After more than 24 hours of intense debate that stretched late into March 10, 2026, Washington State lawmakers passed Senate Bill 6346—a landmark 9.9% income tax on household earnings above $1 million. The vote marks what tax policy experts are calling the "most significant piece of tax policy we've seen in over a century," according to the Association of Washington Business.
The millionaire tax passed amid heated discussion over how best to address the state's notoriously regressive tax system. Washington has long ranked among the most regressive in the nation, with lower-income residents bearing a disproportionate share of the tax burden.
"Research consistently shows that Washington's tax model is among the most regressive in the country," state economists noted, pointing to decades of reliance on sales tax, which disproportionately affects working families.
The legislation responds to a wave of high-profile departures by Washington's wealthiest residents. In 2023, Amazon founder and former CEO Jeff Bezos relocated to Miami. Following his example, former Starbucks chief executive Howard Schultz announced his move to the same Florida city hours after Washington state lawmakers advanced the bill.
While supporters frame SB 6346 as an effort to balance an unequal system, opponents warn of unintended economic consequences. Critics point to the state's already-challenging business climate, ranked 45th nationally in the Tax Foundation's 2026 State Tax Competitiveness Index.
According to a recent Association of Washington Business survey, 44% of business leaders are now considering relocating their personal residences out of Washington State, citing concerns about the tax climate and regulatory environment.
However, economists counter that research suggests personal income tax increases can actually help tame inflation rather than exacerbate it. The millionaire tax is expected to generate significant revenue for state programs, including education, healthcare, and infrastructure investments.
While aimed primarily at the state's highest earners, the tax will also affect pass-through business entities such as LLCs, partnerships, and S-corporations—a detail that has drawn particular scrutiny from small business owners.
Tax professionals recommend several strategies for affected residents and businesses, including deferred compensation plans and charitable giving optimization. However, they note that for many, relocation may prove more economical than restructuring.
The tax's long-term impact on Washington's economy remains uncertain. Business advocates warn it could accelerate an exodus of talent and capital, while supporters argue it's a necessary step toward fairer taxation and sustainable state funding.