OLYMPIA – Leaders from the Washington State Senate and House on Tuesday introduced the Millionaires Tax, a policy that will help fix the state’s broken tax code, provide sustainable funding for schools and health care, and reduce taxes for working families and small businesses.

Senate Bill 6346, sponsored by Senate Majority Leader Jamie Pedersen, is scheduled for a public hearing on Friday, Feb. 6 at 1:30 p.m. in the Senate Ways & Means Committee. The House version of the bill, HB 2724, is sponsored by House Majority Leader Joe Fitzgibbon.

“Our state is wonderful for so many reasons, but our broken, nearly century-old tax structure is holding us back,” Pedersen said. “We have an opportunity to take a giant step forward by funding public schools, health care, and services that people across the state are counting on by increasing taxes on a few thousand very wealthy people and cutting taxes for millions more.”

Less than one percent of the wealthiest households in the state would pay the Millionaires Tax.  The narrow, targeted proposal would levy a 9.9% tax on income above $1 million.  Households with incomes of $1 million and below would pay nothing.

It’s estimated the Millionaires Tax would generate $3.7 billion annually. That money will fund critical services like public education, early learning and child care, health care, and other services Washington families rely on.

“Washington families are concerned about affordability and keeping our economy strong, and businesses are too,” Fitzgibbon said. “By reforming our outdated tax code, we’re helping make life more affordable for working families and promoting our state’s economic competitiveness.”

Revenue from the Millionaires Tax would also be dedicated to targeted tax cuts. Poor and working people in Washington pay a much larger percentage of their income in taxes than wealthy people.  Households with income in the bottom 20% pay 13.8% of their total income in taxes, while those with income in the top 1% pay only 4.1%. Only Florida has a more regressive tax structure than Washington.

Reductions include eliminating sales tax on grooming and hygiene products, such as shampoo and deodorant. Every small business grossing less than $250,000 — approximately 257,000, or 65% of all businesses in the state — would be exempt from the Business & Occupation Tax (B&O) tax starting in 2029. The B&O surcharge will also be eliminated beginning in 2029, which would lower taxes for many leading Washington businesses.

The Millionaires Tax will also allow for the expansion of the Working Families Tax Credit, a sales tax rebate for Washington families with low to moderate income levels struggling to make ends meet.

Additionally, 5% of the revenue collected from the Millionaires Tax will be distributed to counties across the state to help pay for the public defense system and strengthen public safety.

Recent independent polling has revealed that a Millionaires Tax is a popular idea across political and geographic lines — 54% of Republicans, 52% of Independents and 71% of Democrats support the idea of taxing millionaires. In the 2024 general election, 64% of voters supported the capital gains tax on the wealthy, including majorities of voters in 32 out of 39 counties.

The 60-day 2026 legislative session ends March 12.