Washington state lawmakers on February 3 formally introduced House Bill 2724 and Senate Bill 6346, proposing a 9.9 percent income tax on individuals earning over $1 million annually, effective January 1, 2028. The legislation includes an emergency clause designating it “necessary for the support of the state government and its existing public institutions,” a move that under state law exempts it from being suspended or overturned by voter referendum. That means opponents cannot quickly suspend the law via referendum; only a more arduous initiative campaign could ultimately repeal it.

The bills also feature a “poison pill”: if any court invalidates the millionaire’s tax, the entire act—including tax relief measures for consumers and small businesses—would be nullified.

Governor Bob Ferguson issued a statement the same day, saying he appreciates the legislative effort but “cannot support it in this form.” He emphasized that a significant share of revenue from the tax must be returned to Washingtonians to improve affordability, and he looks forward to addressing that in the coming weeks.

Under the proposal, revenue would be allocated as follows: 5 percent to county public defense funding stabilization, and the remainder to the state general fund to fund sales tax relief, the Working Families Tax Credit expansion, and business and occupation (B&O) tax relief. Tax relief components include a sales tax exemption on grooming and hygiene products beginning January 2029; doubling of B&O tax credits; and raising the B&O filing threshold from $125,000 to $250,000.

Democratic leaders argue that the tax would generate approximately $3.7 billion annually, affecting fewer than 1 percent of households. They frame it as a corrective to Washington’s regressive tax structure and a way to support public schools, health care, and services. Republicans, by contrast, warn that the tax represents an assault on small and medium-sized businesses and could pave the way for broader income taxation down the income ladder.

Legal scrutiny is anticipated. Critics argue that invoking the emergency clause is pretextual since the revenue is intended for new programs rather than essential existing obligations. Pursuing a constitutional amendment may be a more legally sound path. Past voter resistance to income taxation in the state—such as repeated defeats of income tax measures and narrow margins in earlier initiatives—suggests court challenges and political opposition are both likely.

The 2026 legislative session continues through March 12. Senate Bill 6346 is scheduled for public hearing on Friday, February 6, at 1:30 p.m. in the Senate Ways and Means Committee. Democratic leaders believe they have sufficient votes to pass the legislation without Republican support.

New Developments

Following the introduction of the millionaire tax proposal, new data from the Association of Washington Businesses (AWB) suggests growing unease within the state’s business community. According to AWB’s winter quarter survey, the share of businesses considering relocating out of Washington has nearly doubled since the legislation was announced—rising from a long-term baseline of 8–9 percent to 17 percent.

Additionally, 44 percent of business owners reported they are considering changing their personal residency, potentially moving out of state while maintaining Washington-based operations. In border communities such as Spokane, that number rises to 56 percent. AWB Vice President of Government Affairs Morgan Irwin described the trend as “a little bit shocking” and “really troubling,” noting that taxes have now overtaken other economic issues as employers’ top concern.

Irwin contended that the proposed law could have broader consequences than lawmakers suggest, warning that many small and medium-sized firms structured as S corporations or LLCs could be affected. He cautioned that the measure, while targeting earners above $1 million, “is not just going after millionaires—it’s going after anybody who’s got a business making any kind of money.”

Capitol Rally and Party Reactions

On Tuesday, hundreds of healthcare providers and educators gathered at the Washington State Capitol in Olympia to show support for the proposed millionaire tax. Supporters chanted slogans urging high earners to “pay their due,” emphasizing the measure as a moral and fiscal step toward equity in state services. SEIU 1199 President and registered nurse Jane Hopkins told attendees Washington should “stand for care, dignity, and the community—not for being worried about millionaires’ feelings.”

Caregiver Melissah Watts said the proposal merely asks wealthy residents to contribute their “fair share,” adding that it would not compromise their lifestyles. “They can still have their private jets and their mansions,” Watts said.

Republican leaders remain sharply opposed. Senate Republican Leader John Braun called the bill “a big deal,” emphasizing that opponents “have a lot of work to do to stop this bill.” Braun warned that Democrats could later expand the income tax to apply to the middle class, while Republican Senator Shelly Short criticized the measure as evidence of “an insatiable appetite for more revenue to do more spending.”

Republican Representative April Connors, a real estate agent, said she has witnessed clients relocating to other states in anticipation of the measure. “I just got another email this week,” Connors told reporters, “and I’m getting this weekly.”

Despite Republican resistance, the Senate Ways and Means Committee voted Monday to advance SB 6346 to the Senate Rules Committee—the next step toward a floor vote. Democratic Senator Yasmin Trudeau described the measure as “leveling the playing field,” stating that wealthy residents have benefited from Washington’s lack of income tax for decades.

Committee Republicans introduced several amendments, including proposals to remove the emergency clause and cap the tax rate and threshold permanently, but all were rejected.

As of Tuesday afternoon, no public hearing had been scheduled for the companion measure, HB 2724.

Update

On February 10, the Washington Senate Ways and Means Committee officially approved Senate Bill 6346 with several modifications. While the core 9.9 percent income tax rate on individuals earning over $1 million annually remains intact, committee members made adjustments to certain definitions and implementation language before sending the bill to the Senate Rules Committee for scheduling of a floor vote. The advancement marks the first major legislative hurdle cleared by the proposed tax since its introduction earlier this month.

Lawmakers on both sides indicated additional floor amendments are likely when the full Senate takes up the measure later in the session. Debate is expected to focus on the emergency clause and on how revenue distributions would be structured to support public defense and tax relief provisions.

If SB 6346 passes the full Senate, it will move to the House for consideration alongside its companion measure, HB 2724, which has not yet received a hearing.

Why this matters locally
Cowlitz County residents should note that, while the tax targets the ultra-wealthy statewide, the absence of a referendum mechanism removes a direct avenue for public intervention. Local stakeholders—particularly small businesses, public defense advocates, and lower-income households who would benefit from relief measures—should monitor hearings and offer testimony if they wish to influence the final outcome. The outcome could reshape the balance of tax burdens and public services across Washington.