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Washington Initiative 2109 would have repealed the state’s 7% tax on certain long-term capital gains. The 2024 ballot debate centered on two competing claims: repeal supporters said the tax threatened business competitiveness, while opponents warned it would remove dedicated funding for education, school construction, early learning, and childcare. Voters rejected the initiative, 64.11% to 35.89%, so it did not repeal the tax.
What Initiative 2109 proposed
Washington enacted its capital-gains tax in 2021. It applies a 7% tax to gains from sales or exchanges of certain long-term capital assets, including stocks, bonds, business interests, and other investments or tangible assets. The tax applies to gains allocated to Washington, after a $250,000 annual standard deduction. For spouses or domestic partners, the combined deduction is limited to $250,000. It is an excise tax on specified asset sales—not a general tax on every kind of household income. The Legislature’s Initiative 2109 summary describes the proposal as one that “would repeal the Washington capital gains tax.”
The tax has statutory exclusions and adjustments, so the general description does not determine how a particular asset sale or taxpayer is treated. For a specific situation, consult current Washington Department of Revenue guidance or a qualified tax professional.
Which funds were at stake?
Under the law, the first $500 million in annual revenue went to the Education Legacy Trust Account. That account supports K–12 and higher education, childcare, and early learning. Remaining receipts went to the Common School Construction Account. The Education Legacy Trust allocation was adjusted annually for inflation beginning with taxes due and payable in 2024.
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The official ballot title framed the consequence of repeal this way: “This measure would decrease funding for K-12 education, higher education, school construction, early learning, and childcare.” That describes the measure’s projected effect on dedicated revenue, not a guarantee about how lawmakers would respond through other funding decisions.
What the 2024 fiscal estimate said
The Washington Attorney General’s fiscal impact statement in the 2024 Voters’ Pamphlet forecast reductions to the Education Legacy Trust Account if I-2109 passed. These were state forecasts for fiscal years 2025–2029, not actual losses or updated estimates:
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| Fiscal year | Forecast reduction |
|---|---|
| 2025 | $424 million |
| 2026 | $398 million |
| 2027 | $422 million |
| 2028 | $447 million |
| 2029 | $472 million |
The five-year forecast totaled $2.163 billion in reduced Education Legacy Trust Account revenue. The pamphlet also listed state costs tied to administration and transition. It anticipated that processing and managing accounts for earlier tax years would continue after repeal, followed later by system decommissioning.
What supporters said about businesses—and what is established
Supporters argued in the official Voters’ Pamphlet that the tax could weaken Washington’s competitiveness, encourage employers and family-wage jobs to move to lower-tax states, and open the door to broader income taxation. They also argued that constitutional education funding would continue without this tax. These were campaign arguments and predictions, not findings that I-2109 had caused businesses or jobs to leave Washington.
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The available evidence here does not establish a measured business-relocation effect caused by the capital-gains tax. The initiative’s business case should therefore be understood as a concern about possible effects, not a proven outcome or a quantified estimate. Similarly, the claim about constitutional education funding was part of the supporters’ argument; it does not erase the forecast reduction in dedicated accounts described above.
Who paid the tax, and what opponents argued
Opponents said the tax applied to a small share of Washington residents and that common categories—including retirement assets, real estate, farms, and qualifying small businesses—were exempt. Those points appeared as campaign claims in the pamphlet; the precise legal treatment depends on the statute’s exclusions and adjustments. The tax’s $250,000 annual deduction is part of the official legal description, but it should not be mistaken for a complete account of every eligibility rule or exemption.
Opponents’ central fiscal concern was that repeal would remove dedicated funding for schools, school construction, early learning, and childcare, adding pressure to those services or funding sources. The fiscal statement quantified the revenue at risk for the Education Legacy Trust Account, but a forecast of lost receipts does not itself specify which programs would ultimately be reduced or whether lawmakers would replace any funding.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How voters decided
Official final results recorded 2,437,419 No votes (64.11%) and 1,364,510 Yes votes (35.89%). I-2109 failed, preserving the capital-gains tax against this particular 2024 repeal effort. The figures are the certified outcome of the November 2024 vote, not a current ballot measure.
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How the 2026 income-tax proposal differs
Washington’s 2026 IP26-645 is a separate initiative and should not be confused with I-2109. The House’s official summary of IP26-645 describes a proposal to repeal a 9.9% tax on annual individual income above $1 million and to prohibit state and local taxes on individual income or taxes measured by individual income. That tax was enacted in ESSB 6346 and was scheduled to begin January 1, 2028, according to the enacted bill. It is a distinct tax and proposal, with a broader income-tax framework than the 2024 tax on specified long-term asset gains.
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