Why It Matters
Washington State has taken a significant step in reshaping its tax structure after Governor Bob Ferguson signed Senate Bill 6346 on March 30, 2026, creating the state’s first income tax on high earners. The new law imposes a 9.9% levy on households earning more than $1 million annually, marking a historic shift for a state long known for having no individual income tax. Supporters say the measure will reduce the burden on lower- and middle-income residents, while opponents are moving immediately to challenge it in court and potentially at the ballot box.
What Happened
Governor Ferguson signed Senate Bill 6346 on Monday, March 30, 2026, at the state Capitol in Olympia, surrounded by lawmakers, union members, and tax reform advocates. The bill was sponsored by Senate Majority Leader Jamie Pedersen, D-Seattle, and passed along party lines in the Democratic-controlled legislature.
The law establishes a 9.9% income tax on Washington households with annual earnings above $1 million. Revenue collection is not scheduled to begin until 2029, giving the law time to survive anticipated legal challenges before taking effect.
Within hours of the signing, the Citizen Action Defense Fund announced plans to file a lawsuit arguing the law is unconstitutional. Former state Attorney General Rob McKenna, who ran for governor as the Republican nominee in 2012, will lead the legal effort. McKenna cited a Washington State Supreme Court ruling from 1933 that struck down a voter-approved progressive income tax, stating that under existing state law, income is classified as property and therefore subject to uniformity requirements that a graduated tax would violate.
By the Numbers
- 9.9% — The tax rate applied to household income above $1 million per year under Senate Bill 6346.
- $3 billion — Estimated annual revenue the tax is projected to generate once collections begin.
- 21,000 — Approximate number of Washington households expected to be subject to the tax.
- 2029 — The year when tax collection is scheduled to begin.
- 1933 — The year the Washington State Supreme Court last invalidated a progressive income tax in the state, the precedent opponents cite in their legal challenge.
Zoom Out
Until Monday, Washington was one of nine states that imposed no individual income tax on wages or salaries. That group includes states such as Texas, Florida, Nevada, and South Dakota, many of which rely heavily on sales taxes and other revenue sources. Critics of Washington’s existing tax structure have long pointed out that reliance on sales taxes disproportionately affects lower-income residents, who spend a higher percentage of their earnings on taxable goods and services.
Washington’s move mirrors efforts in other Democratic-led states to introduce or expand taxes on high earners as a way to fund public services and reduce tax regressivity. States including California, New York, and New Jersey already impose elevated income tax rates on top earners. Washington’s approach, however, is notable for starting from a baseline of zero individual income tax, making the political and legal terrain more complex.
The constitutional question at the center of the lawsuit is also not new to Washington. Multiple ballot measures and legislative attempts to create an income tax have been blocked or rejected over the decades, most recently a 2010 voter initiative that would have imposed a tax on high earners. That measure was defeated at the polls. The 1933 Supreme Court precedent McKenna and other opponents cite has never been formally overturned by the court, setting the stage for what legal analysts expect to be a lengthy court battle.
What’s Next
The Citizen Action Defense Fund is expected to file its lawsuit in the near term, with Rob McKenna leading the litigation. Legal observers anticipate the case could move through the courts over the next several years, potentially reaching the Washington Supreme Court before tax collection is set to begin in 2029.
Opponents are also exploring a referendum effort that would ask voters to repeal the law as early as this fall. If a referendum does not qualify or does not succeed, opposition groups have indicated they will pursue an initiative campaign in either 2026 or 2027 to block the legislation through the ballot.
Governor Ferguson and legislative supporters have said they are confident the law will withstand legal scrutiny, pointing to the graduated structure being applied only to the highest earners and arguing the constitutional landscape has shifted since 1933.