"Washington state’s proposed new income tax includes the largest “marriage penalty” in the nation, placing higher taxes on certain couples who file jointly, according to tax experts.
The state House of Representatives approved Washington’s first-ever income tax, imposing a 9.9% tax on income of more than $1 million a year. Having also passed the state Senate, it will now go to the governor, who plans to sign it into law. Washington is currently one of only nine states with no state income tax, and the new rate would be one of the highest in the nation.
While Democratic legislators call it “the millionaire’s tax,” some taxpayers making far less as individuals will also be subject to the tax thanks to a steep marriage penalty. According to the legislation, the $1 million threshold for the tax applies to individuals, couples and domestic partners. So if a married couple each makes $600,000, their combined income of $1.2 million would trigger the tax.
“According to the statute, it doesn’t matter if you’re single or married, the exemption is $1 million,” said Joe Wallin, an attorney who advises companies and tech founders in Washington. “It should be called the half-millionaire tax.”
While marriage penalties are not uncommon in state or federal tax codes, Washington’s stands out for its size. Most states use two income thresholds for tax brackets, one for individuals and another for couples that’s usually twice as high. Some high-tax states, such as California and New York, only apply marriage penalties for the highest earners, according to the Tax Foundation, a nonprofit tax policy think tank.
In New York, for instance, the income thresholds for each bracket are doubled for joint filers through the 9.65% rate, which applies to income above $1,077,550 for single filers and $2,155,350 for joint filers. But for the special millionaire surtax rates of 10.3% and 10.9% — relevant to those making above $5 million and $25 million in income, respectively — the income thresholds are the same for joint and single filers.
In California, bracket thresholds double for joint filers, except for the 1% Mental Health Services Act, which applies to income above $1 million for both single and married filers.
Jared Walczak, senior fellow of the Tax Foundation, said the marriage penalties in New York and California are relatively small, amounting to a 1% tax rate difference in California and a 0.65% difference in New York. In Washington state, however, the difference can be up to 9.9%.
“In the most extreme case, if you had two single filers who both earned exactly $1 million, they would owe $0, but if they married and earned the same income, they would owe $99,000,” he said. “Washington’s marriage penalty will be the largest by far.”
The state’s Democratic lawmakers and governor haven’t specifically addressed concerns about the marriage penalty. State Sen. Noel Frame, who leads fiscal policy for the state Senate Democrats, said the standard deduction of $1 million per household is the same structure used for the state’s capital gains excise tax, passed by voters in 2021.
“As we work to make the two separate tax structures work together, having consistency in the deduction helps with both administration of the tax by our Department of Revenue and simplicity for taxpayers,” she said in a statement. “Since the tax doesn’t apply to income less than $1 million, there are many high-earning couples that still won’t see much of a tax impact even if their combined incomes are more than $1 million.”
Yet in a state that depends on highly skilled, highly paid workers at companies such as Amazon, Microsoft and other tech companies, many dual-income families could get hit with the tax, analysts said.
“There’s this idea that, ‘We’re just taxing rich dudes with yachts,’” said Brian Heywood, a Washington hedge-fund manager who founded Let’s Go Washington, a conservative political action committee opposed to the tax. “They’ve been less than honest with who they’re going after and what the numbers are.”
Wallin joked that some dual-earning couples might even explore a legal divorce for tax reasons, even if they want to stay effectively married. “The tax savings alone would more than pay the costs of a divorce lawyer,” he said.
The marriage penalty is the latest controversy for Washington’s new income tax, which has become a beacon in the Democratic Party’s movement to raise taxes on the wealthy. From Rhode Island and New York to Virginia and Michigan, Democrats in state legislatures are seeking to counteract rising inequality and federal funding cuts to health care by raising taxes on top earners. California is considering a ballot initiative to create the first state wealth tax, taxing the total net worth of the state’s billionaires.
Washington will be a closely watched experiment in the debate over the impact of higher state taxes on wealth migration.
Two of the state’s most celebrated entrepreneurs — Jeff Bezos of Amazon and Howard Schultz of Starbucks — have already left the state for Florida, which has no income tax. Bezos announced his move to Miami in 2023, after the state’s new capital gains tax of 7% took effect. He sold more than $9 billion worth of Amazon stock in 2024, effectively saving over $600 million in capital gains taxes that he would have had to pay to Washington state.
Schultz recently announced that he had moved from Seattle after 44 years. He said his family office will also move to Miami but that his foundation would continue to operate in Seattle.
“It is our hope that Washington will remain a place for business and entrepreneurship to thrive, creating essential opportunity for those in Seattle and the surrounding areas,” he wrote."
-- CNBC
@BobFergusonGov, veto it, force the Legislature back to the drawing board, and demand real tax reform that reduces regressivity by cutting sales and B&O taxes instead of layering new levies on top. Do the right thing now, before Washington’s taxpayers stage a modern-day Boston Harbor in the shadow of Mount Rainier.
https://t.co/Hzf663BzCH
@GovBobFerguson How about you and the State Democrats get back to the basics of ACCOUNTABILITY. Where are our tax dollars going? Stop virtue signaling with these posts and actually do your job.
No one in state government can answer this precise problem/question…
The following is a scenario of a 5 month period you can easily find on state public records multiple times over:
- A daycare that is licensed for 8 slots for kids
- Assume the daycare is fully enrolled at 8 kids for 5 months (often slots are not full, making this worse, but let’s give them max benefit of the doubt)
- Assume all 8 kids are infants at the highest possible subsidy rate (~$2,300 per child per month), which is ~$18,400 per month. Let’s round up to $20,000 per month for absolutely no reason other than generosity. (Infant only daycare is an extremely unlikely scenario but technically possible)
- In a 5 month period, that’s $100,000 in max subsidies if you are very generous in your assumptions.
Now, how is it even remotely possible when that same daycare receives 4-5x the highest possible subsidy amount in that 5 month period? Sometimes receiving $400-500k in 5 months, when they should max out at $100K! This has been found MULTIPLE times over at various home based daycares in WA.
Are we to believe that a home based daycare with a max potential of less than ten subsidized children is a MILLION DOLLAR per year business?! I own a business with 6 employees and my business makes less than these daycares?? That makes literally no logical sense. Back in the day my mom ran a daycare in Spokane, and if you could make this kind of money she’d still be doing it!
Forget if the daycare actually has kids or not, forget if it’s run by a particular group of people, forget the house, forget the neighborhood… that’s all noise compared to the number one smoking gun which is that the math simply doesn’t math… not even close.
State agencies and Democrat politicians spend more time dazzling us with bullshit, threatening journalists, and making false claims about the ‘process’, and zero time explaining the problem I just described above. Something is very wrong and it’s incredible to watch these elected officials and agency heads dip, duck, dive, dodge and… dodge their way around this very obvious problem.
WA is one of the most expensive states for child care in the nation, but I think if we all knew you could gross a fat $1,000,000 per year doing it, we’d all be daycare owners.
You know who loses in all of this? The honest and good daycares who get paid absolute dirt and have 400 pages of regulations to follow thanks to Democrats. But also families lose, the tax payers lose, and the kids lose.
You work hard just to barely survive to the next paycheck while paying some of the highest taxes in state history, just to learn that money is essentially being allowed to be stolen while the state stands by, and no one in positions of power is willing to take it seriously. All of this contributing to a multi-billion dollar deficit. That is a sad indictment of where we are at politically in this state, and people have the right to be upset about it and demand answers.
The chaos and constant dumpster fires in WA State government is infuriating.
Democrats told Washingtonians the capital gains tax on the wealthy would fund schools and child care, then they passed it. They furthered this promise in 2024 to defeat an initiative meant to overturn it.
Months later, Bob Ferguson signed legislation expanding the capital gains tax, and then just recently wrote a budget proposal that raids the education account capital gains was supposed to fund… using it to paper over his multibillion-dollar deficits caused by a runaway spending addiction.
Point blank, they lied and shifted the goal posts on a tax that (by the rest of the world’s standard) is itself an income tax. They were aided by the state Supreme Court to ensure it was upheld. (Side note, the dissenting opinion in that case is illuminating)
If you believe an income tax will only ever apply to millionaires, you’re getting duped. We’ve already watched this exact trick play out, and if you didn’t see it before, I just laid it out for you.
In 2024, Democrats overwhelmingly approved a citizen initiative that explicitly bans income taxes. Over a year later, many of those same voices are willing to discard that promise and the will of voters when it becomes inconvenient for them. Why trust Democrats on an income tax when the lies flow this easily? As one senator recently put it, it’s a pie-crust promise: easily made, easily broken.
There’s also a constitutional reality they don’t like to talk about. Long standing Washington Supreme Court precedent holds that income is property, and the Washington Constitution requires all property taxes to be uniform. That makes a progressive income tax blatantly unconstitutional under current law. Uniform means flat, and applicable to all, with rich and poor paying the same rate.
The only way to impose an income tax in Washington is to either convince the court to overturn decades of precedent, or impose a flat income tax on every resident.
Beyond the very real economic harm this would cause to families and jobs, no serious person truly believes this would remain a tax only on the wealthy or provide lasting relief. Not even them I suspect, and that’s why most Democrats would not promise it wouldn’t change in the future at a press event last week. You couldn’t sell me their promises if I were dying of thirst in the desert and it was labeled “water.”
Ask yourself one simple question: have you ever seen the Washington Legislature eliminate or substantially reduce a major tax? The answer is no.
Have you seen them raise those taxes, shift the goal posts, manipulate people, or use tax revenue for a purpose it wasn’t intended for? Yes.
A state income tax is on Gov. Bob Ferguson’s agenda for the 2026 legislative session.
The governor and some legislative leaders say it will only apply to those earning more than $1 million. Yet a member of the House Democrat caucus on Tuesday admitted that the public should not make that assumption:
“If past history is prologue – yeah, you probably shouldn’t necessarily believe that” an income tax, if enacted, will only apply to millionaires by 2030.
House Republicans oppose a state income tax. It’s not only unnecessary and unconstitutional – but it will hurt Washington’s economy and eventually target everyone.