Blog

Advanced computing surcharge revenue forecast increased

The advanced computing surcharge is imposed on “select advanced computing businesses” to help fund the workforce education investment account (WEIA). The surcharge is on top of other business and occupation (B&O) taxes. As part of ESHB 2081 (adopted in 2025), the surcharge rate increased from 1.22% to 7.5%, effective Jan. 1, 2026. At the same […]

Revenues for 2025–27 and 2027–29 are still lower than expected when 2026 budget was adopted, but income tax revenue estimates are increased going forward

Revenues to funds subject to the outlook (NGFO) are now forecasted to total $76.258 billion in 2025–27, $82.594 billion in 2027–29, and $94.121 billion in 2029–31. Compared to the June forecast, revenues are now estimated to be $22 million higher in 2025–27, $430 million higher in 2027–29, and $2.382 billion higher in 2029–31. The increases […]

Would I-645 “blow a $13 billion hole in the state budget”?

This week I saw an internet ad from the No on I-645 campaign that claims, “If passed, I-645 would blow a $13 billion hole in the state budget.” This is inaccurate and reflects a misunderstanding of our state budget. First, where is the “$13 billion” figure coming from? There’s no source listed, but a TV […]

New brief: I-645: Repealing the State Individual Income Tax

A 9.9% tax will be imposed on Washington income over $1 million beginning Jan. 1, 2028. Initiative 645 would repeal the income tax and prohibit any state or local taxes on individual income. I-645 would reduce revenues for funds subject to the outlook (NGFO) by $3.108 billion in 2027–29 and by $8.324 billion in 2029–31. […]

Dept. of Revenue requests an 11.4% spending increase (not including the expansion of the Working Families Tax Credit program)

The Department of Revenue (DOR) is requesting $1.087 billion in general fund–state (GFS) appropriations for 2027–29, which would be an increase of $111.0 million (11.4%) over 2025–27 appropriations. Of that increase, $20.8 million is at the carry-forward level. This includes $10.2 million for implementation of the state income tax. The budget request does not include […]

Capital gains realizations by high earners in Washington decreased by more than in other states in 2023

As I wrote on Friday, the taxpayer migration and Statistics of Income data sets from the Internal Revenue Service (IRS) now incorporate the first few years of Washington’s capital gains tax. Although there is not yet much history, the data suggest that Washington residents may have moved or otherwise altered their behavior in response to […]

The adjusted gross income of Washington millionaires declined in 2022 and 2023

Yesterday I reviewed the economics literature on the question of whether wealthy people move in response to tax increases. It’s an important question because the revenue impact of the new income tax is uncertain. The extent to which people (and their incomes) move out of state will have implications for the state budget. Unfortunately, there’s […]

Potential behavioral responses to the income tax

With the income tax, Washington’s tax structure will become more volatile—especially because it is targeted at taxpayers with income over $1 million. The volatility makes it a difficult tax to forecast in general; for Washington, it will be especially hard to forecast in the beginning as it is a brand new tax. When it is […]

Fiscal notes and the income tax

When estimating the fiscal impact of a policy proposal, a key component is the baseline. To what is the new policy being compared? What revenues are expected under existing law, and how would the proposal change that? When agencies prepare fiscal notes during a legislative session, they all use the November revenue forecast as the […]

Washington’s state and local taxes and spending per capita ranked 13th highest among the states in 2024

The U.S. Census Bureau recently released state and local fiscal data for fiscal year 2024. This is the best source of data to use for comparisons of taxes and spending across states. To make those comparisons, we adjust the data by population and by personal income. State and local taxes per capita in Washington grew […]