This bill proposes the establishment of a new income tax in Washington State, targeting individuals with taxable income exceeding $1,000,000 and households with income over $2,000,000, set to take effect on January 1, 2028, pending a constitutional amendment. The tax will be levied at a rate of 9.90% on Washington taxable income and includes provisions for various tax credits, such as those for taxes paid to other jurisdictions and capital gains taxes. The bill also outlines the distribution of tax revenues, allocating funds for local government public defense and the state general fund for relief programs. Additionally, it introduces a standard deduction of $1,000,000 for individuals and $2,000,000 for couples, along with definitions and modifications to the calculation of taxable income.

Furthermore, the bill includes several amendments and new sections related to the taxation of nonresident individuals, student athletes, and pass-through entities, establishing rules for income allocation and apportionment. It mandates a 9.90% tax on the taxable income of electing pass-through entities starting January 1, 2028, and introduces penalties for tax evasion and noncompliance. The legislation also aims to enhance tax compliance, support public defense funding, and clarify the tax status of retirement benefits, while providing a working families' tax credit and exempting certain grooming and hygiene products from sales tax starting January 1, 2029. Overall, the bill seeks to create a new revenue stream for the state while ensuring equitable tax treatment and financial relief for working families.

Statutes affected:
Original bill: 82.32.050, 82.08.0206, 82.32.090, 2.10.180, 2.12.090, 6.15.020, 11.96A.220, 41.32.052, 41.34.080, 41.35.100, 41.40.052, 41.44.240, 41.26.053, 43.43.310, 82.04.4451, 82.32.045, 82.04.288, 82.12.020