Senate Bill 6346, the Millionaires Tax, has now passed both chambers of the Washington State Legislature in the state of Washington, introducing a new state income tax on high earners. The bill passed the Senate on February 16, 2026 (27-22), and after a 25-hour marathon debate, passed the House on March 10, 2026 (51-46) with no Republican support and eight Democrats voting against. Because the House made significant amendments, the bill must return to the Senate for a concurrence vote before going to Governor Ferguson’s desk. The legislative session ends March 12, 2026. Senate concurrence is widely expected given the original 27-22 vote, and Governor Bob Ferguson has publicly committed to signing the revised bill into law, supporting the measure as part of broader Washington tax changes.
BREAKING: On March 10, 2026, after a record 25-hour floor debate, the Washington State House passed SB 6346 by a 51-46 vote. Governor Bob Ferguson has pledged to sign it. If enacted, this will be Washington’s first-ever personal income tax. If enacted, this will be Washington’s first-ever personal income tax, affecting high earners, business owners, and certain types of investment income. |
Disclaimer: SB 6346 has passed both chambers and is expected to be signed into law imminently. This summary reflects the bill as passed by the House on March 10, 2026 and is subject to change pending Senate concurrence and Governor signature. Constitutional challenges are anticipated and could affect the law’s ultimate enforceability. This is not legal or tax advice.
What Is the Washington Millionaires Tax?
SB 6346 imposes a 9.9% tax on household adjusted gross income (AGI) or taxable income above $1 million per year. It is projected to affect approximately 30,000 households statewide — less than 0.5% of Washington residents. The tax is scheduled to take effective January 1, 2028, with first payments due in 2029. We estimate that about 1% of our clients will be impacted. This introduces a form of new income tax in a state that has historically avoided a traditional state income tax structure.
Key Provisions at a Glance
| Tax Rate | top rate of 9.9% on household adjusted gross income above $1 million per year |
| Who Is Affected | Approximately 30,000 households — less than 0.5% of Washington residents primarily high earners and certain business owners |
| Effective Date | January 1, 2028, with first tax payments due in 2029 |
| Standard Deduction | $1 million per household (inflation-adjusted after 2030) |
| Charitable Deduction | Up to $100,000 for donations to Washington nonprofits similar in concept to a standard deduction structure |
| Tax Credits | Credits available for WA capital gains tax paid, B&O taxes paid, and income taxes paid to other states (nonrefundable, no carryforward) |
| Non-Residents | Taxed only on Washington-sourced income; those working in WA fewer than 5 days are exempt |
| Long-Term Cap Gains | Most long-term capital gains excluded from the tax base (unless already subject to WA capital gains tax) |
| Small Business Relief | B&O tax exemption for businesses grossing under $300,000 starting in 2029 — roughly 65% of all WA businesses applies to many small businesses across Washington businesses |
| Legal Status | Includes a ‘necessity clause’ to shield from referendum — challenges expected in court and via ballot initiative |
| Pass-Through Impact | S-corp and PLLC owners with K-1 income pushing household income above $1 million will be directly affected |
What This Means for Dental Practice Owners
This is no longer a proposal to monitor — it is on the verge of becoming law. Washington has been one of nine states with no personal income tax, making it a longstanding haven for high-earning professionals. Dental practice owners whose total household income exceeds $1 million annually need to factor this new tax into their financial planning starting in 2028. This change impacts how business income, wage income, and even rental income may be treated at the state level, especially when layered on top of federal income tax obligations. For many, this raises concerns around double taxation, particularly when income is already taxed at the federal level.
Action Steps for High-Earning Practice Owners
- If your household income is over $1m annually, we will take this new law into account during your 2028 tax projection. You can also schedule a meeting with your Client Advisor to model your potential tax exposure under this new law and stress-test different income scenarios.
- Review the timing of income recognition — income recognized before January 1, 2028 is not subject to the new tax. This is especially relevant for practice sales, stock option exercises, bonus deferrals, and installment sale elections.
- Evaluate available tax credits: B&O taxes paid and Washington capital gains taxes paid may be credited against your millionaires tax liability, potentially reducing your net exposure.
- Understand how your entity structure (S-Corp vs Sole Proprietor) interacts with this new tax and whether any restructuring makes sense for your situation.
- Be aware that constitutional challenges are anticipated — Republican lawmakers have signaled immediate court action — but do not rely on a legal reversal as a planning strategy.
- Ongoing developments, including potential challenges at the ballot box, continued discussion during the legislative session, and positions from leaders like Senate Majority Leader Jamie Pedersen, may influence how this law is ultimately applied to Washington taxpayers.
Have questions about how this new tax could impact you? Reach out to our team for guidance tailored to your dental practice.
Disclaimer: SB 6346 has passed both chambers and is expected to be signed into law imminently. This summary reflects the bill as passed by the Washington State House on March 10, 2026, and is subject to change pending Senate concurrence and Governor signature. Constitutional challenges are anticipated. This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation. © 2026 DG Accounting Professionals LLC. |
