Democrats in Washington Legislature reveal sweeping new tax plan

To tackle a significant $16 billion budget shortfall, Washington's Democratic lawmakers have introduced a sweeping tax plan featuring increased business and capital gains taxes, new sales taxes on services, and expanded property tax collections. This initiative is expected to generate nearly $12 billion over the next two budget cycles, allowing the state to maintain essential services and fund new programs. Among the proposed changes is a surcharge on corporations with over $250 million in annual revenue, effective January 1, 2026, while Boeing is notably exempt from this surcharge. Governor Bob Ferguson's endorsement is pivotal, as he has previously expressed concerns regarding certain tax proposals, particularly those targeting high-income earners. The revised plan discards a payroll tax modeled after Seattle's JumpStart tax while permanently increasing the state's primary business and occupation tax rates.

Additionally, wealthier individual taxpayers may face higher capital gains taxes with the introduction of a new tier. The proposal retains a provision to increase annual property tax growth, allowing it to adjust according to population growth and inflation. As legislators navigate these changes, the focus remains on balancing revenue generation with political feasibility.