Washington state Governor Bob Ferguson announced he is prepared to sign a bill to introduce a new income tax on residents whose annual earnings exceed one million dollars. The decision came after prolonged negotiations with leaders of the Democratic majority in the legislature, who had previously been unable to agree on how to allocate the tax revenue. Ferguson, who had earlier voiced concerns about the proposal, has now approved its latest version, calling the move historic for correcting an unfair tax system. The current system is considered unfair because Washington has no traditional personal income tax regardless of income level. Instead, the state relies mainly on sales and property taxes, which place a heavier burden on low-income people, while the wealthiest residents pay a smaller share of their income in taxes. A capital gains tax for high incomes was recently introduced, but it is not a general income tax.
Under the proposal, a state income tax of 9.9% would be imposed on individual earnings over $1 million per year. It is expected to affect roughly 30,000 taxpayers, with collections starting in 2028. Annual revenues, estimated at about $4 billion, are planned to be partially directed to fund free breakfasts and lunches for all students from kindergarten through 12th grade, with 5% of the funds earmarked for child care and prekindergarten programs.
The latest version of the bill, released by House Democrats, underwent changes. It expanded tax breaks for some families and businesses, but excluded funding that had previously been intended to cover rising city and county costs for state-appointed counsel in court cases. Governor Ferguson praised these adjustments, saying they will make life in the state more affordable for families and small businesses.
Despite the governor’s support, the bill still must pass a vote in the House, which could take place as soon as Monday. Senate Majority Leader Jamie Pedersen, the state senator representing the 43rd District (which includes part of Seattle), expressed support for the changes. As a senator, his role is to craft, propose, debate and vote on bills that regulate life in the state, as well as serve on key committees and work with colleagues in the House and the governor. However, he warned that the vote could be unpredictable due to stalling tactics by Republicans and possible new amendments from Democrats that could complicate final passage.
Opponents of the tax have already promised to challenge it in court and launch a citizens’ initiative to repeal it. Democrats included a provision in the bill banning the issue from being put to referendum. A successful initiative would require collecting twice as many signatures as a referendum, making that path more difficult but not impossible.
Based on: WA ‘millionaires tax’ headed for passage as Ferguson says he’ll sign it