Washington's 9.9% millionaire tax would create a marriage penalty

Washington state's 9.9% tax on income above $1 million, set to take effect Jan. 1, 2028, would create a marriage penalty for high earners, according to a family lawyer in the state writing in WealthManagement.com.

The levy has no brackets, so a married couple's combined income determines the bill. Two unmarried earners at $600,000 each would owe nothing, while a married couple reporting the same $1.2 million would owe 9.9% on the $200,000 above the threshold, or about $19,800. The tax would not be levied until 2029 returns are due, and voters decide in November whether to repeal it through Initiative 645.

For advisors, the planning questions that now carry a dollar value are timing questions: prenuptial talks, marriage dates, business sales and divorces. The author writes of fielding questions in prenuptial and marriage-timing discussions and in the planning phases of business sales and divorces, and notes that estate plans, prenuptial agreements and liquidity events take months to structure. That suggests the order in which a client marries, sells a business or files relative to Jan. 1, 2028 is now worth modeling, whether or not the ballot measure succeeds.