Senate Bill 6346, the Millionaire Tax, passed the Senate February 16 and is now headed to the state House of Representatives.

Please contact your state representatives today!

On February 4, legislative leaders introduced bills to create a 9.9% “millionaire’s tax” on households earning more than $1 million annually. However, the bill would effectively operate as an income tax on sole proprietors and small-business owners organized as pass-through entities. 85% of small businesses use this tax status.

While the proposal does include some small business tax relief, those concessions are inadequate to avoid significant tax increases on NFIB members who report business earnings and expenses as part of their personal income taxes. This also puts small firms at a further competitive disadvantage compared to full C-corporations which would be exempt from the tax.

Act Now. Act Here to Stop SB 6346

Background

— Based on a special member ballot, 98% of NFIB members oppose the proposal.

— In 2025, Legislature increased taxes by a record-setting $9 billion. The proposed millionaire’s tax would burden Washington taxpayers with an additional $4 billion annually.

— Under this proposal, sole proprietor and pass-through business income is taxed at the individual level regardless of whether that income is actually distributed to the owner. This creates serious cashflow risks, particularly for businesses that reinvest earnings, operate under lending restrictions, or experience year-to-year income volatility.

— As a tax on businesses, the proposed rate of 9.9% would be the second highest in the nation.

— Income tax is widely understood to be prohibited under Washington’s state constitution and statute.

— Washington voters have rejected an income tax many times at the ballot.

— Establishing this tax in statute allows future legislatures to reduce the deduction from $1 million to $0.

— Gov. Bob Ferguson has signaled objections to the version of the bill introduced by legislative leaders, preferring greater tax relief for small businesses than the new bill offers.

Contact your elected officials at the link above.