Gov. Ferguson says he wants to see a 'millionaires' tax' in Washington state

Washington state hasn’t really had an income tax for nearly a century, but that might be about to change.

Since Donald Trump’s reelection and tax cuts in the so-called “Big, Beautiful Bill” this year, momentum has been building on the left around a so-called “millionaires’ tax:" a tax on incomes over $1 million.

On Tuesday, Gov. Bob Ferguson said he wants to see such a proposal next month and would work with Democrats to make sure it passes.

At a budget meeting where the governor unveiled his operating budget for next year — with about $800 million in cuts that critics on the left are already calling an "austerity budget" — Ferguson said low-income individuals pay far too much in taxes as a percentage of their incomes in Washington state.

“We are facing an affordability crisis. It is time to change our upside-down tax system,” Gov. Ferguson said. “To rebalance this unfair system, I support a millionaires' tax. Let’s make this historic change in this upcoming legislative session.”

It’s a shift for Ferguson, who has discouraged the idea of propping up the state’s unstable tax structure by inserting more taxes on the wealthy — even promising to veto budgets relying on such taxes. But he did sign a high number of tax hikes on a range of products and services into law earlier this year.

“Nothing’s changed,” Ferguson said. “This budget is balanced without taxes. But we need to look to the future...I do think that it’s a different time right now.”

Republicans in the legislature vehemently criticized Ferguson’s comments Tuesday.

“Washington doesn’t have an income tax because voters rejected it repeatedly. Calling it a ‘millionaires' tax’ doesn’t change what it is,” said State Rep. Travis Couture, the Republicans’ budget lead in the state House.

“Once the door is opened, the definition of ‘millionaire’ always shrinks," Couture continued. "That’s why people don’t trust this. When a budget drains reserves, raids school accounts, and still doesn’t balance, proposing a new income tax just confirms the Democrats' plan isn’t serious.”

Ferguson took pains Tuesday to make it clear that a “millionaires' tax,” even if passed next year, likely would see a challenge from the courts and have to go before the voters — so any money raised by it likely wouldn’t come into state coffers until 2029. Ferguson said the proposal he supports would tax incomes over a million at nearly 10%.

Democrats flip on income taxes

A state income tax has been regarded as a total non-starter in Washington politics for years.

In 2010, a proposal on incomes over $200,000 for individuals went down in flames with 64% voting against. Even two years ago, Democrats seemed scared of losing that fight, passing a ban on income tax into law rather than let Republicans take it to the voters.

But then in 2024, a capital gains tax on rich Washingtonians stood up to challengers who called it a “backdoor income tax.” In the November 2025 elections, Democrats who voted for tax hikes sailed to victory despite business spending and attacks from both Republicans and even moderate Democrats.

Last week, State Sen. Jamie Pedersen, the Democrats’ majority leader, told KUOW’s Sound Politics that reversing their 2024 decision to ban income taxes wouldn’t be hard.

“That was — what did Mary Poppins call that? — a ‘pie crust promise.’ Easily made, easily broken. We put that language into statute, and we can amend it any time we want to,” Pedersen said. “I wouldn’t take that super-seriously.”

Washington State Republican Party chairman Jim Walsh called the Democrats' proposal "a joke" and "patently unconstitutional."

"If Ferguson signs this nonsense into statute, there will be lawsuits. Then, Ferguson and his comrades will try to convince the WA State Supreme Court to rule against our state's longstanding tradition that income is property," Walsh said in an email. "The current governor seems blinded by desperration [sic] and arrogance to imagine his proposed scheme will stand up to rational judicial scrutiny."

Tax support overshadows budget criticism

The splashy announcement overshadowed what Ferguson was in Olympia to do the day before Christmas Eve: announce his proposed operating budget for next year as the legislature prepares to meet in January.

The governor is proposing almost $800 million in cuts, mostly to health and human services, putting caps on childcare subsidies and delaying a rate increase for assisted living and nursing home staff. The proposal would also cut millions from public universities like University of Washington and Washington State University, all the way down to Kindergarten education programs.

It’s an ‘austerity’ approach – that’s according to Chris Reykdal, who oversees K-12 public schools in Washington.

"Cuts to public services hurt us," Reykdal said in a video posted to the official YouTube page of the state Superintendent of Public Instruction. "It directly shrinks incomes and jobs in communities, and ultimately does big big damage."

Ferguson is hoping to raise revenue a little bit by ending some tax subsidies for data centers, and closing loopholes for insurance companies and prescription drug sellers.

Ferguson also proposed moving money raised by the Climate Commitment Act's carbon auction over to fill obligations in the Working Families Tax Credit program, on top of dipping into the rainy day fund.

The state treasurer, Democrat Mike Pellicciotti, said in an email the state’s reserves are already lowest in the nation.

"If the final budget reduces reserves without a clear plan to replenish that fund we will be unable to shield ourselves from future risks,” a spokesperson for the state treasurer said in an emailed statement.

Republicans ripped the budget apart as well; Couture said in an email the governor's proposal was so poorly constructed, at first when he saw it, he "honestly thought it was a prank."

Next year's budget is a supplemental one; it's an adjustment to the budget passed earlier this year as revenue forecasts came in lower than expected due to slow economic growth.

Update, 12/23/25 at 4:27 p.m.: This story has been updated to include comments from Reykdal and Pellicciotti.