Washington vote appears to uphold 9.9% millionaire tax

Washington voters appeared to reject repeal of the state’s 9.9% tax on household income above $1 million by 58% to 42% in election-night returns. A Seattle Times estimate put the hurdle at about 62% of remaining ballots, while 66.5% of King County voters rejected repeal.

If final counts confirm the result, Washington will lose its place among the nine states without an income tax. Tech leaders have long marketed that status as an edge in recruiting companies and talent. For employers, the measure raises a recruiting and retention test: founders and investors warned that the levy could push talent and capital elsewhere, while others called those fears overblown.

What changes for employers?

The tax applies only to household income above $1 million, so a household earning $1.5 million would owe $49,500. The levy applies to 2028 income, with first payments due in April 2029, and Washington projects $3 billion to $4 billion annually from roughly 25,000 households.

Gov. Bob Ferguson signed the measure in March 2026 alongside tax breaks for small businesses and lower-income families. For employers, the change creates a workforce-location issue rather than a new payroll or benefits deadline.

Why did Seattle’s tech leaders split?

Since lawmakers unveiled the proposal in February, Seattle’s tech community has divided between founders and investors predicting an exodus and others calling those fears overblown. Seattle venture firm Madrona gave $250,000 to the repeal campaign, making it one of the largest donors.

Madrona managing director Matt McIlwain said: “The outcome on the income tax should be disappointing for all Washingtonians as having no income tax was a major source of competitive advantage for the state.” He urged repeal in an October GeekWire column and cited record economic growth and job creation after voters rejected an income tax in 2010.

McIlwain remains concerned about Washington’s future ability to compete. Asked whether the result changes Madrona’s Washington strategy, he did not address the state specifically. He said the firm’s goal remained finding and partnering with founders and teams that create enduring companies, products, jobs and economic returns.

Attorney Ben Golden, who advises Pacific Northwest startups and investors, countered that the result demonstrates: “Washingtonians are ready to invest in ourselves.” He called for hard work to spend revenue wisely, including preparation for Medicaid cuts and AI job disruption.

Golden acknowledged that some residents may leave for tax havens. He nevertheless described the region as healthy, talent-packed and still ripe for investors and startups to build and grow.

Seattle entrepreneur and investor Brian Fioca hopes the added revenue will improve residents’ quality of life. He called Washington a wonderful place to live and build a company, full of extraordinary people and talent, and had earlier written a GeekWire op-ed on the issue.

Fioca said people who leave or decline to start businesses because of the tax are not prospects he would be excited to work with or invest in. Meanwhile, state Sen. Jamie Pedersen, D-Seattle, designed the tax and served as prime sponsor of the bill creating it.

The Senate majority leader has been in the Legislature since 2007 and serves as executive vice president and general counsel at construction and engineering firm McKinstry. Pedersen described the tax as an anchor around the state’s neck. He said the system was bad for working people, small businesses and almost everyone except the 1%.

Pedersen repeatedly reworked the bill through the final legislative days to win votes. He celebrated at Tuesday’s No on 645 election-night event in Seattle. The campaign cited working families, labor unions, teachers and small-business owners, with endorsements from Edmonds-based travel writer Rick Steves and “Jeopardy!” host Ken Jennings.

What does the migration record show?

Jeff Bezos, Howard Schultz and Rich Barton moved out of Washington in recent years, though each described the move as personal. McIlwain moved his family from Georgia to Seattle 26 years ago and became a Georgia resident again two years ago, before lawmakers unveiled the tax in February.

In 2010, Steve Ballmer and Microsoft helped fund the campaign that defeated a statewide income tax. The region’s largest technology companies stayed out of this fight.

Can the tax withstand a court challenge?

Former Attorney General Rob McKenna and former state Supreme Court Justice Phil Talmadge filed a lawsuit in April arguing that the tax is unconstitutional. They cited a 1933 ruling that classified income as property, which Washington’s constitution requires the state to tax at a uniform rate.

The case will likely reach the state Supreme Court. According to Washington State Standard, Democrat-backed candidates led four of five races on Tuesday’s ballot as of election-night returns.

For employers, the next checkpoints are final ballot certification and the court decision. Because the tax applies to 2028 income, its recruiting and retention effects will remain unmeasured, leaving Washington’s competitive position under a sustained test.