Blog

Paid family and medical leave rate structure changed again, but it does not improve program solvency

The Legislature has passed 2SSB 5292. If signed by Gov. Ferguson, the bill would change the paid family and medical leave (PFML) tax rate-setting formula. However, more will need to be done to address program solvency. Initially, the tax rate for the program was set at 0.4%. Beginning in 2021, the rate was set based […]

Bracket creep in Washington’s estate and income tax proposals

Typically, federal and state tax codes automatically adjust various provisions—like exclusion and deduction amounts—for inflation. This helps to prevent bracket creep. As the Tax Foundation defines it, bracket creep “occurs when inflation, rather than real increases in income, pushes people into higher income tax brackets or reduces the value they receive from credits and deductions.” […]

Proposed House striking amendment to income tax bill is supported by Gov. Ferguson, but there’s no fiscal note yet

The Senate passed the income tax bill (ESSB 6346) on Feb. 16. (I wrote about the bill as passed here.) As passed by the Senate, the income tax would increase revenues by $2.706 billion in 2027–29 and $7.537 billion in 2029–31. It would use some of those revenues for local government public defense ($189.4 million […]

House Finance version of estate tax bill would reinstate the exclusion amount glitch

Last year the Legislature increased estate tax rates and fixed a long-term problem with the inflation adjustment for the exclusion amount (ESSB 5813). This year, the Senate has passed ESB 6347, which would roll back the tax rate increases in ESSB 5813. Beginning with estates of people dying on or after July 1, 2026, the […]

Legislature keeps kicking the can down the road

The cause of the state’s operating budget shortfall is, ultimately, that in 2023–25, the Legislature chose to spend $4.8 billion more than the state collected in revenues. (All figures in this post are in terms of funds subject to the outlook, or NGFO.) The budget balanced thanks to the use of one-time funds. The budget […]

An alternative income tax proposal would require a constitutional amendment

Yesterday, Rep. Walen introduced HB 2738, which would impose an income tax, and HJR 4213, which would amend the state constitution to explicitly allow the income tax. HB 2738 is very similar to the income tax bill (SB 6346) that was passed by the Senate on Monday. Indeed, the base text of HB 2738 is […]

Senate-passed income tax bill increases the amount of tax relief compared to the original version, and the governor is proposing additional relief provisions

The Senate passed the income tax bill (SB 6346) on Monday. I wrote about the bill as introduced here and here. Amendments were adopted by the Ways and Means Committee and on the Senate floor, some of which will have significant fiscal impacts. Some of the amendments made by the Ways and Means Committee include: […]

Since the current budget was adopted, revenues are up $166 million over the outlook period

According to the Economic and Revenue Forecast Council (ERFC), revenues for funds subject to the outlook (NGFO) are now forecasted to be $1.856 billion higher over the outlook period (2023–25, 2025–27, and 2027–29) than had been forecasted in November. The forecast for 2025–27 increased by $827.4 million, to $75.276 billion. The forecast for 2027–29 increased […]

Income tax would increase revenues by more than $3 billion a year

The Department of Revenue (DOR) has now published a fiscal note for the income tax bill. According to DOR, the income tax would increase revenues by $2.717 billion in fiscal year 2029, $4.080 billion in 2030, and $3.487 billion in 2031. A small portion of these revenues would be allocated by the bill to specific […]

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 […]