor of Washington: March 30 signing announcement
• Washington Supreme Court: Heywood v. Hobbs referendum order

Last substantive review: July 12, 2026. We will update this guide as the Department of Revenue publishes implementation rules, forms, and filing guidance.