Washington Approves 9.9% Tax on Incomes Over $1 Million

Washington state lawmakers have approved a 9.9 percent tax on annual incomes exceeding $1 million, marking the state's first broad income tax and sending the measure to Gov. Bob Ferguson for his expected signature. The legislation, passed by the House after a marathon debate exceeding 24 hours and by the Senate shortly after, aims to address what supporters describe as an outdated tax structure that disproportionately burdens lower-income residents.

The tax would apply to fewer than 0.5 percent of Washingtonians, according to state estimates, and is projected to generate between $3 billion and $4 billion annually. Funds would support education initiatives, including free breakfast and lunch for all K-12 students, expansions to the Working Families Tax Credit benefiting an additional 460,000 households, and reductions in sales taxes on hygiene products and childcare costs. Gov. Ferguson, a Democrat, praised the bill in a statement, calling it "historic progress in rebalancing our unfair system" that would return money directly to families and small businesses while making the state more affordable overall.

The measure challenges a 1933 state Supreme Court ruling that had barred...