Nine days remain in the 2026 legislative session in Olympia, and the proposed income tax has yet to reach the House floor and reports circulating late Tuesday suggest it may not reach the floor this session.
There are media reports that Gov. Bob Ferguson has told supporters and donors that getting it just right could mean “coming back next year to finish the bill in a longer session,” he wrote in an email to political donors and supporters.
Ferguson told the Washington State Standard he is “hopeful” an agreement can be reached by the end of the session March 12.
Senate Bill 6346, a 9.9% tax on income above $1 million, already cleared the Senate, but when it passed a House committee last week, amendments that were attached changed the legislation, stripping out a key tax break for large corporations.
Since then, several big tech companies have publicly blasted the bill, releasing a letter Monday warning that the proposed income tax on people making $1 million or more a year could undermine their industry’s development and progression.
As reported by The Center Square, the letter to Ferguson was signed by a variety of tech sector company leaders, including Allen Institute founding CEO Oren Etzioni, Read AI CEO and Co-founder David Shim, and founder and former vice president for AI at Microsoft Luis Vargas, among others.
On late day news that Ferguson may be backing off the income tax for this year, Washington State Republican Party Chair Jim Walsh, who also serves in the House, texted The Center Square.
“The fatal flaw in the current governor’s unconstitutional income tax scheme is that it doesn’t include a constitutional amendment. He and his supporters can spin that as much as they like but, without amending Article VII, they’ve got a dead fish in their bowl,” Walsh wrote.
Senate Minority Leader John Braun stepped off the Senate floor to call The Center Square upon hearing news that the bill may be dead for this year.
He said he met with Ferguson on Tuesday and discussed the income tax in length, but said the governor did not mention his hesitation with the bill at this point, nor did he mention sending a letter out to supporters and donors about potentially waiting until next year to try again.
“Language that gave a preferable B&O tax status and some other preferable tax statuses to certain industry groups, primarily big tech, were stripped out,” Walsh told The Center Square in an earlier Tuesday interview, referencing the House version that passed a committee last week.
“Those groups who might have been neutral or even slightly positive on the state income tax scheme now are against it,” he said, “as they should be, and they should have been all along, frankly.”
Walsh said he’s convinced Democrats are fighting among themselves at this point, with moderate members urging support for alternate legislation that would allow voters to weigh in before passage of an income tax.
“Right now, all the negotiation, all the panic, all the neurosis, is amongst the Democrats,” he said. “They’re all trying to figure out how to put some more lipstick on this pig and make it less horrible.”
Also late day Tuesday, Tennessee Gov. Bill Lee announced that Seattle based Starbucks is “expanding its North American presence with plans to locate a corporate operations office in Davidson County later this year,” noted the news release.
“Companies across the nation recognize that Tennessee’s strong values and fiscally-conservative approach are good for business, and we are proud to welcome another Fortune 500 company like Starbucks to our state,” said Gov. Bill Lee.
During a Tuesday media availability, Republican legislative leaders said the pushback from the business community on the income tax should not be ignored.
“The AWB [Association of Washington Business] poll said one in two businesses are considering leaving Washington, and when those businesses leave the state, jobs for everyday people leave too and that means taxpayer dollars are going to be leaving,” said Rep. April Connors, R-Kennewick.
A communications contact in Ferguson’s office said she did not have the letter referenced in media reports that Ferguson sent to his supporters about the potential pullback on the income tax.
This story will be updated as more information becomes available.
