Governor Bob Ferguson signed Senate Bill 6346 into law on March 30, 2026, establishing Washington State’s first income tax. The law imposes a 9.9% tax on individuals with annual income exceeding $1 million, and state estimates indicate that approximately 30,000 Washington taxpayers will be subject to the new tax, which is scheduled to take effect in 2029.

The bill passed the state legislature on March 12, 2026. Washington was previously one of nine states without an individual income tax, and prior efforts to establish one were either overturned by courts or rejected by voters. SB 6346 also includes tax relief measures for low-income households and small businesses.  The law was enacted against a backdrop of ongoing debate about the structure of Washington’s tax system and current state budget shortfalls. Legal challenges and the possibility of a ballot referendum are both anticipated.

Although the tax will not take effect until 2029, Washington residents with income above or near the $1 million threshold should consider reviewing their tax situation in advance. Taxpayers who spend time in multiple states may want to evaluate their residency and domicile status. Business owners with income from pass-through entities should assess how the 9.9% state tax could affect their overall effective tax rate. Individuals and businesses with operations in both Oregon and Washington may want to consider how the two states’ tax regimes interact, particularly given the uncertainty around SB 6346’s legal and political future.

Geffen Mesher will continue to monitor developments related to SB 6346 as the law moves through the courts and the political process. For questions about how this legislation may affect your tax situation, please contact Geffen Mesher.

About Geffen Mesher: Geffen Mesher is a Portland-based CPA and advisory firm with nearly a century of experience serving businesses, families, and investors across the Pacific Northwest. We focus on providing ongoing financial strategy, accounting, and tax advisory services for businesses and individuals across numerous industries. Learn more at gmco.com.