Washington voters to decide in November whether to block 9.9% tax on income above $1 million

Washington voters will decide in November whether to block the state's new income tax on high earners, which is not scheduled to take effect until 2028. Initiative 645 would reverse the legislature's decision and prevent the tax from taking effect, according to a Tax Foundation analysis published Oct. 15.

The tax applies to individuals or couples with incomes above $1 million at a 9.9 percent rate. The Tax Foundation expects it to fall largely on small business owners and highly compensated tech workers.

For some Seattle high earners, the Tax Foundation calculates a combined top state and local rate of 18.037 percent, which it says would be the highest in the country. That figure stacks the 9.9 percent state tax with a 5 percent Seattle Social Housing Tax, a 2.557 percent Seattle JumpStart Tax and a 0.58 percent WA Cares tax, split across employer and employee.

In 2024, according to the Tax Foundation, lawmakers approved a measure barring the state and its local jurisdictions from taxing personal income, rather than letting voters decide. Because amending language adopted by ballot measure requires a two-thirds legislative supermajority for the first two years, the early 2024 vote let lawmakers return during the 2026 session, rather than in 2027, to adopt the income tax.

The new tax carries an emergency clause, asserting it was "necessary for the support of the state government and its existing public institutions." That shielded it from a voter referendum, so opponents filed an initiative to repeal the tax instead.

A date has been set for oral arguments in a constitutional challenge to the law; Washington had no income taxation until recently, and its constitution has previously been interpreted as largely prohibiting it. Separately, a state lawmaker recently proposed lowering the threshold to as low as $250,000.

A client whose income lands above the $1 million threshold would face the 9.9 percent tax. The Tax Foundation's profile—pass-through owners and heavily compensated tech employees—is exactly the population whose income swings year to year.

If Initiative 645 passes in November, the tax never takes effect. If it fails, the tax is scheduled to begin in 2028 with the constitutional challenge still unresolved.