Washington state's 9.9% millionaires tax signed into law: What it means for residents

Governor Bob Ferguson made history as Washington became the first state to introduce an income tax of its kind. Washington State has taken a dramatic step toward reshaping its tax landscape, with Governor Bob Ferguson signing into law a 9.9% income tax on the state's wealthiest residents — a move that marks a historic first for a state long known for having no income tax on wages or salaries.

What Is the Washington Millionaires' Tax?

The Washington Millionaire's Tax, which will take effect at the start of 2028, targets high-income earners in a state home to some of the wealthiest individuals and corporations in the world.

Seattle alone counted 54,200 millionaires in 2023, according to UK wealth advisory firm Henley and Partners, making Washington fertile ground for precisely this kind of fiscal intervention.

The tax is expected to generate at least $3 billion per year for the state beginning in 2029, according to officials — a figure that underscores both the scale of the ambition and the concentration of wealth that makes it possible.

Why Ferguson Says Washington Needed This Law

Speaking at a press conference after signing the measure on Monday, Ferguson did not mince words about the inequity the new tax is designed to address.

Washington, he said, ranks at the bottom of all US states in tax fairness, pointing out that families “whose income is in the bottom 20% pay a whopping 13.8% of their total income in state and local taxes while the wealthiest pay a far smaller percentage of their income.”

Ferguson also took direct aim at the federal government, accusing President Donald Trump's tax cuts to the wealthy of deepening the gap between low-income residents and the state's highest earners — a framing that positions the new law as both a state-level correction and a pointed rebuke of Washington DC's fiscal direction.

Where Will the Money Go?

The proceeds from the tax are earmarked for a set of measures with broad popular appeal. According to a statement from Ferguson's office, revenues will fund free meals for students from kindergarten through 12th grade, expand access to affordable childcare, and eliminate sales tax on diapers, over-the-counter drugs and hygiene products.

The package is designed to direct money collected from the wealthiest residents back toward the everyday financial pressures faced by ordinary families.

A Historic Shift for a No-Income-Tax State

The significance of this moment should not be understated. Washington is one of only nine US states that does not tax wage and salary income for individuals, a distinction that has long made it a magnet for high earners and technology executives.

The new millionaires tax does not disturb that broader framework, but it does introduce a meaningful carve-out that breaks with decades of fiscal tradition.

For a state that houses Amazon's global headquarters and has long been the home of Microsoft, the political symbolism of taxing extreme wealth is as significant as the projected revenue.

The Opposition: A Referendum Is Already in Motion

The ink on the law was barely dry before resistance began to organise. Brian Heywood, founder of the conservative political committee Let's Go Washington, has already filed a referendum against the tax to put the question before voters in the general election later this year.

Should the referendum qualify, Washington residents will have the final say on whether the law survives, making this less an endpoint than the opening shot in what is likely to be a bruising political battle.

Washington Millionaire's Ta: What Comes Next

With the tax not taking effect until 2028 and full revenue collection not beginning until 2029, there is ample time for legal challenges, political reversals and further debate. What is already clear, however, is that Washington State has crossed a threshold it has long resisted, and the consequences — fiscal, political and symbolic — will reverberate well beyond its borders.

The 9.9% income tax applies to high-income earners in Washington State and is distinct from any federal tax obligations.