Washington’s New “Millionaires Tax”: What High-Income Clients Need to Know Now
- Jana
- May 4
- 2 min read
Washington has passed a new tax measure aimed at high earners, often referred to as the “Millionaires Tax.” While the name may sound like a broad wealth tax, the reality is more targeted—and understanding the details now can help avoid costly surprises later.
What Passed
The new law introduces a 9.9% tax on income over $1,000,000. This applies strictly to income, not to accumulated wealth or assets.
Key Dates
Effective Date: January 1, 2028
First Payments Due: 2029
Although implementation is a few years away, the long lead time makes early planning especially important.
Important Clarifications
There has been some confusion around what this tax actually covers. Here’s what it does—and does not—do:
This is not a tax on net worth or total assets
It applies only to income exceeding $1,000,000
There is no direct tax on real estate or investment holdings unless they generate taxable income
Why This Matters
This change primarily affects high-income Washington-based individuals, but the ripple effects are broader. Even clients who are not currently earning at this level may be impacted if they anticipate significant future income events.
This is particularly relevant for:
Business owners, especially those planning growth or sale
Clients approaching liquidity events, such as company exits or large asset sales
Individuals evaluating residency changes for tax purposes
Even though the tax is not immediate, it introduces a new layer of complexity that could influence decisions made today.
Initial Planning Focus
With several years before the tax takes effect, there is a meaningful opportunity to plan strategically. Early considerations may include:
Timing of income recognition to optimize tax exposure
Entity structure reviews to ensure tax efficiency under the new rules
Residency strategy, particularly for clients with flexibility in where they live and earn income
Looking Ahead
While additional guidance and potential refinements are expected over time, the direction is clear: proactive planning will be key. Waiting until 2028 may significantly limit available options.
We will continue to monitor developments closely and share actionable strategies as more details emerge. If you believe this may impact your situation, it’s worth starting the conversation now.
Comments