Washington Millionaires Tax

• The law: ESSB 6346 is law (Chapter 238, Laws of 2026, signed March 30, 2026). The 9.9% tax on individuals' Washington taxable income above a $1 million standard deduction begins January 1, 2028, and first returns are due in April 2029. No income tax is in effect today.
• Referendum ruling: On May 4, 2026, the Washington Supreme Court held that ESSB 6346 is "not subject to referendum" (No. 105220-1). The court said the case concerned "only whether ESSB 6346 is subject to a referendum, not the constitutionality of the tax." It did not decide whether the tax is constitutional.
• On the ballot: Initiative 645 (IP26-645) is on the November 3, 2026 general election ballot. If approved, it would repeal the 9.9% tax and prohibit state and local taxes on individual income. The state's fiscal impact statement gives an effective date of December 3, 2026 if approved.
• What I-645 would leave in place: The Attorney General's explanatory statement says the non-income tax credits, exemptions, and deductions enacted with the tax "would not be repealed and would remain in place."
• Court-invalidation clause: If a court of final jurisdiction invalidates the income-tax section (§201), ESSB 6346 §1202 makes sections 1–1003 and 1201–1209 null and void. That includes the scheduled 2029 repeal of most ESSB 5814 service taxes and the 2029 relief items listed below.

Sources: ESSB 6346 session law · DOR income tax page · WA Supreme Court order, No. 105220-1 · SOS Voters' Pamphlet, Nov 3, 2026 · AG explanatory statement, IP26-645 · OFM fiscal impact statement, I-645

• ESSB 6346 imposes a 9.90% tax beginning January 1, 2028.
• The final bill report says only individuals are subject to payment of the tax.
• The first tax payments and returns begin in calendar year 2029.

Sources: ESSB 6346 final bill report · ESSB 6346 bill text as passed

ESSB 6346 is not just an income-tax bill. Its legislative materials connect the new revenue source to tax relief, including changes to sales and use taxes, the small business B&O credit, and other relief provisions scheduled around the 2029 implementation period. That relief would also be void if a court of final jurisdiction invalidates the income tax (§1202).

• Washington base income — starts from federal AGI, then applies Washington-specific modifications.
• Standard deduction — a $1 million standard deduction, with a combined limit for spouses or domestic partners.
• Deductions and addbacks — charitable deductions, capital construction fund treatment, wagering loss treatment, cannabis 280E-related deductions, and pass-through entity tax addbacks.
• Credits — for certain taxes paid to other states, B&O or public utility tax paid on the same income, and Washington capital gains tax paid on capital gains taxed under the bill.
• Nonresidents — Washington-source income assigned through allocation and apportionment, including workday-based compensation sourcing and receipts-factor concepts for business income.
• Pass-through election — pass-through entities may elect entity-level payment, with owners receiving a credit for their share.

ESSB 6346 is scheduled to remove most ESSB 5814 retail services, but not advertising services, from the retail sale definition on Jan. 1, 2029; that change depends on the bill's new income tax surviving court review (§1202). See the retail-services tracker.

• Expanded Working Families Tax Credit eligibility beginning in 2029.
• Sales and use tax exemptions for diapers, over-the-counter drugs, and grooming or hygiene products beginning in 2029.
• Small business B&O credit and annual filing threshold increases beginning in 2029.
• Scheduled removal of most ESSB 5814 retail services, but not advertising services, from the retail sale definition on Jan. 1, 2029; that change depends on the bill's new income tax surviving court review (§1202).

• January 1, 2028 — tax imposition begins.
• Calendar year 2029 — first payments and returns begin; several relief provisions take effect.
• December 15, 2026 is the due date for the Income Tax Advisory Workgroup’s initial report to the legislative fiscal committees, and that report is not published yet.
• December 15, 2027 — final advisory group report date.
• DOR implementation — watch for forms, rules, advisory group output, and filing mechanics.

ESSB 6346 says that if a court of final jurisdiction invalidates the income-tax section, the covered provisions of the act are null and void. Treat this as an active risk area, not a settled planning assumption. A referendum or litigation headline is not the same as a final merits decision — keep implementation timeline, referendum status, and constitutional litigation status in separate buckets.

• DOR implementation — forms, filing mechanics, rules, safe harbors, and taxpayer instructions still need detail.
• Advisory group reports — initial report due December 15, 2026; final report due December 15, 2027.
• Referendum: resolved. The Supreme Court held ESSB 6346 not subject to referendum (No. 105220-1, May 4, 2026). Constitutionality: not decided in that case. Ballot: Initiative 645, November 3, 2026.
• Retail-services relief — ESSB 6346 is scheduled to remove most ESSB 5814 retail services, but not advertising services, from the retail sale definition on Jan. 1, 2029; that change depends on the bill's new income tax surviving court review (§1202).

Is the tax due now? No. The tax is imposed beginning January 1, 2028, with first payments and returns beginning in 2029.

Who is subject to payment? Only individuals are subject to payment. A pass-through entity election can affect how entity income is paid and credited.

Why is this connected to retail services? ESSB 6346 links the income-tax package to tax relief. It is scheduled to remove most ESSB 5814 retail services, but not advertising services, from the retail sale definition on Jan. 1, 2029; that change depends on the bill's new income tax surviving court review (§1202).

What is the main legal risk to watch? The bill text and report include null-and-void language tied to a final court decision invalidating the income-tax section. Track that separately from implementation updates.

What should advisors track first? DOR implementation guidance, advisory group reports, standard deduction and credit mechanics, nonresident sourcing, pass-through election rules, and litigation status.

• ESSB 6346 final bill report
• ESSB 6346 bill text as passed Legislature
• DOR 2026 tax legislation page
• DOR 2026 legislative report PDF
• Governor signing announcement