Washington’s Income Tax History Faces A New Millionaire Proposal

Washington State has what I consider to be a proud history of no state income tax. It actually goes back to 1932, when voters approved a state income tax for Washington, but it was declared unconstitutional. 

During the Great Depression, the movement sprung up again to advocate for a Washington state income tax, mainly by rural farmers; it was not successful. In 2024, the state legislature passed a law outlawing state and local income taxes. 

Is state income tax on the way?

Over the decades there have been pushes for a state income tax but have never been successful up until now. The Washington state tax base has mainly been based on excise tax and property tax. The current push for state income tax is coming from Governor Ferguson.  

According to seattletimes.com,
‘Gov. Bob Ferguson has thrown his support behind an income tax on millionaires, backing what would be a seismic shift in Washington’s tax code.
At a budget news conference Tuesday, Ferguson endorsed a proposal brewing among legislative Democrats that would impose a 9.9% tax on people who earn more than $1 million annually.’ 

Currently, Washington state is one of only 9 states in the entire United States that do not have an income tax. Other states with no income tax include Texas, Wyoming, Florida, Nevada, South Dakota, New Hampshire, Alaska, and Tennessee. 

Governor Ferguson took quite a bit of heat from Democrats when he proposed his 2026 Supplemental budget with some big cuts and dipping into some dedicated funding. 

so now what?

Since both houses of the legislature are controlled by Democrats, it's easy to assume that this state income tax proposal will pass easily. But with Washington's history of no income tax going all the way back to the early 1930s. It might be a little more difficult to buck history. Every time a state income tax has been proposed, Washington state voters have rejected it. 

Governor Ferguson did admit that the addition of a Washington state income tax would not solve all the problems of Washington state's current budget shortfall. If it does pass in the Legislature, it would not kick in until 2029. Ferguson also stated that he wanted the $1 million threshold to become part of state law possibly through a constitutional amendment. 

Rep. Travis Couture, R-Allyn, was quoted by the Seattle Times saying, “If record revenue couldn’t balance the budget, a ‘millionaire’ income tax won’t either. This is a spending problem, not a revenue problem,” 

The question now is, will voters get an opportunity to choose?