OLYMPIA – A boisterous and jubilant crowd watched Thursday as The Millionaires Tax, the most progressive tax reform in Washington state history, was signed into law.

When implemented, the Millionaires Tax will provide sustainable funding for schools, health care and other essential services, help fix Washington’s broken tax code and provide tax cuts for millions of working Washingtonians and small businesses.

“Today was a momentous step forward,” said Jamie Pedersen (D-Seattle), the prime sponsor of the legislation. “For Washington’s 1.1 million school kids, people struggling to afford health care and other necessities, and small businesses looking for a little help, that help is on the way.”

Less than 1% of the wealthiest households in the state will pay the Millionaires Tax (SB 6346). The narrow, targeted proposal will levy a 9.9% tax on income above $1 million.  Households with incomes of $1 million and below will pay nothing.

It’s estimated the Millionaires Tax will 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.

Revenue from the Millionaires Tax will also be dedicated to targeted tax cuts to rebalance Washington’s regressive, nearly century-old tax structure. Tax cuts and other savings for families and small businesses include:

  • The elimination of sales taxes on diapers, personal hygiene products, and over-the-counter medication. Because there is already no sales tax on food, that means almost everything in a family’s grocery cart will be tax free.
  • Expansion of the Working Families Tax Credit to include 460,000 additional Washingtonians in the program, which gives low-income families a little help making ends meet.
  • A doubling of the small business tax credit, which will eliminate the B&O tax for more than 65% of small businesses in Washington.
  • School breakfasts and lunches will be free for all 1.1 million school kids, saving money for hundreds of thousands of Washington families.
  • 5% of revenue collected from the Millionaires Tax goes toward child care.

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.

“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.”

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.