Millionaires’ Tax Before Washington Voters Supports Vital Investments, Makes Tax Code Fairer

On November 3, voters in Washington State will decide whether to protect landmark legislation enacted in March that will generate billions in new annual revenue for schools, child care, and other priorities while also helping balance out the state’s highly unbalanced tax system. If the repeal effort fails, Washington will remain among the growing list of states approving targeted tax increases on wealthy filers to help support the people’s needs.

The tax plan pairs a targeted tax increase on millionaires with expanded tax benefits for families and small businesses. Its key components include:

• New tax on millionaires. The plan’s signature component is a new 9.9 percent tax on households’ taxable annual income above $1 million. Households with taxable annual income below $1 million are exempt, and affected taxpayers only pay the new rate on the portion of their income above the threshold. The tax is expected to apply to around 20,000 households, or fewer than 1 percent of the state’s taxpayers.
• Expanded tax credit for working families. The plan substantially expands eligibility for the state’s Working Families Tax Credit, which provides $335 to $1,330 annually to help workers and families with lower incomes afford the basics. An additional 460,000 households will become eligible. Washington’s credit is comparable to state earned income tax credits, which have grown in popularity over the years and are now offered in nearly two-thirds of states plus the District of Columbia (D.C.) and Puerto Rico.
• Additional tax breaks for consumers and small businesses. The plan provides several new or expanded tax breaks for targeted purposes. These include new exemptions from the state’s relatively high sales tax for the purchase of certain household essentials. They also include technical revisions to cut taxes for small businesses, many of which are taxed more heavily under Washington’s distinctive business tax system than they would be under a more common corporate income tax.

The plan will generate substantial revenues for new investment, helping offset harmful federal cuts and supporting current and future needs. The new tax will raise an estimated $3.1 billion in its first year in effect (2029) and $8.3 billion over its first full two-year budgeting cycle.

Those revenues are slated to fund both the tax plan’s targeted tax benefits and a range of additional public investments. The measure requires a portion of revenues to cover the annual cost of free school meals for all Washington students and another 5 percent to go to early learning programs and child care. Beyond those requirements, all remaining funds will support the broad range of services funded through flexible dollars in the state’s annual budget, including K-12 schools (which account for nearly half the state’s general fund spending).

Over time, those sorts of robust investments will likely provide significant benefits to families and communities, as the experience of several states in recent years has shown. In Massachusetts, for example, a millionaires’ tax approved by voters in 2022 has routinely outpaced initial revenue estimates, funneling billions to universal school meals, fare-free transit, free community college, and other investments in transportation and schools.

New revenue sources for states are especially crucial at a time when families are facing the fallout from the historic federal cuts in the harmful 2025 Republican reconciliation law. In Washington, about 65,000 people have lost SNAP food assistance since that law’s enactment, while more than 40,000 people have lost health coverage through the Affordable Care Act marketplaces or Medicaid.

Those losses are expected to grow in coming years. So are Washington’s added costs under the federal law, including at least $100 million in added SNAP costs the state will likely owe annually starting in October 2027 due to the law’s shift of more SNAP costs to states.

The plan moves Washington toward a more balanced state tax code. Washington has long had one of the country’s most regressive state tax codes. It’s one of nine states that do not broadly tax personal income, which has left Washington extremely reliant on a mix of sales taxes and fees, which fall much more sharply on people with lower incomes. As a result, Washington households with incomes under $33,500 (the bottom 20 percent) pay 13.8 percent of their income in state and local taxes, while those making over $878,400 (the top 1 percent) pay only 4.2 percent.

Under the new tax plan, 95 percent of households will pay slightly less on average than they do now. Those with incomes in the top 1 percent will pay more than they do now, but still a lower share of their income than those further down the income scale.

The plan builds on a national trend. In recent years, a growing number of states have raised new revenues to support stronger state investments and make their tax codes fairer. Seven states did so in 2026 alone, four of which (Hawai’i, Maine, Rhode Island, and Washington) approved some form of millionaires’ tax. And 11 states, plus D.C. did so over the five years prior, leveraging new revenues from wealthy households and corporations to support investments including paid leave, affordable housing, school construction, transportation, and other vital services.

Washington itself has made progress in recent years, namely through a new capital gains tax. If the new tax on the state’s highest incomes remains law, it will prove another important step toward a more equitable tax code capable of meeting the state’s growing needs.