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This week, Washington lawmakers introduced companion bills, SB 6346 and HB 2724, that would create a new state tax commonly described as a “millionaires’ tax.” The bills would impose a 9.9% tax on Washington taxable income beginning January 1, 2028.  

Both bills are written to include a $1,000,000 standard deduction (combined $1,000,000 for spouses/domestic partners), meaning that the tax would be paid upon any income earned which is over the $1,000,000 threshold. Income derived from commissions would be included in these calculations. However, a nonrefundable credit is included in the proposals which is intended to prevent the same income from being taxed under both B&O tax and the new income tax.  

Also included in the income calculations is net rental income. For nonresident owners, the bill explicitly sources Washington real property rents (and certain gains) to Washington.  

On real estate sales, the bill, in its current form, subtracts long-term capital gains from the Washington base, and adds back only the “Washington capital gains” that are subject to the state’s existing capital gains tax. As members should be aware, real estate is currently exempt from the State’s capital gains tax thanks to hard work by Washington REALTORS® lobby team. 

As written, 5% of the new revenue from the income tax streams would be directed to a newly created County Public Defense Funding Stabilization Account to fund public defense services. The remainder of the funds would be directed to the State’s general fund to be used for sales/use tax relief (for items such as grooming/hygiene products), the Working Families Tax Credit program, and B&O tax relief. 

As of this writing, both versions of this legislation sit in their respective chamber committees (House Finance, Senate Ways & Means). Washington REALTORS® has historically opposed any form of an income tax. 

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