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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 […]

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 […]

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, […]

Pre-filed bills would make changes to the 2025 tax package, including a proposed repeal of ESSB 5814

The 2025 tax package was rushed through the legislative process, leading to considerable uncertainty. The implementation of ESSB 5814, which extended the sales tax to more services, has been particularly fraught. Unsurprisingly, three bills have been pre-filed that would make changes to ESSB 5814. Additionally, two bills would make changes to ESSB 5794, which repealed […]

Two pre-filed bills would increase certain state B&O taxes and a third would allow counties to levy B&O taxes

Last week, I wrote about a proposed payroll expense tax bill. Other bills have been pre-filed so far that would increase state or local business and occupation (B&O) taxes. County B&O Taxes HB 2097 would allow county legislative authorities to impose B&O taxes effective Jan. 1, 2027. The maximum county B&O tax rate would be […]

Newly proposed payroll expense tax would be volatile and revenues would probably not materialize until FY 2028

The historically large tax package that was adopted earlier this year increased business taxes significantly. The adopted package did not include a payroll expense tax, though one was considered during the 2025 session (SB 5796). SB 5796 would impose a 5% tax on wages over the Social Security taxable wage base ($176,100 in 2025 and […]

Since the 2025–27 operating budget was adopted, revenues are down by $1.690 billion over the outlook period

According to the Economic and Revenue Forecast Council, revenues for funds subject to the outlook (NGFO) are estimated to be $66 million lower over the outlook period than was forecasted in September. Final revenues for 2023–25 (which ended June 30) total $67.137 billion, an increase of $13.1 million compared to the September forecast. The forecast […]

Washington has the nation’s sixth least competitive taxes

According to the Tax Foundation’s 2026 State Tax Competitiveness Index, Washington’s tax climate ranks 45th overall. (In the Tax Foundation’s index, one is the best rank and 50 is the worst.) This ranking reflects state tax systems as of July 1, 2025, so it does not yet incorporate many of the tax changes made by […]