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More proposals to modify last year’s tax package, including rolling back the estate tax rate increases

The 2025 tax package was rushed through at the very end of session, which led to a lot of uncertainty. As I wrote in December, several bills have been introduced for the 2026 session that would make changes to ESSB 5814 and ESSB 5794, which were part of the 2025 package. Other bills have been […]

Cataloging the Legislature’s tax increase proposals

An income tax is not the only tax increase being considered by the Legislature this year, even after enacting historically large tax increases last year. If enacted, the new proposals would add to an already high tax burden in Washington. This post catalogs the tax increases that have been introduced so far this year (it […]

How the income tax proposal would work and how the revenues would be used

The income tax bill language has now been introduced. SB 6346 and HB 2724 are identical; SB 6346 is scheduled for a public hearing in the Senate Ways & Means Committee on Friday. Before I get into the details of the text, I want to make three overarching points: Calculating the tax The bill would […]

Gov. Ferguson’s budget proposal would result in a shortfall of $1.880 billion in 2027–29 (plus, a separation-of-powers issue at the ERFC?)

On Tuesday, the Economic and Revenue Forecast Council (ERFC) met to adopt an official outlook based on Gov. Ferguson’s 2026 supplemental operating budget proposal. The outlook helps to illuminate the long-term impacts of his proposal, but the treatment of reversions prompted the Office of Financial Management (OFM) to claim that there could be a separation-of-powers […]

New brief: Washington Businesses Paid 50% of State and Local Taxes in 2024

From 2000 to 2024, business and occupation tax collections increased by 269.5%. Businesses also pay sales taxes, property taxes, and many other state and local taxes. A new report from the Council on State Taxation finds that businesses paid 50.0% of all state and local taxes in Washington in fiscal year 2024. Washington businesses paid […]

Federal spending reductions are not the cause of Washington’s budget problem

The Office of Program Research (OPR) estimates that the budget shortfall is $1.5 billion in 2025–27 and $4.3 billion over the four-year outlook. That estimate includes the November revenue forecast and adjustments to the maintenance level (the cost of continuing current or planned services, adjusted for inflation and enrollment). Some policymakers have blamed the federal […]

Should reversions be included in the outlook?

Last week, the Economic and Revenue Forecast Council (ERFC) met to approve a methodology for the official budget outlook based on Gov. Ferguson’s proposed 2026 supplemental. (The outlook itself will be presented and approved by the ERFC on Jan. 27.) The first question staff had for the ERFC was about reversion assumptions. As the methodology […]

Treasurer’s office pointedly suggests the Legislature follow the four-year balanced budget requirement

The Office of the State Treasurer (OST) annually produces a Debt and Credit Analysis report that includes data on state debt and makes fiscal recommendations for the Legislature. For the past several years, the recommendations have been to target reserves at 10% of revenues, keep projected debt service costs to 5%–6% of revenues, and continue […]

To help the public and policymakers prioritize state spending, improve budget data transparency

A new bill, sponsored by Sen. Gildon, would improve state budget transparency. As I wrote in October, there are some major holes in Washington’s fiscal data website, fiscal.wa.gov. There is not enough detail provided for either historical spending or the current budget to enable policymakers and the public to make informed evaluations of budget proposals. […]

With a state income tax, combined income and payroll tax top rates could reach 18% in Seattle

Gov. Ferguson supports a tax on annual income over $1 million. There is no public bill language yet, but the Washington State Standard reports that legislators expect the tax rate in the income tax bill to be 9.9%. (Similarly, the current capital gains tax rate on capital gains exceeding $1 million is also 9.9%.) Today, […]