(The Center Square) – The 2026 legislative session in Olympia is wrapping up Thursday, and one of the final pieces of legislation to cross the finish line was Senate Bill 6346.
Three Democrats joined all Republicans in opposition on the Senate floor Wednesday evening, but the majority had more than enough votes to pass the measure.
Gov. Bob Ferguson has indicated he will sign the so-called “millionaire’s tax,” which will slap a nearly 10% tax on income north of $1 million a year, or combined household income above that threshold, to fund several programs, provide tax breaks for lower income families and bolster the general fund.
Different numbers have been thrown around about how many Washingtonians will pay the tax and how much it will generate, starting in 2029. Estimates are around 20,000 to 30,000 people may be subject to the tax, which could generate in excess of $3 billion a year.
Earlier in the week, the House spent more than 24 hours of continuous debate on the income tax, which was the longest floor session since the 1920s when lawmakers debated the highway system.
Patrick Connor, Washington state director of the National Federation of Independent Business, told The Center Square during a Thursday interview about how the income tax will impact small businesses.
“When it comes to small business, it’s really a top-off tax because every single dollar that comes into a small business is taxed and it’s taxed on the gross, not on the net,” he explained. “We’re paying the business and occupation tax on all of those dollars, so now they’re going to be paying an additional 10% tax on business earnings potentially above a million dollars, which we think is going to cripple a number of small businesses.”
Connor said the cumulative effect of taxes that have hit several sessions in a row are making it difficult for many to stay in business and make a living.
“Sometimes fairly easily a business could have gross receipts above a million dollars; however, those business owners are taking home a salary that is far, far lower than that million-dollar threshold,” he said. “Nonetheless, they could be subject to the millionaire’s tax.”
As reported by The Center Square, the Association of Washington Business noted that in their most recent quarterly survey of members, 44% of business owners indicated they are considering relocating their domicile to avoid Washington taxes. In Eastern Washington, 56% indicated they may relocate.
The income tax is likely to face additional challenges. A ballot initiative to repeal the tax could show up this November, and Senate Minority Leader John Braun has said organizations are already planning legal challenges to the bill.
Opponents say the legislation is in direct conflict with the state constitution’s requirement that property cannot be taxed at different rates on different income levels.
