Washington’s SB 6346 — a proposed 9.9% tax on household income above $1 million — passed the state Senate in February, and after a recent all-night debate, the House approved the bill on March 10. Governor Ferguson stated that he plans to sign the newest version of the bill.
Here is what the legislation means for nonprofits across a few dimensions:
Charitable Deduction Incentive
One direct mechanism affecting nonprofits is a built-in charitable giving incentive. The bill allows taxpayers to deduct up to $100,000 of charitable contributions (indexed for inflation) from their Washington taxable income. This exemption for charitable deductions increased from an earlier version’s $50,000 cap to $100,000 during Senate deliberations. For wealthy Washingtonians who are already charitably inclined, this deduction offers a “double-dip” benefit by lowering both federal and state tax obligations, potentially encouraging larger donations to nonprofits.
Potential Donor Impact
A concern for nonprofits that rely heavily on major donors is the risk of wealthy residents leaving the state. Detractors argue that millionaires will leave, taking tax dollars with them, which could reduce the donor base for Washington-based organizations. That said, millionaires do not appear to have fled Massachusetts after that state passed its 2022 surtax, and the share of households with net worths over $1 million rose sharply there from 2022–2025.
Revenue Directed to Services Nonprofits Support
On the other side of the ledger, nonprofits focused on social services, education, and health care could benefit significantly from the tax revenue. The tax is projected to generate $3.7 billion annually, funding public education, early learning, child care, and health care services. Many nonprofits deliver these services under government contracts, so expanded public funding could increase their funding streams.
Broader Tax Burden on Nonprofits
A separate law that took effect in October 2025 added taxes on many services and products that nonprofits need – including consultants, training and development, technology tools, advertising services, storage facilities, and temporary staffing – increasing costs for nonprofit organizations across the state at a time when many are already struggling financially.
To provide some relief, the Nonprofit Association of Washington secured an exemption on live presentations, which is included in the final version of SB 6346.
Bottom Line
The millionaires’ tax, if enacted, presents a mixed picture for nonprofits. The charitable deduction built into the bill could modestly incentivize high-end giving, and the revenue generated could strengthen government funding for the kinds of services many nonprofits provide. However, the potential impact on donors and the compounding costs from other recent tax changes remain real concerns for the sector. Given that the bill has not yet been signed into law and faces potential legal and voter challenges, the ultimate impact remains uncertain.