For most of its history, the answer to "what is Washington state income tax" has been simple: there isn't one. Washington has long been one of a handful of states, along with Texas, Florida, and Nevada, that do not tax personal income. Residents have enjoyed zero state tax on wages, retirement income, pensions, Social Security benefits, and withdrawals from 401(k) plans and IRAs.
That is changing. In March 2026, Washington Governor Bob Ferguson signed Senate Bill 6346, enacting the state's first-ever personal income tax. The tax takes effect January 1, 2028, with the first returns and payments due in 2029.
So the new answer is more complicated. Washington will have a state income tax, but only for high earners. Most residents will still pay nothing.
Washington is enacting a 9.9 percent income tax on individual income exceeding $1 million per year. The tax applies to residents and, in some cases, nonresidents who earn money from Washington sources. If your annual income is below $1 million, you owe nothing. If your income is above $1 million, you pay 9.9 percent only on the amount over that threshold.
The state is calling it a millionaire's tax and that is an accurate description. The $1 million standard deduction per household means the vast majority of Washington residents will never file a state income tax return.
Why Is Washington Enacting an Income Tax Now?
Washington has rejected income tax proposals eleven times over the past century. Voters have consistently said no. So why is this happening now?
The answer lies in how the legislature structured the bill. Lawmakers did not put this to a public vote. The bill includes a "necessity clause" that blocks a voter referendum. This means the legislature passed it on their own authority, and the governor signed it, without going to the ballot.
Supporters argue the tax is necessary to fund social services, including child care, school meals, tax credits for working families, and small business tax breaks. They say it rebalances a tax system that has long relied heavily on sales and property taxes, which hit lower-income residents harder.
Opponents call the tax unconstitutional and have already filed lawsuits challenging it. The legal fight is just beginning, and it could take years to resolve. For now, though, the tax is on the books and scheduled to take effect in 2028.
Who Pays the Washington Income Tax?
The tax applies to individuals with Washington taxable income above $1 million per year. That threshold applies per household. For married couples or state-registered domestic partners, the combined standard deduction is capped at $1 million, regardless of whether they file joint or separate returns.
The state estimates this will affect roughly 21,000 filers, which is less than half of one percent of Washington households. The tax is expected to generate between $3.4 and $4 billion annually.
For everyone else, nothing changes. You will not file a Washington income tax return. You will not pay a cent. Your retirement income, wages, and investment earnings remain free of state income tax as long as your total income stays under the $1 million threshold.
How Is Washington Taxable Income Calculated?
The calculation starts with your federal adjusted gross income, or AGI. That is the same number you report to the IRS. From there, Washington makes a few adjustments.
First, you subtract the $1 million standard deduction. This is the big one. If your federal AGI is $1.2 million, you subtract $1 million and pay tax on $200,000.
Second, you can deduct charitable contributions up to $100,000 per household. This is in addition to the standard deduction. If you give generously to charity, that further reduces your taxable income.
Third, there are a few other specialized deductions. You can deduct 90 percent of gambling losses up to the amount of gambling income included in your Washington base income. There are also deductions for certain commercial fishing vessel construction costs and cannabis expenditures that are disallowed for federal purposes.
The final tax rate is 9.9 percent applied to whatever remains after these deductions.
What Income Is Counted?
The tax applies to most forms of income, with some exceptions. Washington taxable income includes wages, salaries, business income, investment income, interest, dividends, and capital gains.
Retirement account distributions are generally included, though there is an important nuance. The tax only applies if your total income exceeds $1 million. For most retirees, that is not an issue. But a wealthy retiree with large IRA or 401(k) withdrawals could cross the threshold.
Capital gains are included, but Washington already has a separate capital gains tax enacted in 2022. The new income tax and the existing capital gains tax interact. Taxpayers can claim a credit for capital gains tax paid on gains that are also subject to the income tax, to avoid double taxation.
Income that is exempt includes interest from certain state and local bonds, tribal income for Native Americans, and income from US obligations when federal law prohibits state taxation.
What About Nonresidents?
If you live outside Washington but earn money from Washington sources, you may owe tax on that portion of your income. This is common in states with income taxes, and Washington is following the same playbook.
For nonresidents, the tax applies only to Washington-source income. That includes:
Wages for services performed in Washington. If you live in Oregon but commute to a job in Vancouver, Washington, those wages are taxable by Washington.
Income from a business, trade, or profession carried on in Washington. This includes your share of income from a pass-through entity like an LLC or partnership that operates in the state.
Rent or gains from real estate or tangible property located in Washington.
There is a small exception. Nonresidents who perform services in Washington for five or fewer days in the entire calendar year are exempt from tax on that compensation. This does not apply to professional athletes, student athletes, or entertainers. Those groups have their own specific rules.
What About Part-Year Residents?
Moving into or out of Washington during the year gets complicated. Part-year residents are taxed on all income earned while a resident, plus Washington-source income earned while a nonresident.
The standard deduction is also prorated. If you were a Washington resident for half the year, your standard deduction is roughly half of $1 million. The exact calculation uses a ratio of your Washington base income to your total AGI for the year.
If you are planning a move, this is an area where professional advice matters. Residency audits have increased dramatically in recent years as more people work remotely and relocate to no-tax states like Florida or Tennessee.
Washington is also creating an optional pass-through entity tax, or PTET, that takes effect January 1, 2028. This is for businesses structured as partnerships, LLCs, or S corporations.
Under this election, the business itself can pay the 9.9 percent tax on behalf of its owners. The owners then receive a credit on their individual returns for their share of the tax paid. This structure is popular in other states because it can help owners work around the federal cap on state and local tax deductions.
The election is made annually and is irrevocable for that tax year once filed. It must be submitted by June 15 of the taxable year.
What Happens to Other Washington Taxes?
Washington is not replacing its existing taxes with this income tax. It is adding another layer.
The state will still have its sales tax, which is one of the highest in the country with combined state and local rates that can top 10 percent. Groceries and prescription drugs are exempt from sales tax, but most other goods and services are not.
The state will still have its property tax, which funds local schools and services. Senior citizens and people with disabilities may qualify for property tax exemptions.
The state will still have its capital gains tax of 7 percent on the first $1 million of long-term capital gains and 9.9 percent on gains exceeding $1 million. That tax was enacted in 2022, survived legal challenges, and remains in place.
And the state will still have its business and occupation tax, a gross receipts tax that applies to businesses regardless of profitability.
The new income tax adds to this mix. Washington is becoming a higher-tax state, particularly for high-income households and business owners.
The Legal Challenge
Within days of the bill being signed, a lawsuit was filed seeking to have the new income tax declared unlawful and invalid. Opponents argue that the Washington state constitution defines income as property, and property must be taxed uniformly. A graduated income tax, they say, violates that uniformity requirement.
Supporters believe the state supreme court will uphold the tax using similar logic that upheld the capital gains tax in 2023. That court ruled that the capital gains tax was an excise tax on the sale of assets, not a direct tax on property.
The legal fight will take time. It could reach the Washington Supreme Court in 2027 or 2028. For now, taxpayers and businesses must plan as though the tax will take effect as scheduled.
What This Means for Residents
For the vast majority of Washington residents, the new income tax changes nothing. If your household income is under $1 million, you will not file a Washington return and you will not pay this tax.
For high-income households, the math changes significantly. A founder or executive earning $5 million annually in Washington would owe roughly $396,000 more per year compared to living in a state with no income tax. Add capital gains exposure, and the total gap grows larger.
Some business leaders are already considering relocation. A survey by the Association of Washington Business found that 44 percent of business leaders are considering moving their personal residence out of state, and 17 percent of businesses plan to relocate entirely.
Whether that exodus materializes remains to be seen. Washington still offers strong advantages, including a deep talent pool, major technology employers, and natural beauty. But the state's tax advantage over places like Texas and Florida has narrowed considerably.
Frequently Asked Questions (FAQ)
How much is $100,000 after taxes in Washington state?
You keep all $100,000. Washington does not have a state income tax on income below $1 million per year. The state enacted a new income tax that takes effect in 2028, but it only applies to income above $1 million per household. At $100,000, you are well below that threshold. You owe nothing to Washington state.
How much is $70,000 after taxes in Washington state?
You also keep all $70,000.
Washington has no state income tax on income under $1 million. At $70,000, you owe nothing to the state. No state tax, no city tax, no local income tax of any kind.
Your only tax is federal income tax.
Does Washington have a state income tax?
As of 2026, no. Washington does not currently have a state income tax. However, a new income tax on high earners has been enacted and takes effect January 1, 2028. For tax years before 2028, Washington remains an income-tax-free state for all residents.
Who pays the new Washington income tax?
The tax applies only to individuals with Washington taxable income exceeding $1 million per year. The $1 million standard deduction per household means less than one percent of Washington residents will owe any tax. Most people will never file a Washington income tax return.
What is the tax rate for Washington's new income tax?
The rate is 9.9 percent, applied only to the portion of your income that exceeds the $1 million standard deduction. For example, if your income is $1.2 million, you pay 9.9 percent on $200,000, which comes to $19,800.
Does Washington tax Social Security or retirement income?
Under current law, Washington does not tax Social Security benefits, pensions, or retirement account withdrawals. The new income tax that takes effect in 2028 applies to all income over $1 million, including retirement income. However, most retirees have incomes well below that threshold and will owe nothing.
When do I need to start filing a Washington income tax return?
The first tax year for the new income tax is 2028. The first returns and payments are due in 2029, around the same time you file your federal return. If your income is below $1 million, you do not need to file at all.
Is the new income tax being challenged in court?
Yes. A lawsuit was filed on April 9, 2026, seeking to have the tax declared unconstitutional. Opponents argue that the Washington constitution requires uniform taxation and does not allow a graduated income tax. The legal process will likely take years to resolve.
Does the new income tax apply to nonresidents?
Yes, but only on income earned from Washington sources. If you live in another state but work in Washington, your wages for days worked in Washington are subject to the tax if your total worldwide income exceeds $1 million. There is an exception for nonresidents who work five or fewer days in Washington during the year.
How does the new income tax interact with Washington's capital gains tax?
Taxpayers can claim a credit against the income tax for capital gains tax paid on the same income. This prevents double taxation. The interaction between the two taxes is complex, and high-income taxpayers should seek professional advice to navigate it.