Washington state has no income tax. It just passed one for millionaires that could be a model for other states

People who live and work in Washington state don’t currently pay any income tax. But in a few years, a small group of residents will be subject to one: Washington lawmakers recently passed a bill that would impose a 9.9% tax on income earned above $1 million, which goes into effect on January 1, 2028.

The so-called millionaires tax could raise up to $4 billion annually for the state, revenue that Governor Bob Ferguson has said could go toward free breakfast and lunch for students, and to working families through a tax credit. (Ferguson has yet to sign the bill, which landed on his desk March 13, but has pledged to.)

The tax is part of a wave of bills that lawmakers have been considering this year to rein in wealth hoarding and address the widening issue of inequality. And to some “high net worth” individuals, it’s long overdue.

‘It’s about time’

Judy Pigott, for example, is a member of Patriotic Millionaires, a group of wealthy individuals who advocate for more progressive taxes. She’s also a long-time Seattle resident. When Pigott first heard about the bill, her reaction, she says, was, “It’s about time.”

“I think it’s important for people who have higher income to pay a fair share, which, in my mind, means we should get rid of loopholes and super tax advantages,” she says. “Those who have [wealth], they do have a social contract—unwritten, but important—to the whole.”

When Pigott, 76, lived in a different state, her uppermost earnings were taxed at almost 80%. “A 9.9% tax,” she says, “seems minor to me.”

Individuals’ effective tax rates will actually be lower than that rate, because the 9.9% applies only to any income above $1 million. On a $1.2 million income, for example, only $200,000 is subject to that tax.

The bill also applies to only a small subset of the population: less than 0.5% of Washingtonians will be impacted.

Will rich people flee?

Still, there are opponents. Critics of the bill have raised concerns that it could push rich residents to flee the state, or even harm recruitment efforts for Seattle sports teams.

Pigott has no plans to leave Seattle, and she doesn’t anticipate others doing so. “While there may be someone who leaves Washington state, the reasons are unlikely to be as a result of this tax, certainly not as a singular issue,” she says. “More likely, I would say, they want sunshine.” 

Research backs Pigott’s thoughts on this.

“The literature just doesn’t really support the idea that people migrate because of their taxes going up,” says Omar Ocampo, a researcher for the Institute for Policy Studies’s program on inequality and the common good.

In 2023, for example, a millionaires tax went into effect in Massachusetts, and so far there doesn’t seem to have been a mass exodus of millionaires. 

Actual data from the Internal Revenue Service (IRS) on income earners isn’t yet out for that year, but two other proxies hint to little effect, Ocampo says: the number of millionaires in the state by net worth has grown since then, and revenue from the tax has surpassed projections every year so far.

Many headlines have been written about former Starbucks CEO Howard Schultz leaving Washington for Florida, but he’s also commented that he has entered the “retirement phase” of his life—and Florida is one of the top states when it comes to attracting retirees.  

And when it comes to sports, former Patriots coach Bill Belichick had said that the Massachusetts millionaires tax would affect the team’s recruitment efforts, but as Ocampo notes, that team made it to the 2026 Super Bowl.

California also has a higher overall tax burden than Massachusetts, and sports teams there are still successful. 

Washington state could ‘be a trailblazer’

These misconceptions, Ocampo says, emanate from what he calls the “wealth defense industry,” which he describes as the opposition to, basically, any progressive taxes.

Wealthy individuals have fought such taxes publicly, often spending significant amounts of money to do so. For example, Google cofounder Sergey Brin has spent $45 million fighting a 5% wealth tax in California, the Guardian reported this week.

Billionaires spent millions opposing New York Mayor Zohran Mamdani’s election, spurring him to comment that they were “spending more money against me than I’d tax [them].”

But Ocampo says people tend to support these taxes when they see the tangible benefits from them. Massachusetts’ millionaires tax has led to real public transit investments, and has allowed the state to cover college tuition for 25,000 students. 

Massachusetts has become an example lawmakers have pointed to when discussing the potential of taxing the wealthy. Now, Washington state could become another model—particularly for states that don’t have any income tax.

“Whenever someone mentions any type of millionaires tax, people say ‘absolutely not, I don’t want this.’ But then you can see Washington being a trailblazer,” he says. 

“[In places like] New Hampshire, Florida, people can start looking at this as ‘maybe this is something that we can do and the rest of the rest of the population doesn’t have to worry that this income tax would affect them, yet we could have some public investment,’” he adds. 

More wealthy people themselves—at least millionaires, even if billionaires are still largely opposed—may come around to these ideas, too. Pigott says the idea of money only flowing to a few people has “come to be seen as gross.” Research supports the idea that public opinions of the ultra-wealthy are becoming increasingly negative.

To Pigott, the concept of the wealthy holding on to all their money doesn’t even make much sense.

“Too many of us in this country . . . want ‘more for me now,’” she says. “And if what you want is more, you cannot have enough. It’s an unreachable goal.”

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