Governor Bob Ferguson took office on January 15, 2025.67c6c66282b4
Since then, Washington State has enacted several significant tax increases, primarily through the 2025 legislative session (with bills signed in spring 2025) to address budget shortfalls. These are often described by critics (including House Republicans) as the largest tax increase package in state history, totaling roughly $9–12.5 billion over four years (state and local levels combined, depending on estimates).36086417b4f9
In 2026, a major new income tax (the "Millionaires' Tax" ) was passed and signed. Here is a summary of key tax increases:
Major 2025 Tax Increases (Signed ~May 2025)
Business & Occupation (B&O) Tax changes (e.g., via HB 2081/ESHB 2081 and related bills like SB 5794): Permanent across-the-board rate increases for many businesses, new surcharges on large firms (e.g., additional tax on taxable income over $250 million for some, with rates varying by type/income), higher rates on certain financial institutions and large service businesses. Projected to raise billions.29647ed95678
Sales Tax Expansion (e.g., ESSB 5814): Extended retail sales tax to additional business services previously exempt or treated differently (e.g., certain advertising, IT/custom software services, temporary staffing, security services, and modifications to digital automated services). Effective in phases, notably October 2025 for some.caf848892773
Capital Gains Tax Increase (e.g., SB 5813): Raised the rate on long-term capital gains over $1 million from 7% to 9.9% (while the 7% rate applies to gains above the exemption ~$250k–$270k).d269cbebbb06
Estate Tax Modifications (linked to capital gains bills): Increased rates and adjusted exclusions (later partially reverted in 2026 legislation).c90c40
Transportation-Related Taxes/Fees (part of budget/transportation package):
6-cent-per-gallon increase in the state gas tax (with future escalators).
Increases in motor vehicle sales tax, rental car tax (e.g., from 5.9% to 11.9% temporarily), tire fees, weight fees, and new taxes on peer-to-peer car sharing/recreational vessels.cc5b2a7811c1
"Tesla Tax" / EV Credits (HB 2077): New tax on the sale/transfer of zero-emission vehicle credits.50a729
Other: Elimination of certain tax preferences/breaks (SB 5794), new B&O classification for payment card processing (HB 2020), and various fees/taxes in the operating and transportation budgets.d8f523
These contributed to a ~$78 billion two-year operating budget.076d21
2026: Millionaires' Tax (SB 6346, signed March 30, 2026)
Imposes a 9.9% tax on income over $1 million (with a $1 million standard deduction, effectively targeting high earners). Applies to Washington residents and certain nonresident Washington-sourced income.e46f100dcdb0
Effective for tax years beginning January 1, 2028 (first payments due in 2029).
Projected to raise several billion annually; paired with expansions to the Working Families Tax Credit and some exemptions.fc9221
Expected to face legal challenges.028193
Notes:
Many sources (especially Republican-led) highlight the cumulative impact on businesses, consumers, and affordability. Official estimates and effective dates vary by bill; some changes phase in over years.bac152
Not every bill was purely a "tax increase"—some involved rate adjustments, base broadening, or fees—but the net effect was substantial new revenue.
For the most precise details on any bill, check the Washington State Legislature website (app.leg.wa.gov) or Department of Revenue guidance, as implementations can include nuances or future tweaks.
This is based on publicly reported legislative outcomes up to mid-2026. Tax policy can evolve with court rulings, future sessions, or revenue forecasts.