High‑Earners Pay More: Washington’s New Income Tax

Washington state has approved a new tax that will target people who make more than one million dollars each year. The bill was passed by the Senate with a 27‑to‑21 vote and will now go to Governor Bob Ferguson for his signature. The measure is not as controversial in the Senate as it was earlier in the House, where lawmakers debated it for a full day. The tax is set at 9. 9 percent on earnings over the million‑dollar mark, with payments beginning in 2029. Experts predict it will bring in between three and four billion dollars annually, a sum that could help fund schools, universities, and other state programs. Senate Majority Leader Jamie Pedersen, a Democrat from Seattle, welcomed the House’s amendments to the bill. He highlighted promises such as using some of the revenue to support free school lunches for K‑12 students. Pedersen said the bill has improved thanks to input from many people. Republican lawmakers, however, warned that the tax could affect more residents than it appears. Sen. Chris Gildon of Puyallup said the tax is a common tool to address budget deficits and could end up burdening ordinary workers.In addition to the new tax, the bill offers several breaks. It would cancel the state sales tax on items like diapers and over‑the‑counter medicines, give small businesses relief from the business and occupation tax, and expand a credit that returns up to 1, 300 dollars annually to qualifying families. The legislation also rolls back some sales‑tax increases that had been imposed on school districts for temporary staff and live performances. The governor has said he plans to sign the bill soon, but opponents are preparing legal challenges and ballot initiatives that could overturn it. Business groups have expressed concerns that the tax, along with other recent increases, might prompt wealthy individuals to leave Washington for states with lower taxes. House Minority Leader Drew Stokesbary cited the departure of former Starbucks CEO Howard Schultz to Florida as evidence. Ferguson dismissed these worries, saying that revenue boosts are a typical response to any tax hike and that the bill’s cuts will ultimately benefit businesses.