The Washington state Senate approved legislation Monday creating a 9.9% tax on income above $1 million, sending the measure to the House with less than three weeks remaining in the legislative session.
Senate Bill 6346, sponsored by Senate Majority Leader Jamie Pedersen of Seattle, passed 27-22. Two Democrats joined all Republicans in voting against the bill.
Under the proposal, households earning more than $1 million annually would pay the tax only on income exceeding that threshold. Lawmakers said fewer than 1% of the state’s wealthiest households would be affected.
Beginning in 2029, small businesses grossing less than $300,000 annually, about 65% of businesses statewide, would be exempt from the business and occupation tax. That threshold increased from $250,000 through a Senate Ways and Means Committee amendment.
The measure would expand the state’s Working Families Tax Credit, which provides a sales tax rebate to low and moderate-income households. An amendment dedicates 7% of revenue from the tax to counties for public defense services, up from 5% in the original proposal. Lawmakers also increased the charitable deduction exemption from $50,000 to $100,000.
Another amendment would repeal recent expansions of the sales tax to certain services. The bill now moves to the House. If approved, it would require the governor’s signature to become law.
A legal challenge is expected. Groups have discussed placing an initiative on the ballot to repeal the tax if it becomes law. The 60-day legislative session ends March 12.
