Washington state progressives strike big business tax break from 'millionaires tax'

February 28, 2026 - 12:24

A significant revision to Washington's proposed capital gains tax has shifted the measure's focus squarely onto the state's wealthiest residents. The changes, advanced by the House Finance Committee, specifically remove a substantial tax break for certain business owners that had been included in earlier versions of the legislation.

Progressive lawmakers argued the initial framework offered excessive concessions, particularly a deduction for business owners selling their companies. They contended that this provision would have undermined the core goal of the so-called "millionaires tax," which is to generate revenue from high earners to fund essential services and tax relief for low- and middle-income families. The amended bill now targets capital gains earnings above $250,000 from stocks, bonds, and other assets, while closing the business sale loophole.

Supporters hail the move as a necessary step toward tax equity in a state long criticized for having the most regressive tax structure in the nation. They assert the revised tax will ensure the financial burden falls on those most able to pay, generating critical revenue for child care, early learning, and other public investments. The proposal continues to face strong opposition from critics who challenge its constitutionality and argue it will harm the state's economic competitiveness. The bill's fate now rests with the full House as the legislative session continues.