Washington’s new 9.9% income tax on household income above $1 million, scheduled to take effect in 2028, has sparked debate over whether wealthy residents will leave the state to avoid the tax.
The issue is becoming part of the campaign surrounding Initiative 645, which would repeal the tax before it takes effect. Supporters of the tax say it will provide billions of dollars annually for education, health care and other public services. Opponents argue the tax, combined with other recent increases, could make Washington less attractive to entrepreneurs and high-income residents.
State estimates indicate about 25,000 Washington households would be subject to the tax, generating roughly $3.5 billion annually. Some wealthy residents and business owners have already said taxes influenced decisions to relocate or consider moving. Real estate professionals and financial advisers also report increased interest among some clients in lower-tax states.
However, research on tax-related migration suggests a large-scale exodus may be unlikely. Cornell University researcher Cristobal Young estimates Washington could lose about 1.9% of its millionaires because of the new tax, or roughly 475 households. National research has found that most high-income residents remain in their states after tax increases, often choosing other tax-planning strategies instead of relocating.
The extent of any migration remains uncertain. Washington’s tax would represent a significant change for a state that historically has had no personal income tax, and critics argue the combined effect of multiple tax changes could produce a different outcome.
Voters will decide the future of the tax and whether Initiative 645 passes in November.
