By Aliss Higham
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Several U.S. states implement so-called “millionaire tax” on residents, with one more looking to join.
Washington may soon become the latest state to change how it taxes its wealthiest residents, as lawmakers debate whether a targeted income tax on millionaires could help reshape the state’s revenue system while easing pressure on lower-income households.
Governor Bob Ferguson has publicly endorsed a proposal from legislative Democrats that would create a new income tax aimed exclusively at high earners. The plan would impose a 9.9 percent tax on annual adjusted incomes above $1 million, marking a significant shift for a state that has historically avoided personal income taxes altogether.
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Ferguson has framed the proposal as a way to rebalance the tax burden rather than expand it broadly. He has said some of the revenue generated should be directed toward relief for lower-income residents, potentially by expanding Washington’s working families tax credit or reducing sales taxes. At the same time, he has been explicit about his opposition to taxing anyone earning less than $1 million a year, emphasizing that the proposal would apply only to the state’s highest earners.
If approved during the upcoming legislative session, a single income tax bracket would be established for wealthy residents while leaving everyone else unaffected. Ferguson's office has said the measure could generate at least $3 billion annually, though it would not take effect until 2029 at the earliest.
States With Millionaire Taxes
Several already impose “millionaire taxes,” designed to raise additional revenue from the highest-income residents.
Currently, five states—California, Connecticut, Maine, New Jersey and New York—along with Washington, D.C., have adopted versions of a millionaire tax. In California, high earners pay a base tax rate of 9.3 percent, plus an additional 1 percent surcharge on income exceeding $1 million, on top of federal taxes. New York, meanwhile, taxes income over $1,077,500 at a rate of 8.82 percent.
Other states take a similar, though not identical, approach. Hawaii does not have a formal millionaire tax, but it applies an 11 percent rate to all income above $200,000 for single filers. Rhode Island imposes a 5.99 percent rate on income over $145,600, regardless of filing status. States such as Connecticut, Maryland, New Jersey, North Dakota, Oregon, Vermont and Wisconsin also fall among the higher-tax jurisdictions, each with its own income thresholds and rates.
At the federal level, there is no separate millionaire tax. The top federal income tax rate of 37 percent applies to taxable income above $609,351, regardless of how that income is earned.
For Washington, the proposal represents a notable departure from its current system. Whether it advances could signal how far states are willing to go in asking their wealthiest residents to contribute more.
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