Opponents of Washington’s new tax on high earners submitted more than 500,000 signatures to the Secretary of State’s office on July 2, all but guaranteeing that voters will decide the tax’s fate this November.
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What happened
Backers of Initiative 645, led by Redmond hedge fund manager Brian Heywood, gathered at the Secretary of State’s office on July 2 to submit 511,408 signatures supporting a repeal of Washington’s newly enacted 9.9% tax on adjusted gross income above $1 million a year — the tax Democrats have called the “millionaires tax,” according to reporting from The Seattle Times. The signature count is well above what’s needed to qualify, effectively locking in a spot on the November 3 ballot.
The tax itself was signed into law by Governor Bob Ferguson earlier this year as part of the state’s response to budget pressure. Washington remains one of only nine states without a personal income tax, which is part of why this fight is drawing national attention — it would be the first-ever state income tax on the books if it survives the repeal effort.
Why it matters
This sets up what The Seattle Times described as “an epic brawl for November over the state’s tax system, government funding and business climate.” Democrats have commissioned polling showing 57% opposition to the repeal when voters are read the ballot language, including an official “impact statement” warning that I-645 would cut funding for K-12 education, healthcare, human services, and higher education. Expect a heavily funded campaign on both sides between now and November 3, per The Spokesman-Review.
What this means for small business owners
Most CentsIQ clients aren’t anywhere near the $1 million personal income threshold this tax targets — but that doesn’t mean it’s irrelevant to you. A few things worth tracking over the next several months:
- Tax policy uncertainty affects planning. Whatever the outcome, this vote will shape how Washington funds public services going forward, which can ripple into local business taxes, fees, and B&O rates down the line. Don’t make major structural decisions (entity changes, owner compensation strategy) based on assumptions about a tax that’s still legally in flux.
- If you’re near the threshold, either personally or through pass-through business income that counts toward your adjusted gross income, this is worth a conversation with your CPA now rather than in December. A repeal wouldn’t be certified until after the November 3 election, and any 2026 tax year exposure needs to be modeled either way.
- Watch for follow-on legislation. If I-645 fails, expect the state to look for other revenue levers. If it passes, expect a scramble to fill the resulting budget gap. Either way, more WA tax changes are likely in 2027.
“Opponents of Washington’s new high-earners income tax submitted more than 500,000 signatures for an initiative to kill the tax Thursday, setting up an epic brawl for November over the state’s tax system, government funding and business climate.” — The Seattle Times
The bottom line
Nothing changes for your books today — the tax stands until and unless voters repeal it in November. But if you’re a growing WA business with an owner nearing seven figures in personal income, or you’re just trying to plan around a genuinely uncertain tax environment, now’s the time to loop in your bookkeeper or CFO rather than wait for the ballot results to force your hand.
