Washington imposes millionaire tax to fund social programmes

Washington state has enacted a new tax targeting high earners, becoming the latest Democrat-led state to adopt a levy aimed at the wealthy.

The law, signed by Governor Bob Ferguson, introduces a 9.9% tax on income exceeding $1 million, set to take effect in 2028, Caliber.Az reports, citing an American newspaper.

The measure marks a significant shift for Washington, which previously had no state income tax.

Revenue from the tax will fund childcare, free school meals, tax credits for working families and relief for small businesses.

Supporters argue the move is necessary to address inequality and offset expected budget pressures linked to federal spending cuts under Donald Trump’s tax legislation. Ferguson said the measure would “rebalance an unfair system,” noting that lower-income residents pay a higher share of their income in state and local taxes than the wealthiest.

“This disparity was made much worse by President Trump’s massive tax cuts for the wealthy, paid for, by the way, with cuts to necessities like healthcare and food assistance that have tremendous harm to the people of Washington state,” Ferguson said.

Opponents, including Republican lawmakers, warn the tax could drive wealthy residents to lower-tax states and discourage entrepreneurship. State House Minority Leader Drew Stokesbary said the policy risks undermining the business climate and could eventually expand to affect more taxpayers.

Washington’s move comes amid a broader push in Democratic-led states to increase taxes on top earners. Massachusetts, for instance, introduced a 4% surtax on income above $1 million in 2022, generating nearly $3 billion in revenue in 2025.

Similar proposals are under discussion elsewhere, including efforts backed by Zohran Mamdani in New York. Meanwhile, some Republican-led states are moving in the opposite direction, seeking to cut or eliminate income taxes.

Ferguson said the new revenue would expand the state’s Working Families Tax Credit to 460,000 more households and fund universal free meals for K-12 students, while also cutting taxes for small businesses and removing sales taxes on essential goods.