Article
Brochure
Executive Resource
Insight Hub
Video
Ext. PublicationWashington Millionaires’ Tax and Its Impact on High-Income Individuals
Never miss a thing.
Sign up to receive our Tax News Brief newsletter.
Washington has long been recognized as a state without an individual income tax, but that is set to change with the enactment of Engrossed Substitute Senate Bill (ESSB) 6346 signed into law on March 30, 2026. The law imposes a 9.9% tax on certain high-income individuals, effective January 1, 2028. Although framed as a “millionaires’ tax,” it creates broader implications for estate, trust and residency planning.
Who’s Affected by SB 6346?
The tax applies based on income level and residency status and is limited to individuals. A $1 million standard deduction per household (indexed for inflation every other year) effectively limits the tax to higher income taxpayers, generally those earning $1 million or more. Washington residents will generally be taxed on income from all sources, regardless of where it is earned. In contrast, nonresidents may only be taxed on Washington source income.
Key Estate and Trust Planning Issues
The law includes provisions that may significantly affect estate and trust planning, particularly for structures designed to shift income for tax purposes. Notably, it includes provisions addressing incomplete gift nongrantor trusts that can impact tax planning.
Under the new rules, Washington residents will be required to include trust income on their personal Washington tax return if the trust is treated as a nongrantor for federal income tax purposes but is funded with an incomplete gift for federal gift tax purposes. This provision is intended to limit common income shifting strategies using trusts that separate income taxation from transfer tax planning. While trusts themselves are not taxed, trust structure and funding decisions could directly affect an individual’s Washington tax exposure.
Residency Planning Becomes More Important
Residency will play a central role in determining an individual’s exposure to the new tax. A taxpayer’s liability will depend heavily on whether they are considered a Washington resident based on factors such as domicile, physical presence and place of abode.
The law includes a narrow 30 day safe harbor for certain domiciliaries who do not maintain a Washington abode, maintain a permanent abode outside Washington for the entire year and spend limited time in the state. High income individuals with multistate lifestyles should expect greater scrutiny of residency status and day count documentation.
Why This Matters Now
Even though the tax does not take effect until 2028, the law signals a major shift for a state long viewed as having no individual income tax. Existing estate plans and trust structures, especially for Washington residents, should be reviewed now to assess potential future exposure. Additionally, given the likelihood of legal challenges, the tax may be subject to change prior to its January 1, 2028, effective date. Taxpayers are encouraged to monitor developments closely and consider potential impacts before implementing tax or residency planning decisions in response to the legislation.
If you have questions about how Washington’s new income tax may apply to your situation, Weaver’s tax professionals can help you assess potential impacts and planning considerations. Connect with us to discuss your specific circumstances.
©2026
