WA Millionaires' Tax (SB 6346): What Eastside Homeowners Need to Know
Washington Just Passed a Millionaires' Tax. Here's What Eastside Homeowners Actually Need to Know.
My phone has been ringing. Clients across Bellevue, Kirkland, Mercer Island, and Sammamish are all asking the same question: "Freddy — does this new tax change what we should do with our home?" This post is my answer.
Yesterday, the Washington State House passed Senate Bill 6346 — the "Millionaires' Tax" — after a 24-hour marathon debate. Governor Bob Ferguson has pledged to sign it. By the time you read this, it may already be law.
For the first time in nearly a century, Washington State is on the verge of having a personal income tax. That is historic — and it is generating real anxiety among high-net-worth homeowners on the Eastside. Here is what I want to do with this post: cut through the noise, give you the actual facts, and tell you what I'm advising my clients right now. No political spin. Just clarity.
WA Senate Bill 6346 — The Millionaires' Tax — passed the House on March 10, 2026. Here's the plain-English breakdown Eastside homeowners need right now.
What Is Washington's Millionaires' Tax (SB 6346)?
Senate Bill 6346 levies a 9.9% income tax on Washington household income exceeding $1 million per year. It passed the Senate 27–22 on February 16 and passed the House 51–46 on March 10, 2026 — after one of the longest floor debates in recent state history. Governor Ferguson has pledged to sign it.
Here is the simple math: a household earning $1.2 million pays 9.9% on the $200,000 above the threshold — which equals $19,800. Every dollar below $1 million is not taxed under this law.
| Item | Detail |
|---|---|
| Tax Rate | 9.9% on household income above $1,000,000 |
| Who Pays | Less than 0.5% of WA households — an estimated 21,000–30,000 filers |
| Joint Filers | The $1M threshold applies to combined household income — no separate per-spouse threshold |
| Effective Date | January 1, 2028 |
| First Payments Due | Spring 2029 |
| Est. Annual Revenue | $3.4 – $3.7 billion |
| Real Estate Sale Gains | EXEMPT EXEMPT — proceeds from home and property sales are specifically excluded from WA taxable income |
| Cap Gains Tax Credit | Amounts paid under WA's existing 7% capital gains tax credited against this tax |
| B&O Tax Credit | Business owners may credit a portion of B&O taxes paid |
| Charitable Deduction | Up to $100,000 deductible from WA taxable income (inflation-indexed) |
| Legal Status | Passed both chambers March 2026; Governor pledged to sign; constitutional challenge expected |
Real Estate Sale Gains Are Exempt — Read This First
If you sell your home, your waterfront estate, or your investment property — those proceeds are excluded from the millionaires' tax calculation. This is the most critical detail that most headlines are not covering clearly, and the first thing I tell every client who calls me.
The millionaires' tax applies to wages, business income, and certain investment income. It does not add a new tax burden on your home sale proceeds.
Important context: real estate gains may still be subject to federal capital gains tax and Washington's existing 7% capital gains tax on long-term gains above approximately $270,000 — both already in effect and a separate conversation. The new millionaires' tax does not add to that burden on real estate proceeds. Consult your CPA for your specific situation.
The Washington State Capitol in Olympia — where SB 6346 passed the Senate 27-22 on February 16 and the House 51-46 on March 10, 2026.
When Does This Actually Take Effect?
This is a two-year runway — which is meaningful for planning, and important context for anyone considering a rushed decision based on today's headlines.
Bottom line: this is not a 2026 emergency. It is a 2027–2028 planning conversation. But starting that conversation now — before the market reacts — is the right move.
What This Could Mean for the Eastside Luxury Market
Here is my honest read after 25 years on the Eastside and weeks of direct conversations with high-net-worth clients working through this question.
The calls follow a pattern. Clients are weighing retirement timelines, children finishing high school, next investments, portfolio rebalancing. Some were already considering a move in the next two to three years. The tax is one more variable in a picture that was already complex.
- If your income over $1M comes from wages, business, or investments — not home sales — this tax will cost you real money starting in 2028. How much depends entirely on your full picture. Your CPA should be modeling this now, not in 2027.
- If you were planning to sell your Eastside home in the next 2–3 years anyway — the real estate exemption means the timing is driven by your calendar and market conditions, not this tax. The spring 2026 Eastside market is healthy, with the $2M–$5M luxury segment drawing serious buyers.
- If you're reconsidering Washington residency entirely — you have time to plan properly. Establishing domicile in another state is a serious legal and logistical process. Rash decisions made in fear of a law still facing court challenges would be premature.
- The capital flight question is real but unresolved. Whether high earners migrate to Nevada, Florida, or Texas in meaningful numbers is a 2027–2028 story. The Eastside luxury market will be an important indicator to watch through the mid-term election cycle.
The Eastside luxury market — Bellevue, Kirkland, Mercer Island, Sammamish — remains resilient heading into spring 2026. The Millionaires' Tax is one variable in a larger picture.
What the Revenue Funds
Understanding what this tax is meant to accomplish — regardless of where you stand politically — is part of making informed decisions as a homeowner and investor.
Critics argue the tax creates economic uncertainty, faces serious constitutional hurdles, and sets a precedent that could be expanded to lower income thresholds in future sessions. Both perspectives deserve honest consideration — and both are legitimate inputs for your planning conversation.
My Take as Your Eastside Advisor
I have been in Eastside real estate for over 25 years. I have watched tech booms, market corrections, tax proposals come and go, and clients make both excellent and regrettable decisions under pressure. What I know is this: the clients who navigate major transitions well are the ones who plan ahead with the right team around them — not the ones who react to headlines.
"Don't make a permanent real estate decision based on a law that may face legal challenges and doesn't take effect for two years. But absolutely use this moment to get your full picture in front of the right people."
— Freddy Delgadillo, Judah Realty | Realogics Sotheby's International RealtyHere is what I'm advising every client who calls me right now:
- Start with your financial advisor. What does your income composition look like in 2027 and 2028? What does the tax actually cost you under your specific scenario?
- Loop in your CPA or tax planner. The gross rate (9.9%) often looks very different after credits, deductions, charitable giving strategies, and PTET elections are applied. Get the real number before making decisions.
- Schedule time with me. Let's look at your home's current market value, equity position, and what the next 12–24 months look like for your specific neighborhood. I have been tracking the Eastside market for 25 years — that context matters.
- Make decisions from complete information. Not from a headline. Not from fear. The right move for you depends on your full picture — and that picture is different for every client I work with.
I am not a tax attorney or financial planner. What I am is the real estate advisor who can be your connector — helping you get those conversations started and making sure your real estate assets are fully accounted for when you sit down with your advisors. That is what I have been doing on the Eastside for over two decades.
A complete real estate strategy brings together your financial advisor, CPA, and real estate advisor — I can be the connector to make sure your real estate picture is fully accounted for.
WA Millionaires' Tax & Eastside Real Estate — FAQ
SB 6346 imposes a 9.9% income tax on Washington household income exceeding $1 million per year. It passed the Senate on February 16, 2026 (27–22), passed the House on March 10, 2026 (51–46), and Governor Bob Ferguson has pledged to sign it. It would be the first broad-based personal income tax in Washington's history in nearly a century.
The tax rate is 9.9% on household income above $1,000,000. Income at or below $1 million is not taxed at all. Example: a household earning $1.2 million owes 9.9% on $200,000 — which is $19,800. A household earning $950,000 owes nothing under this law.
No. Gains from real estate sales are specifically exempted from Washington taxable income under SB 6346. If you sell your home, investment property, or waterfront estate, those proceeds are excluded from the millionaires' tax. This does not affect existing federal capital gains tax or Washington's separate 7% capital gains tax. Consult your CPA for your specific situation.
The tax applies to income earned starting January 1, 2028. First tax returns and payments are due in spring 2029. High earners have a meaningful two-year planning window — assuming the law survives expected legal challenges.
Yes. The $1 million threshold applies to combined household income for married couples and registered domestic partners. A couple where each spouse earns $600,000 — $1.2 million combined — would owe 9.9% on $200,000. There is no separate per-spouse threshold under the current law.
An estimated 21,000 to 30,000 Washington filers — less than 0.5% of all households. The vast majority of Washington residents, including most Eastside homeowners, will not be directly affected by the tax itself. The indirect effects on the Eastside luxury real estate market are the more relevant concern for most homeowners to watch.
This is the central economic debate. Critics fear that high earners — tech executives, business owners, and investors — will establish residency in Nevada, Florida, or Texas. Proponents argue Washington's quality of life, tech job market, and no-federal-income-tax advantage retain residents. The answer will become clearer as we approach 2028. The Eastside luxury market will be an important leading indicator to watch heading into the mid-term elections.
This is genuinely contested. Washington's Supreme Court ruled in 1933 that income is property, making graduated income taxes historically unconstitutional under the state's uniformity clause. SB 6346 is structured as an excise tax on the "receipt of income" — the same legal theory used to uphold Washington's capital gains tax in Quinn v. State (2023). Supporters believe it will survive review. Opponents will file legal challenges almost immediately after signing. This uncertainty is a real variable in any planning discussion.
SB 6346 includes language declaring itself "necessary for state government support," which ordinarily exempts a bill from the referendum process. However, opponents may pursue a voter initiative to repeal the tax directly — separate from referendum. Such an initiative could appear on the November 2026 mid-term ballot if enough signatures are gathered.
Real estate sale gains are specifically exempt from SB 6346, so the tax itself is not a direct reason to accelerate a home sale. However, if you earn over $1 million annually from wages, business, or investments — and you're already weighing timing around retirement, family milestones, or portfolio strategy — this is a strong moment to have a comprehensive conversation with your financial advisor, CPA, and real estate advisor together. I'm happy to be part of that conversation. Call me at (425) 941-8688 or visit judahrealty.com/contact.
Wondering What Your Eastside Home Is Worth Right Now?
Tax changes, market shifts, retirement timelines, and personal milestones all factor into your real estate strategy. Let's look at your full picture — starting with what your home is worth today.
Freddy Delgadillo · Judah Realty | Realogics Sotheby's International Realty 📞 (425) 941-8688 · ✉ freddy@judahrealty.com Schedule a Confidential Consultation