Grounding
The Millionaires Tax, passed by the Legislature in 2026, is a 9.9% tax on income over $1 million. It will be paid by about 22,000 of the wealthiest households in Washington State. The estimated $3.5 billion in revenue from the tax will fund public schools, child care, health care, services for seniors and people with disabilities, and more.
Charitable Deduction Benefit
According to the bill’s authors, the law applies to Washington taxable income and allows some additional adjustments, deductions, and credits to help taxpayers avoid double taxation, including taxes paid on capital gains, the B&O Tax and Public Utility Tax, and other payments.
The Millionaires Tax allows for up to $100,000 in allowable charitable contributions to Washington state nonprofits to be deducted per household, regardless of filing status.
This is in addition to the charitable deduction allowed under the capital gains tax statute.
Impact on Donors
- The charitable deduction benefit is in line with the policies of other states regarding charitable deductions.
- This approach is balanced. Some states (PA, NJ) do not allow a charitable deduction at all under their state income tax systems. Others (NY, CA) adopted limits or phase-downs of itemized deductions for high-income taxpayers to protect the integrity of their tax base.
- There is nothing preventing wealthy donors from continuing to be generous with their donations. The current language preserves a strong incentive for charitable giving while ensuring that very large contributions do not eliminate state tax liability altogether in a way that undermines the purpose of the bill.
- The capped deduction respects philanthropy while maintaining the principle that extraordinary wealth should continue to contribute meaningfully to the shared investments that benefit the entire state.
- Wealthy donors still receive a substantial federal benefit from donating.
Charitable Deductions Do Not Automatically Trigger Audits
The auditing language of the Millionaires Tax is standard practice, and there is no language in the bill that connects charitable deductions with an audit process (see Part VII of the bill). Any agency overseeing a tax on high-income earners needs the ability to audit to ensure taxpayers are making a good faith effort to pay and are not repeatedly and substantially avoiding taxes.
Avoid Misinformation and Contact DOR Directly
If you need to understand how you will be impacted by the Millionaires Tax, Washington’s Department of Revenue (DOR) will work directly with you on your specific situation.
Email DOR at [email protected] to bypass misleading information and receive a “binding ruling.” When you email, you can provide specifics about your tax situation and DOR will provide the answers directly.
“Wealth Flight” Is a Scare Tactic
Brian Heywood and some ultra-wealthy people have used scare tactics in order to build support for a repeal of the Millionaires Tax. They say that people will leave our state in order to avoid paying the tax.
But we know that wealthy people maintain residences for the same reasons we do: to be close to family, their jobs, businesses, or school systems. Multiple studies prove this.
Progressive taxes are how we fund and create thriving communities in Washington that people want to and love living in, including the wealthy. Tax policy alone is rarely a reason why someone uproots their entire life and family.
Plus, most other states have some kind of tax on high earners, including our neighboring states of Oregon and Idaho. There are only eight states in the nation that do not tax personal income.
Heywood and others said people would leave our state when the capital gains tax passed. That didn’t happen. In fact, revenue and the number of payers from the capital gains tax have exceeded projections.
Balancing Our Tax Code
The Millionaires Tax is an important tool to balancing our upside-down tax code. For decades, low- and middle-income earners have paid a higher percent of their income in state and local taxes than the wealthiest people.
The Millionaires Tax asks those with the greatest ability to contribute to pay their fair share for the public services that make economic success possible, including education, health care, and public safety.
Resources
Washington State Budget and Policy Center’s Millionaires Tax FAQs
Washington State Budget and Policy Center’s Statewide Map of Payers
Economic Opportunity Institute’s Impacts of the Millionaires Tax
Economic Opportunity Institute’s Small Business and Pass-Through Entities article
For more information or questions about the Millionaires Tax, please contact Mia Shigemura ([email protected]) and Annie Kucklick ([email protected]).