AN ACT Relating to investing in Washington families and businesses to fund K-12 education, health care, higher education, other essential governmental services, and the working families' tax credit, and to reduce certain sales and use taxes and certain business and occupation taxes by establishing a tax on millionaires;
HB 2724 would create a new state income tax chapter in Washington imposing a tax on individuals with Washington adjusted gross income above a specified high-income threshold, described in the bill as a “millionaires tax.” The measure is framed as a progressive tax reform intended to raise revenue from the state’s highest-income households while exempting lower-income residents. The bill also includes a broad set of definitions, apportionment rules for residents and nonresidents, estimated tax payment requirements, filing rules, penalties, and administrative provisions modeled in part on federal income tax concepts.
The bill directs revenue from the new tax primarily to the state general fund, with a small share deposited into a county public defense funding stabilization account. It also pairs the new tax with several tax relief provisions, including credits or exemptions affecting business and occupation taxes, public utility taxes, capital gains taxes, and sales and use taxes, as well as an expansion of the working families tax credit. In addition, the bill creates or modifies exemptions for certain household goods and grooming and hygiene products, and it contains a severability clause and an expiration-related review mechanism for the working families tax credit.
HB 2724 would significantly alter Washington tax law by adding a new Title 84 RCW chapter for the income tax on high earners and by amending multiple existing statutes related to tax administration, retirement benefits, and tax preferences. It would also establish new rules for allocation and apportionment of income, credits for taxes paid to other jurisdictions, pass-through entity taxation, and enforcement penalties. The bill’s structure suggests a comprehensive attempt to build a new progressive income tax system while preserving or offsetting some existing tax burdens through targeted relief.
The general sentiment reflected in the bill text is strongly supportive of the measure’s policy goals: it emphasizes fairness, reducing regressivity, protecting essential public services, and shifting more of the tax burden to the wealthiest households. The bill’s findings repeatedly state that Washington’s current tax system is overly reliant on consumption taxes and that the new tax would help fund education, health care, higher education, human services, and the working families tax credit. No committee transcript or vote history was provided, so there is no recorded legislative debate or roll-call sentiment in the supplied materials.
The main points of contention implied by the bill are likely to be the creation of a state income tax in a state that has historically relied on sales and excise taxes, the constitutionality of such a tax under Washington law, and the administrative complexity of implementing a new tax regime. The bill anticipates legal challenge by including a null-and-void clause if a court invalidates the tax and by stating that the measure is necessary for state government support. Potentially affected parties include high-income individuals, nonresidents with Washington-source income, pass-through entity owners, businesses receiving tax credits or exemptions, and taxpayers claiming the working families tax credit or sales tax relief.
The bill would add a new chapter to Title 84 RCW establishing a state income tax on high-income individuals and related rules for apportionment, credits, filing, withholding, penalties, and administration. It would also amend multiple RCW provisions to coordinate with the new tax, including statutes governing retirement-related exemptions, tax administration, and existing tax preferences. Revenue would be directed mainly to the general fund, with a portion reserved for county public defense funding, and the bill would create new or expanded tax relief provisions for working families, certain business taxes, and selected consumer goods.
The bill text reflects strong support for a more progressive tax structure and for using the new revenue to protect and expand public services. Its findings emphasize fairness, economic security, and reducing the tax burden on lower- and middle-income households. No committee discussion or vote record was provided, so there is no additional evidence of legislative support or opposition beyond the bill’s own stated policy rationale.
The most significant likely points of contention are the proposal to impose a state income tax in Washington, the bill’s legal durability under state constitutional and statutory constraints, and the complexity of administering a new tax system. The bill itself anticipates these concerns by creating a severability provision, a null-and-void clause if the tax is invalidated, and detailed administrative rules. Opposition would likely come from taxpayers and business interests affected by the new tax, while supporters would be those favoring progressive taxation, expanded working families credits, and greater funding for education, health care, and other public services.