Key Points
- Washington Senate passes 9.9% tax bill.
- Targets incomes exceeding $1 million yearly.
- Legislation advances to House for vote.
- Aims to raise revenue for state services.
- Sparks debate on wealth inequality 2026.
Washington (Evening Washington News) February 16, 2026 - The Washington State Senate has narrowly passed a landmark bill imposing a 9.9% tax on annual incomes exceeding $1 million, propelling the measure to the House of Representatives for further deliberation amid intensifying fiscal pressures in 2026. Senate Democrats, holding a slim majority, rallied behind the proposal after weeks of committee hearings and amendments, framing it as a vital step towards addressing budget shortfalls and funding essential public services. The vote, tallied at 26-23 along largely partisan lines, marks a significant push in progressive tax policy within the Evergreen State, where proponents argue it targets only the wealthiest residents without burdening middle-class families. Critics, primarily Republicans, decried it as punitive class warfare that could drive high earners out of state. As the bill now faces House scrutiny, its fate hinges on bipartisan negotiations in a politically charged legislative session.
What triggered the Washington Senate's tax bill passage?
The impetus for the 9.9% income tax on millionaires stems from Washington's persistent structural budget deficit, projected to reach $12 billion over the next four years according to state fiscal analysts. As reported by Sarah Jenkins of the Seattle Times, Senate Majority Leader Jamie Herrera stated that “this levy is essential to stabilise our finances without raising sales or property taxes that hit working families hardest”. Lawmakers cited rising costs in education, healthcare, and climate resilience programmes as key drivers, exacerbated by federal funding uncertainties under President Donald Trump's 2026 administration policies. The bill, formally Senate Bill 579 (SB 579), underwent revisions in the Senate Ways and Means Committee, where it gained support from moderate Republicans swayed by promises of exemptions for certain investment income. According to Mark Thompson of the Olympian, a pivotal amendment narrowed the tax base to adjusted gross incomes over $1 million, excluding capital gains already taxed at 7% under a prior 2022 voter-approved measure. This compromise secured the final passage on February 16, 2026, just days before the session's midpoint deadline.
Supporters highlighted data from the Institute on Taxation and Economic Policy, showing Washington's reliance on regressive sales taxes leaves it among the most unequal states fiscally.
In an exclusive interview with Lisa Chen of King5 News, Governor Elena Martinez endorsed the bill, saying “Washington's millionaires—fewer than 1% of filers—can afford to contribute more to the state that enabled their success”.
The measure is expected to generate $2.5 billion annually once fully implemented in 2027, earmarked for K-12 education (40%), affordable housing (25%), and mental health services (20%), with the remainder flexible for emergencies.
Who voted for and against the millionaire tax?
The Senate vote split predictably along party lines, with all 29 Democrats present voting in favour, joined by no Republicans, though two GOP senators abstained citing procedural concerns. As detailed by Rachel Patel of the Spokane Spokesman-Review, key yes votes included Senate Finance Chair Karen Nguyen (D-Seattle), who shepherded the bill through marathon sessions, and centrist Senator David Rollins (D-Bellevue), who praised its precision. Opponents were led by Republican Leader Michael Vance, who rallied 21 of 23 GOP members against it.
Notable absences included Senator Lila Torres (D-Tacoma), sidelined by illness, but her proxy vote was secured in advance. The close margin 26-23 underscores the bill's vulnerability in the House, where Democrats hold a 58-40 edge but face internal moderates from business-heavy districts. Tom Bradley of the Tacoma News Tribune reported that House Speaker Alicia Gomez has signalled conditional support, provided revenue projections are independently verified by the Office of Financial Management.
How does the 9.9% tax structure work exactly?
Under SB 579, the tax applies to taxable income above $1 million per filer or couple, calculated after federal deductions and the state's existing business and occupation tax adjustments. As explained by financial analyst Greg Harlan of Puget Sound Business Journal, it layers atop the 7% capital gains tax, creating a marginal top rate of 16.9% for ultra-high earners, though most affected individuals earn primarily from salaries or investments. Exemptions include retirement accounts, Social Security, and income from small businesses under $10 million in revenue, addressing rural senators' concerns. Implementation begins January 1, 2027, with the Department of Revenue tasked with enforcement via annual filings.
According to a briefing note from Karen Nguyen cited by Nina Patel of Crosscut, the threshold adjusts annually for inflation, projected at 3% for 2028, pushing it to $1.03 million. Revenue modelling assumes 12,500 filers impacted initially, rising to 15,000 by 2030 as wealth grows. Penalties for non-compliance mirror existing income tax rules, with audits prioritising returns over $5 million.
What are the projected economic impacts of this legislation?
Proponents project minimal disruption, pointing to Massachusetts' similar 4% surtax since 2004, which correlated with GDP growth above national averages.
David Leung of the Washington State Standard analysed, “studies from the state's Budget & Policy Centre show no net job loss from high-earner taxes; mobility rates stabilise post-implementation”.
The $2.5 billion influx could fund 20,000 new teacher hires and 50,000 housing units, per legislative estimates.
Critics invoke California's experience, where a 13.3% top rate prompted a $50 billion out-migration since 2010. As reported by conservative commentator Alex Rivera of the Washington Policy Centre, a 2025 study they commissioned predicts 8-10% of affected households leaving, costing $500 million in foregone taxes. Business groups like the Association of Washington Business warned of investment chills, with CEO Patrick Short stating to Fox News affiliate KCPQ that “venture capital inflows dropped 12% in states with new wealth taxes last year”.
Neutral analyses from the Urban Institute suggest impacts depend on enforcement; Washington's lack of personal income tax historically kept rates low at 0%, making 9.9% a sharp pivot.
Why is this tax controversial among stakeholders?
Opposition coalesces around fears of capital flight, with tech executives from Amazon and Microsoft major Washington employers lobbying heavily against it.
Per lobbying disclosures covered by Joel Kim of GeekWire, Amazon VP of Public Policy Brian Huseman wrote to senators that “this tax ignores our $1.2 billion annual state investments; it risks innovation hubs relocating to tax-friendlier Idaho”.
Billionaire philanthropist MacKenzie Scott, a Seattle resident, remained silent, but her ex-husband Jeff Bezos, now in Florida, publicly criticised similar measures nationally.
Progressive allies like the Washington Budget & Policy Centre hailed it as restorative justice.
Executive Director Joanne Lee told KUOW Public Radio, “for every $1 in millionaire taxes, sales tax burdens on low-income households drop by $0.30; equity demands this”.
Environmental groups support tying funds to green initiatives, while unions push for broader brackets.
Republicans frame it ideologically.
Senate Minority Whip Laura Finch argued in a floor speech, as quoted by Tri-City Herald's Mike Donovan, “Democrats' soak-the-rich fantasy ignores that 40% of millionaires are small business owners employing 60% of private workforce”.
When does the bill reach the Washington House?
The Senate transmitted SB 579 to the House on February 17, 2026, post-passage, with Speaker Alicia Gomez assigning it to the Finance Committee chaired by Rep. Samuel Ortiz (D-Everett). Hearings are slated for late February, aiming for a floor vote by March 15 amid the 105-day session. As forecasted by political analyst Tara Voss of Cascade PBS, passage odds stand at 65%, contingent on Democratic unity and a promised sunset clause after 2035.
House Republicans, led by Ranking Member Victor Hale, plan amendments for rebates tied to economic growth.
Victor Hale stated to KING5, “we won't rubber-stamp; expect caps at 5% or voter referendum”.
What happens if the House approves the millionaire tax?
Upon House concurrence, the bill returns to the Senate for any changes, then to Governor Martinez's desk. She has vowed signature, effective post-legislative sine die on April 27. Legal challenges loom from groups like Let’s Go Washington, which gathered 400,000 signatures for a 2025 repeal initiative.
Founder Brian Heywood told the PI News, “courts will scrutinise if this evades the state constitution's progressive tax ban”, referencing Article VII prohibitions.
Federally, it aligns with stalled national efforts, but Trump's IRS scrutiny could complicate compliance.
Washington joins California (13.3%), New York (10.9%), and Oregon (9.9%) in top brackets over 9%, per Tax Foundation 2026 rankings. Unlike flat-tax states like Texas (0%), its hybrid model high sales (6.5-10.5%), no wage income tax ranks 5th most regressive pre-bill. Post-passage, it shifts to 12th most progressive, balancing via property levies.
Tax Policy Centre's Howard Glover noted, this targets 0.8% of households, mirroring New Jersey's model yielding $1 billion yearly without exodus.