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Bill

HB 2738

Establishing an income tax on individuals with Washington taxable income over $1,000,000 per year and households with income over $2,000,000 per year.

2025-2026 Regular Session Introduced by Amy Walen

Washington proposes taxing individual incomes exceeding $1 million annually to fund state programs, challenging the state's no-income-tax tradition.

First reading, referred to Finance.
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Bill Summary · HB 2738

Legislative bill overview

HB 2738 proposes implementing a state income tax specifically on high-income individuals and households in Washington, targeting those earning over $1 million annually (individuals) or $2 million (households). This would represent a significant departure from Washington's current tax structure, which relies heavily on sales tax and has historically avoided broad income taxes. The bill would create a new revenue stream dedicated to state operations and programs.

Why is this important

Washington state currently has no income tax, making it one of a minority of states with this distinction. This proposal directly challenges that long-standing policy and could reshape how the state funds services. The revenue generated could substantially impact education, healthcare, and infrastructure funding—or face legal challenges based on Washington's constitutional constraints on income taxation. This represents a fundamental debate about tax fairness, economic competitiveness, and the state's fiscal future.

Potential points of contention

  • Constitutional concerns: Washington's state constitution has historically been interpreted to prohibit income taxes, requiring either a constitutional amendment or successful legal argument for implementation
  • Economic competitiveness: Critics argue a state income tax could drive high-income earners and businesses to neighboring states without income taxes (Oregon, Idaho), while supporters counter that targeted high-income taxes won't significantly impact migration
  • Revenue reliability and adequacy: Proponents claim this tax would fund critical services; opponents question whether the revenue justifies the administrative burden and potential economic effects, and whether it sets a precedent for broader taxation

Compiled from official sources — confirm details with the bill’s official record.

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