Washington enacted a 9.9% individual income tax in 2026, but it does not begin until January 1, 2028. The law describes a $1 million income threshold; its tax is calculated on Washington taxable income after a $1 million standard deduction and other statutory adjustments—not on a person’s wealth or automatically on every dollar of income once it exceeds $1 million.
What Washington enacted, and when the tax starts
Governor Bob Ferguson approved ESSB 6346 on March 30, 2026. It became Chapter 238, Laws of 2026. The act’s general effective date is June 11, 2026, subject to exceptions for particular provisions. The new individual income tax itself starts January 1, 2028.
That distinction matters: enactment and the law’s general effective date do not mean the new income tax applies to income earned in 2026 or 2027. The act says that, beginning January 1, 2028, a tax is imposed on the receipt of Washington taxable income.
Who may have to pay
The tax applies to individuals, not to a person’s net worth. The Washington Department of Revenue describes it as applying to individuals and married couples filing jointly whose annual adjusted gross income exceeds $1 million. That is a useful threshold description, but it is not the statute’s complete tax calculation: the law defines a taxable-income base, provides a $1 million standard deduction, and makes other adjustments.
Residents
The law generally treats a person as a Washington resident if Washington is their domicile. It also has a rule that can treat a person who is not domiciled in Washington as a resident if they maintain an abode in the state and are physically present there for more than 183 days. Residents’ income is generally measured wherever it is derived, subject to the act’s definitions and adjustments.
Nonresidents
Nonresidents are generally taxed on Washington-source income, applying the statute’s allocation rules. For compensation, the general approach allocates pay according to the services performed in Washington; statutory exceptions and apportionment methods can affect the result. Someone who works across state lines or has income from several states may need to determine how the particular income is sourced rather than relying only on where they live.
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How the rate and $1 million deduction work
The statutory rate is 9.90% of Washington taxable income. The act provides a $1 million standard deduction per individual. For spouses or state registered domestic partners, the deduction is combined, whether they file jointly or separately. The deduction is subject to adjustment for nonresidents, and inflation adjustment begins in October 2029.
In simplified terms, the calculation starts with federal adjusted gross income, applies Washington-specific additions and subtractions, and then accounts for the standard deduction and other rules to determine Washington taxable income. The 9.90% rate applies to that taxable-income amount. It is therefore inaccurate to describe the law as a 9.9% tax on all income, a 9.9% tax on assets, or a tax that takes 9.9% of a person’s entire income just because their income crosses $1 million.
The act includes other adjustments that can affect an individual’s taxable income. Examples include:
- A charitable-contribution deduction capped at $100,000 per individual, or $100,000 combined for spouses or registered domestic partners.
- A deduction for qualifying deposits to a capital construction fund.
- A wagering-loss deduction limited to 90% of qualifying losses and capped by Washington-allocated wagering income.
- A deduction for specified expenses of licensed commercial-cannabis activity that federal law disallows.
These examples are not a complete calculation guide. Eligibility, documentation, income allocation, and the interaction of statutory adjustments can change the result.
How it interacts with Washington’s capital-gains tax
The new income tax and Washington’s separate capital-gains tax are distinct taxes with different bases. The new tax applies to Washington taxable income beginning in 2028; the existing tax applies to qualifying Washington capital gains. The new law contains specific adjustments for long-term capital gains and provides a same-year credit for Washington capital-gains tax imposed under the separate tax.
| Question | New individual income tax | Separate Washington capital-gains tax |
|---|---|---|
| What is taxed? | Washington taxable income, as defined and modified by ESSB 6346. | Qualifying Washington capital gains under the separate capital-gains tax. |
| When does it apply? | Beginning January 1, 2028. | The new law’s 2028 start date does not change the separate tax’s own rules or timing. |
| How does the new law address capital gains? | It generally subtracts long-term capital gains included in federal adjusted gross income and adds back long-term capital losses, then adds back certain Washington capital gains subject to the separate tax, subject to the statute’s provisions. A nonrefundable credit is available for Washington capital-gains tax imposed for the same tax year. | Its own definitions, exemptions, and rules determine which gains are subject to it. |
The interaction is not accurately summarized by saying that capital gains are simply taxed twice or are entirely excluded from the new tax. The statutory adjustments and same-year credit matter, and the credit is nonrefundable: it reduces the new tax as provided by law but is not described as a refund of tax beyond the amount owed.
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ESSB 6346 also changes tax credits and business and sales taxes. Those provisions are separate from the new individual income tax, and their effective dates differ.
| Provision | What the act does | Effective timing stated in the act |
|---|---|---|
| Working Families Tax Credit | Expands eligibility. | A separate effective date applies; it is not the income tax’s January 1, 2028 start date. |
| Small-business B&O tax | Increases a small-business B&O credit and raises the B&O tax-return filing threshold. | Separate effective dates apply. |
| Specified sales-tax changes | Changes sales-tax treatment for specified services. | Some changes begin July 1, 2026. |
| Grooming and hygiene products, diapers, and over-the-counter drugs | Provides sales-tax exemptions for the listed items. | January 1, 2029. |
The Legislature states that income-tax revenue is intended to support the general fund, including K–12 education, health care, higher education, human services, and the Working Families Tax Credit. The act also directs a portion of revenue to the Fair Start for Kids account.
What remains uncertain about implementation and court challenges
The act directs the Department of Revenue to report to the Legislature beginning in 2028 on administrative costs and staffing, and it creates a department-led advisory group. Detailed department rules and forms are not established here. The available information also does not establish whether litigation over the tax is pending or resolved, so it does not support a claim that a court has upheld, blocked, or repealed the tax.
The act provides that most of its provisions become null and void if a court of final jurisdiction invalidates the tax. That provision makes court developments relevant to the law’s status, but it is not evidence that such a ruling has occurred.
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