All Roll Calls
Yes: 3,419 • No: 3,819
WashingtonSB 63462025-2026 Regular SessionSenateWALLET
Establishing a tax on millionaires.
Sponsored By: Jamie Pedersen (Democratic)
Became Law
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Bill Overview
Analyzed Economic Effects
36 provisions identified: 10 benefits, 9 costs, 17 mixed.
Small businesses: bigger B&O break, fewer filings
Beginning January 1, 2029, the B&O small business credit cap rises to $125 per month. If at least half of your taxable amount is under listed B&O categories, the cap is $375 per month. The credit still follows the law’s reduced-credit formula and tax credit tables. Also starting in 2029, if your annual sales or gross income from B&O‑taxed activities is under $250,000, you do not have to file monthly returns for those activities. A separate $24,000 rule still applies to other listed activities.
Schools, libraries skip use tax on services
Beginning July 1, 2026, public libraries, library districts, and K‑12 schools do not pay state use tax on certain services. Covered services include IT services, custom website work, investigation and security, armored car services, temporary staffing, and custom or customized software. This lowers costs for those public institutions.
Many business incomes exempt from surcharge
From January 1, 2026 through December 31, 2029, certain income does not count toward the surcharge. Examples include income under specific manufacturing rates, some wholesale and retail transactions (including certain food and fuel sales), income with certain credits, farmers and eligible apiarists, and some outside‑state petroleum product sales. Income the law exempts is also left out when figuring the surcharge base.
Higher penalties for late or unpaid tax
If you do not pay tax by the due date, penalties start at 9% of the tax due. If still unpaid, the total penalty can rise to 19% and then 29%. There is a 5% penalty for substantial underpayments and 5% for failing to obtain a required registration. There is an extra 10% penalty for disregarding written instructions or willfully ignoring electronic filing or payment rules.
New tax rules for nonresidents and athletes
Washington taxes residents on all income. Nonresidents report income from Washington sources, such as wages for work done here, business income, property rents or gains, intangibles used here, and wagering income. If you work both inside and outside Washington, your Washington pay equals total pay times (days worked in Washington ÷ total days), unless the department approves another method. If you work in Washington five days or less in a year, no income is allocated here, except for pro athletes, student athletes, and entertainers. Nonresident pro athletes with over $1,000,000 in pay allocate by duty‑day ratio, and employers must file an annual roster and pay report by April 15. If you are not a full‑year resident, your $1,000,000 standard deduction is prorated by your Washington base income share.
Temporary 0.5% surcharge on $250M+ incomes
From January 1, 2026 through December 31, 2029, a 0.5% surcharge applies to Washington taxable income over $250 million. For 2029, many listed income types are exempt and do not count toward the $250 million threshold. Affiliated and control rules (more than 50% control) apply to group related persons for this surcharge during 2026–2029.
Add-backs raise income for pass-through owners
When you compute Washington income, you must add back taxes on or measured by net income that you deducted on your federal return. If you own a pass‑through, you must also add back your share of any entity‑level tax expense that lowered your federal adjusted gross income. These add‑backs increase Washington taxable income for many owners.
Millionaire income tax starts in 2028
Beginning January 1, 2028, Washington taxes individuals at 9.90% of Washington taxable income. You get a $1,000,000 standard deduction per person ($1,000,000 combined for spouses or registered partners). The deduction is indexed every odd October starting in 2029 for the next year. Residents can claim a limited, nonrefundable credit for income taxes paid to another state, and a nonrefundable credit for Washington capital gains tax paid for the same year. If your annualized estimated tax is over $5,000, you must make estimated payments; no estimated payments are required before July 1, 2029. Returns are due by the federal due date and tax must be paid then even with a federal extension; late filing is penalized 5% per full month, up to 25%. Charitable deductions are capped at $100,000 per person ($100,000 combined for spouses/partners). The law uses federal definitions and accounting methods, and joint federal filers file jointly in Washington with joint and several liability unless relief applies. Section 901 takes effect January 1, 2029, and no refunds under that section apply to periods before January 1, 2028.
Mixed changes to investor income taxes
Most out‑of‑state municipal bond interest is added to Washington base income, while interest on Washington obligations stays excluded. Income from U.S. government obligations can be deducted, reduced by related expenses deducted federally. You deduct long‑term capital gains in federal AGI and add long‑term capital losses; if you owe Washington capital gains tax, you must add those Washington‑taxed gains and certain related amounts. Washington residents must also include income from certain incomplete nongrantor trusts that was not already included.
Working Families’ Credit amounts and penalties
Each year, the Working Families’ Credit pays $300 with no children, $600 with one, $900 with two, and $1,200 with three or more. If you were overpaid, the department can recover the money and charge interest starting six months after assessment. If it finds you knowingly committed fraud, it must add a penalty equal to 50% of the overpaid amount. The department can collect from a spouse if the refund came from a joint federal return.
Elective pass-through entity tax and credits
Starting January 1, 2028, a pass‑through business can elect to pay a 9.90% entity‑level tax by filing the election by June 15. Owners get a nonrefundable credit equal to their share of the entity tax. If the same income also paid B&O or public utility tax, the taxpayer can claim a nonrefundable credit. Use each owner’s pro rata share from the federal Schedule K‑1. Estimated payments are not required before July 1, 2029.
Many sections void if court strikes key part
If a final court strikes down section 201, then sections 1–1003 and 1201–1209 of this law are null and void. Large parts of the law depend on section 201 surviving court review.
More families qualify for state refund
The Working Families' Credit now covers more people. ITIN filers and some who file married filing separately can qualify if other rules are met. The credit phases down as income nears the state maximum, with different rates by number of children, and never drops below $50 if your calculated amount is above $0. The amounts are adjusted for inflation each year, and the state can automate claims, accept paper or e‑applications, and allow retroactive claims for up to three years. If the state later finds you were underpaid within the refund window, it must pay the extra amount.
New deductions for select businesses
If you deposited money in a federal capital construction fund (IRC 7518) and it reduced your federal taxable income, you can deduct that deposit from Washington base income. Licensed cannabis businesses can deduct expenses disallowed by federal IRC 280E when computing Washington income.
Sales tax break for libraries and schools
Public libraries and K‑12 schools do not pay state sales tax on certain services. Covered services include IT services, custom websites, live presentations, security and armored car services, temporary staffing, and custom software.
State taxes on some public pensions
Certain Washington public retirement allowances and related payments are no longer exempt under this income tax law. If you receive a pension from the listed public systems, that income may be subject to Washington tax.
Tax refunds can pay past child support
If you owe past‑due child support and the state is holding your Washington income tax refund, the refund can be taken to pay that debt. While the collection is active, you cannot apply that refund to future taxes. The money stays available to satisfy child support first.
Stronger criminal penalties for tax evasion
The law makes knowing tax evasion a class C felony. Knowingly failing to pay, file returns, or give required information is a gross misdemeanor. These crimes require proof that the person acted knowingly.
New filing rules for spouses/partners
If you file a joint federal return, you must file a joint Washington return. If you file separate federal returns, you file separate Washington returns. State‑registered domestic partners may file a joint state return even if they filed separate federal returns. Spouses and partners are generally jointly and severally liable, with federal‑style relief available. If not filing jointly, you must allocate income and deductions under Washington community property rules and applicable IRS rules.
New limits on business loss carryovers
Carryovers from tax years ending before January 1, 2028 are added back into Washington base income. For net operating loss carryovers from after January 1, 2028 that are apportioned to Washington and meet the rules, you can deduct 80%. Older carryovers get limited, while newer Washington‑apportioned NOLs keep a partial deduction.
Business income apportionment and estimates
Businesses apportion apportionable income to Washington by multiplying by Washington receipts divided by total receipts. The law gives detailed rules for assigning receipts and lets taxpayers or the department use another method when the standard rule is unfair. The department may enter estimation agreements with multistate businesses to set their Washington tax.
Income tax allowed with $1 million deduction
State law now allows this income tax only while the standard deduction is at least $1,000,000 per household. This ties the tax’s legality to keeping a very high standard deduction.
New tax rules for digital sales
Starting January 1, 2029, the state updates what counts as a taxable retail sale and how digital goods and digital automated services are defined. Some digital products and services become taxable, while others are excluded, like certain human‑provided services, internet access, and telehealth. Sellers and platforms must use the new lists and exclusions to collect the right tax.
No state sales tax on diapers
Beginning January 1, 2029, Washington does not charge state sales or use tax on diapers that meet the law’s definition. This lowers the cost for parents and caregivers who buy diapers in-state or bring them in from out of state. The exemption only applies to items that fit the statute’s definition of diapers.
No state tax on hygiene and OTC drugs
Starting January 1, 2029, Washington does not charge state sales or use tax on certain grooming and hygiene items, like soap, shampoo, toothpaste, mouthwash, antiperspirant, and sunscreen. State sales and use tax also do not apply to over‑the‑counter drugs that meet the law’s labeling rules.
Tribal income is exempt from this tax
If you are a member of a federally recognized tribe, several kinds of tribal‑source income are exempt from this tax. This includes income from treaty rights, income earned in your own tribe’s Indian country, trust lands or funds, tribal payments to members or beneficiaries, and income preempted by law. The law is not intended to apply to tribal governments in Washington.
Tax revenues fund services; 5% to kids
Taxes collected under this law go to the state general fund. They pay for sales and use tax relief, a larger working families’ tax credit, business tax relief, and investments in K‑12 education, health care, human services, and higher education. Beginning July 1, 2029, and every July 1 after, 5% of the prior fiscal year’s revenues from this law go to the Fair Start for Kids account. All interest and penalties go to the general fund.
NIL income taxed for nonresident athletes
If you are a nonresident student‑athlete and do publicity work for your name, image, or likeness in Washington, that NIL income is allocated to Washington and may be taxed here. For college payments tied to athletic revenues, the state will propose apportionment rules by January 1, 2028.
Sellers must keep school/library exemption forms
Starting July 1, 2026, if you sell items or services tax‑free to public libraries or K‑12 entities, you must get an exemption certificate from the buyer. The certificate must follow the Department of Revenue’s form and rules. You must keep a copy in your records. This adds a small paperwork step when you rely on the buyer’s exemption.
New interest and refund timing rules
For annual reporting periods covered by this law, interest on assessments runs from the last day of April after the reporting year until the notice due date. Refunds are paid by voucher or by electronic transfer if you pay by EFT and the state has your account. The four‑year limit on refunds still applies, with stated exceptions.
Advisory group meetings and staff support
After July 1, 2026, the advisory group meets regularly to guide how this law is carried out. Topics include pass‑through entity elections and timing, a state K‑1 form, filing rules and documents, an opt‑in safe harbor, and how to implement any extension of sales tax to services. Legislative members receive staff support from nonpartisan and caucus staff during meetings.
Child support taken from state tax refunds
The child support agency and the Department of Revenue share data to find state income tax refunds. They adopt rules to use held refunds to pay past‑due child support.
Revenue department reports on rollout
The Department of Revenue reports to the legislature by December 15, 2026 on early implementation changes. A final report with recommendations is due by December 15, 2027.
Advisory group and reporting for tax
An advisory group meets regularly after July 1, 2026 to help implement the law. The Department of Revenue provides staff support. The legislature states the Department should use appropriated funds to implement the law even during litigation. Starting January 1, 2028, the Department reports each year on total administration cost, full‑time staff, and the cost‑to‑revenue ratio.
Tax administration follows federal procedures
The Department of Revenue runs this tax using chapter 82.32 RCW and, when possible, federal tax procedures from the Internal Revenue Code’s subtitle F. The Department can adopt rules and make exceptions to ensure prompt, fair collection and to align with federal guidance.
Technical dates and legal carve-outs
Sections 1101–1104 take effect July 1, 2026. RCW 82.32.805 and 82.32.808 do not apply to this law except as noted, and do not apply to sections 1101–1104 starting July 1, 2026. RCW 82.32.805 also does not apply to section 901. These are technical rules about how parts of the law are treated.
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Sponsors & Cosponsors
Sponsor
Jamie Pedersen
Democratic • Senate
Cosponsors
Annette Cleveland
Democratic • Senate
Bob Hasegawa
Democratic • Senate
Claire Wilson
Democratic • Senate
Claudia Kauffman
Democratic • Senate
Derek Stanford
Democratic • Senate
Emily Alvarado
Democratic • House
Javier Valdez
Democratic • Senate
Jesse Salomon
Democratic • Senate
Jessica Bateman
Democratic • Senate
John Lovick
Democratic • Senate
June Robinson
Democratic • Senate
Lisa Wellman
Democratic • Senate
Liz Lovelett
Democratic • Senate
Manka Dhingra
Democratic • Senate
Marcus Riccelli
Democratic • Senate
Mike Chapman
Democratic • Senate
Noel Frame
Democratic • Senate
Rebecca Saldaña
Democratic • Senate
Sharon Shewmake
Democratic • Senate
Steve Conway
Democratic • Senate
T'wina Nobles
Democratic • Senate
Member 14205
House
Member 27504
House
Victoria Hunt
Democratic • House
Yasmin Trudeau
Democratic • Senate
Roll Call Votes
Senate vote • 3/11/2026
Final Passage As Amended by the House
Yes: 27 • No: 21 • Other: 1
Senate vote • 3/11/2026
Concur in House amendment(s)
Yes: 27 • No: 21 • Other: 1
House vote • 3/9/2026
2543 Marshall Pg 12 Ln 20
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2573 Dufault Pg 12 Ln 20
Yes: 45 • No: 51 • Other: 2
House vote • 3/9/2026
2596 Walen Pg 12 Ln 24
Yes: 47 • No: 49 • Other: 2
House vote • 3/9/2026
2604 Reeves Pg 12 Ln 24
Yes: 47 • No: 49 • Other: 2
House vote • 3/9/2026
2582 Corry Pg 69 Ln 19
Yes: 47 • No: 49 • Other: 1
House vote • 3/9/2026
2580 Chase Pg 69 Ln 20
Yes: 44 • No: 51 • Other: 3
House vote • 3/9/2026
2564 Stuebe Pg 69 Ln 21
Yes: 43 • No: 52 • Other: 3
House vote • 3/9/2026
2608 Reeves Pg 69 Ln 21
Yes: 46 • No: 49 • Other: 3
House vote • 3/9/2026
2542 Marshall Pg 106 Ln 13
Yes: 43 • No: 50 • Other: 5
House vote • 3/9/2026
2562 Rude Pg 6 Ln 8
Yes: 45 • No: 51 • Other: 2
House vote • 3/9/2026
2597 Walen Pg 8 Ln 3
Yes: 47 • No: 49 • Other: 2
House vote • 3/9/2026
2556 Valdez Pg 64 Ln 36
Yes: 41 • No: 56 • Other: 1
House vote • 3/9/2026
2572 Engell Pg 69 Ln 5
Yes: 93 • No: 1 • Other: 1
House vote • 3/9/2026
2581 McClintock Pg 69 Ln 20
Yes: 42 • No: 52 • Other: 4
House vote • 3/9/2026
2548 Walsh Pg 107 Ln 31
Yes: 40 • No: 53 • Other: 5
House vote • 3/9/2026
Postpone Indefinitely
Yes: 38 • No: 58 • Other: 2
House vote • 3/9/2026
2578 Walsh Pg 1 Ln 3
Yes: 40 • No: 56 • Other: 2
House vote • 3/9/2026
2568 Orcutt Pg 2 Ln 6
Yes: 40 • No: 56 • Other: 2
House vote • 3/9/2026
2600 Reeves Pg 3 Ln 9
Yes: 59 • No: 37 • Other: 2
House vote • 3/9/2026
2549 Manjarrez Pg 3 Ln 12
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2591 Waters Pg 3 Ln 12
Yes: 42 • No: 53 • Other: 3
House vote • 3/9/2026
2539 Berg Pg 3 Ln 21
Yes: 94 • No: 1 • Other: 3
House vote • 3/9/2026
2585 Manjarrez Pg 4 Ln 22
Yes: 40 • No: 55 • Other: 3
House vote • 3/9/2026
2550 Ley Pg 5 Ln 15
Yes: 38 • No: 57 • Other: 3
House vote • 3/9/2026
2583 Dent Pg 5 Ln 15
Yes: 43 • No: 50 • Other: 5
House vote • 3/9/2026
2587 Stokesbary Pg 5 Ln 15
Yes: 40 • No: 53 • Other: 5
House vote • 3/9/2026
2555 Klicker Pg 5 Ln 17
Yes: 43 • No: 51 • Other: 4
House vote • 3/9/2026
2574 Barkis Pg 5 Ln 18
Yes: 41 • No: 53 • Other: 4
House vote • 3/9/2026
2546 Couture Pg 5 Ln 26
Yes: 38 • No: 56 • Other: 4
House vote • 3/9/2026
2547 Ley Pg 5 Ln 26
Yes: 38 • No: 56 • Other: 4
House vote • 3/9/2026
2565 Penner Pg 5 Ln 29
Yes: 39 • No: 55 • Other: 4
House vote • 3/9/2026
2552 Mendoza Pg 5 Ln 33
Yes: 41 • No: 54 • Other: 3
House vote • 3/9/2026
2576 Marshall Pg 5 Ln 33
Yes: 40 • No: 54 • Other: 4
House vote • 3/9/2026
2612 Reeves Pg 5 Ln 33
Yes: 45 • No: 50 • Other: 3
House vote • 3/9/2026
2613 Reeves Pg 5 Ln 33
Yes: 23 • No: 72 • Other: 3
House vote • 3/9/2026
2614 Reeves Pg 5 Ln 33
Yes: 47 • No: 49 • Other: 2
House vote • 3/9/2026
2558 Jacobsen Pg 7 Ln 3
Yes: 42 • No: 54 • Other: 2
House vote • 3/9/2026
2595 Connors Pg 7 Ln 3
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2588 Jacobsen Pg 8 Ln 1
Yes: 47 • No: 49 • Other: 2
House vote • 3/9/2026
2569 Orcutt Pg 11 Ln 15
Yes: 44 • No: 52 • Other: 1
House vote • 3/9/2026
2571 Abell Pg 11 Ln 15
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2545 Barnard Pg 11 Ln 16
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2612 Reeves Pg 5 Ln 33
Yes: 39 • No: 58 • Other: 1
House vote • 3/9/2026
2561 Keaton Pg 43 Ln 2
Yes: 38 • No: 58 • Other: 2
House vote • 3/9/2026
2579 Abbarno Pg 43 Ln 2
Yes: 42 • No: 54 • Other: 2
House vote • 3/9/2026
2598 Walen Pg 64 Ln 21
Yes: 43 • No: 54 • Other: 1
House vote • 3/9/2026
2541 Jacobsen Pg 107 Ln 4
Yes: 40 • No: 54 • Other: 4
House vote • 3/9/2026
2538 Orcutt Pg 107 Ln 26
Yes: 43 • No: 50 • Other: 5
House vote • 3/9/2026
2551 Ybarra Pg 107 Ln 31
Yes: 37 • No: 56 • Other: 4
House vote • 3/9/2026
2567 Low Pg 107 Ln 31
Yes: 37 • No: 57 • Other: 4
House vote • 3/9/2026
2540 Schmidt Pg 12 Ln 28
Yes: 40 • No: 56 • Other: 2
House vote • 3/9/2026
2602 Reeves Pg 13 Ln 20
Yes: 46 • No: 50 • Other: 2
House vote • 3/9/2026
2603 Reeves Pg 13 Ln 20
Yes: 2 • No: 94 • Other: 2
House vote • 3/9/2026
2560 Corry Pg 13 Ln 25
Yes: 45 • No: 51 • Other: 2
House vote • 3/9/2026
2589 Burnett Pg 26 Ln 36
Yes: 38 • No: 59 • Other: 1
House vote • 3/9/2026
2544 Graham Pg 43 Ln 2
Yes: 39 • No: 58 • Other: 1
House vote • 3/9/2026
2609 Reeves Pg 69 Ln 21
Yes: 46 • No: 49 • Other: 3
House vote • 3/9/2026
2610 Reeves Pg 69 Ln 21
Yes: 44 • No: 51 • Other: 3
House vote • 3/9/2026
2611 Reeves Pg 69 Ln 21
Yes: 46 • No: 49 • Other: 3
House vote • 3/9/2026
2592 Couture Pg 69 Ln 24
Yes: 44 • No: 49 • Other: 5
House vote • 3/9/2026
2537 Leavitt Pg 103 Ln 30
Yes: 94 • No: 0 • Other: 4
House vote • 3/9/2026
2601 Reeves Pg 106 Ln 22
Yes: 41 • No: 53 • Other: 4
House vote • 3/9/2026
2615 Rule Pg 106 Ln 33
Yes: 57 • No: 36 • Other: 4
House vote • 3/9/2026
2563 Dye Pg 107 Ln 31
Yes: 93 • No: 0 • Other: 5
House vote • 3/9/2026
2586 Barnard Pg 67 Ln 28
Yes: 45 • No: 50 • Other: 3
House vote • 3/9/2026
2575 Connors Pg 12 Ln 18
Yes: 43 • No: 53 • Other: 2
House vote • 3/9/2026
2577 Steele Pg 107 Ln 31
Yes: 38 • No: 57 • Other: 3
House vote • 3/9/2026
2594 Walen Pg 107 Ln 31
Yes: 46 • No: 49 • Other: 3
House vote • 3/9/2026
2566 Griffey Pg 43 Ln 3
Yes: 44 • No: 52 • Other: 2
House vote • 3/9/2026
2584 Walsh Pg 107 Ln 26
Yes: 41 • No: 55 • Other: 2
House vote • 3/9/2026
Final Passage as Amended by the House
Yes: 51 • No: 46 • Other: 1
House vote • 3/9/2026
2554 Abell Pg 106 Ln 18
Yes: 40 • No: 55 • Other: 3
House vote • 3/9/2026
2590 Penner Pg 12 Ln 19
Yes: 42 • No: 54 • Other: 2
Senate vote • 2/16/2026
693 Warnick Pg 10 Ln 25
Yes: 20 • No: 29
Senate vote • 2/16/2026
3rd Reading & Final Passage
Yes: 27 • No: 22
Senate vote • 2/16/2026
696 Gildon Pg 66 Ln 6
Yes: 21 • No: 28
Senate vote • 2/16/2026
695 MacEwen Pg 66 Ln 1
Yes: 21 • No: 28
Actions Timeline
Effective date 6/11/2026*.
3/30/2026SenateChapter 238, 2026 Laws.
3/30/2026SenateGovernor signed.
3/30/2026legislatureDelivered to Governor.
3/13/2026legislatureSpeaker signed.
3/12/2026legislaturePresident signed.
3/12/2026legislaturePassed final passage; yeas, 27; nays, 21; absent, 0; excused, 1.
3/11/2026SenateSenate concurred in House amendments.
3/11/2026HouseThird reading, passed; yeas, 51; nays, 46; absent, 0; excused, 1.
3/9/2026SenateRules suspended. Placed on Third Reading.
3/9/2026SenateFloor amendment(s) adopted.
3/9/2026SenateCommittee amendment not adopted.
3/9/2026SenateRules Committee relieved of further consideration. Placed on second reading.
3/6/2026SenateReferred to Rules 2 Review.
3/2/2026SenateFIN - Executive action taken by committee.
2/27/2026SenateMinority; without recommendation.
2/27/2026SenateMinority; do not pass.
2/27/2026SenateFIN - Majority; do pass with amendment(s).
2/27/2026SenateFirst reading, referred to Finance.
2/17/2026SenateThird reading, passed; yeas, 27; nays, 22; absent, 0; excused, 0.
2/16/2026SenateRules suspended. Placed on Third Reading.
2/16/2026SenateFloor amendment(s) adopted.
2/16/2026Senate1st substitute bill substituted.
2/16/2026SenatePlaced on second reading by Rules Committee.
2/12/2026SenateMinority; without recommendation.
2/9/2026Senate
Bill Text
Session Law
4/1/2026
Bill as Passed Legislature
3/13/2026
Engrossed Substitute
2/16/2026
Original Bill
2/12/2026
Substitute Bill
2/10/2026
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SB 6260 — Implementing efficiencies and programming changes in public education.
SB 6228 — Removing a tax exemption for the warehousing and reselling of prescription drugs.
HB 2034 — Concerning termination and restatement of plan 1 of the law enforcement officers' and firefighters' retirement system.
HB 2689 — Concerning the working connections child care program.
HB 2487 — Concerning taxes imposed on insurers operating within the state.
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