Washington’s House of Representatives passed a 9.9 percent tax on annual income exceeding $1 million Tuesday evening, ending a 24-hour debate that lawmakers described as the longest in state history. The final vote was 51-46, with several Democrats joining all Republicans in opposition to the measure supporters call a “millionaires tax.”
The bill now returns to the Senate for approval of House amendments before heading to Gov. Bob Ferguson, who has pledged to sign it. If enacted, Washington would join seven other states with no income tax in implementing what would be the nation’s most narrowly targeted high-earner income tax. The legislative session ends March 12, giving lawmakers two days to finalize the measure.
Senate Bill 6346 would affect approximately 20,000 taxpayers statewide starting in 2028 or 2029, generating an estimated $3.5 billion annually for education, healthcare, and tax relief programs. The revenue would fund expanded tax credits for working families, free school meals, and sales tax exemptions on diapers, over-the-counter medications, and hygiene products.
“States are struggling to fund education, healthcare, housing, and public safety, and are in need of tax reform,” said Rep. Tye Rylands, a Mill Creek Democrat who chairs the House Finance Committee. The bill would expand the Working Families Tax Credit to 460,000 additional households, providing rebates up to $1,000 annually.
The marathon debate began at 5:38 p.m. Monday and continued until approximately 6:10 p.m. Tuesday, according to the House Clerk’s office. Republicans proposed more than 60 amendments during the session, including one that would delay implementation until an NBA team returns to Seattle. Most amendments failed along party lines.
Washington’s constitution defines income as property, requiring uniform taxation across all property types. Voters have rejected 10 constitutional amendments since the 1930s that would have excluded income from the property definition. The state Supreme Court has consistently upheld this interpretation, creating what opponents say is an insurmountable legal barrier.
“They are apparently going to pass it without bothering to amend the Constitution,” said former Attorney General Rob McKenna, a Republican. “Presumably, they’re hoping the state Supreme Court will effectively amend the Constitution by deciding that income is not part of property. I don’t think they will.”
The constitutional question sets up what could be a lengthy legal battle. Washington’s capital gains tax, enacted in 2021, faced immediate court challenges before the state Supreme Court upheld it in 2023. Legal experts expect similar lawsuits if the income tax becomes law.
Democrats argued the measure addresses Washington’s regressive tax structure, where lower-income households pay a higher percentage of their income in taxes than wealthy residents. Sen. Shar Mena, a Tacoma Democrat, called the current system a “fundamental inequity” that asks families to pay a greater share than the ultra-wealthy.
The debate featured theatrical moments, including Rep. Jim Walsh quoting Monty Python and Rep. Brian Burnett comparing tax evasion penalties to pedophilia laws. Republicans countered with calls for sales tax cuts instead of new levies. “We need a path of relief for the taxpayers of Washington state,” said Rep. Travis Penner, an Easton Republican.
House amendments added business tax exemptions for companies with revenue under $300,000 and credits up to $600,000. The bill allocates 5 percent of revenue for childcare programs. A proposed amendment allowing charitable deductions failed, with opponents arguing it would reduce revenue and create loopholes.
“We don’t want to discourage charitable giving,” said Rep. Stephanie Barnard, a Pasco Republican, defending the failed amendment. Democrats maintained that the tax structure already allows federal charitable deductions and that state-level deductions would primarily benefit high earners.
The bill’s implementation timeline gives affected taxpayers two to three years to adjust financial planning. Tax advisors expect wealthy residents to consider asset restructuring, relocation to states without income taxes like Nevada or Texas, or increased charitable giving before the tax takes effect.
Small businesses with revenue below $300,000 would gain business and occupation tax exemptions under the House amendments. The expanded Working Families Tax Credit would provide relief to families earning up to certain income thresholds, though specific eligibility details remain subject to Senate approval of the amended version.
Washington currently relies heavily on sales taxes, property taxes, and business levies. The state ranks among the most regressive tax systems nationally, with the lowest 20 percent of earners paying approximately 17 percent of their income in state and local taxes compared to roughly 3 percent for the top 1 percent, according to the Institute on Taxation and Economic Policy.
Ferguson, who took office in January, campaigned on tax reform and affordability measures. “We support the revised bill because it makes affordability investments,” his office said in a statement Tuesday, citing free school meals and expanded tax credits as priorities.
If the Senate approves the House amendments by March 12, the bill would mark the first broad-based income tax in Washington history. Previous attempts to implement income taxes through ballot measures and legislation have failed repeatedly over nine decades. A 2010 ballot measure proposing a similar high-earner tax lost with 64 percent voting against.
Opponents have indicated they will pursue legal challenges and potential ballot initiatives to repeal the tax if it becomes law. The Washington State Supreme Court would likely hear any constitutional challenge, given the fundamental question of whether income qualifies as property under Article VII of the state constitution.
The narrow House vote reflects divisions within the Democratic caucus, with several members from swing districts joining Republicans in opposition. The Senate previously passed an earlier version of the bill, but must now vote on the House amendments before the measure can advance to the governor.
Source: WA income tax clears House after 24-hour debate | The Seattle Times