Washington House has passed the so-called “millionaires tax”. The bill will go for final approval today or tomorrow. “The Millionaires’ Tax will apply to less than one half of one percent of Washingtonians, but make life more affordable for millions. I look forward to signing it,” said Gov. Bob Ferguson in a statement. The bill adds a 9.9% tax to taxable, personal annual income above $1 million. Washington is currently one of nine states without an income tax. Supporters of Senate Bill 6346 claim that it will bring some fairness to a regressive tax code that has relied heavily on sales, property and business taxes. The legislation includes tax benefits for low-income families and small businesses. SB 6346 bill is said to be the first time in decades that State lawmakers have pursued a personal income tax aimed at high‑income residents.Many tech leaders and entrepreneurs are not happy with the bill, which they say could undermine their sector by souring Washington’s relatively favorable tax laws for startup founders, investors and high-salary individuals. In a recent open letter to the governor, Seattle tech leaders said that income tax proposal will hurt region’s AI innovation. In an open letter to the Governor earlier this month (which first appeared in Wall Street Journal), they warned that a new income tax could stall the region’s momentum in artificial intelligence. “These policies would materially undermine Washington’s ability to keep growing the tech sector, which is a core driver of our economy, and would slow the AI innovation and investment momentum that we should be accelerating, not discouraging,” the letter reads. The letter adds that it may become an AI competitiveness problem, writing that Washington is “competing for the talent required to build and scale AI products, companies, and jobs” but is “starting to lose momentum” compared to rival hubs.
Here is the full text of the open letter:
Governor Ferguson, As experts and innovators in the field of artificial intelligence, we write to strongly encourage you to pause the state’s efforts to create a state income tax and increase the capital gains tax. These policies would materially undermine Washington’s ability to keep growing the tech sector, which is a core driver of our economy, and would slow the AI innovation and investment momentum that we should be accelerating, not discouraging. Washington state is competing for the talent required to build and scale AI products, companies, and jobs. Although we already have an initial base of AI labs, startups, and innovators here, Washington is starting to lose momentum, slowing our ability to attract and scale this critical economic sector. According to Silicon Valley Bank’s February 2026 State of the Markets report, Seattle has seen a significant downturn in startup formation in the last three years. The areas that are growing have one of two advantages. • San Francisco is seeing growth in the AI sector due to a strong, existing ecosystem that Seattle cannot match. • Texas is seeing growth due to a better tax climate that is attracting businesses in many sectors. Washington state has a core of technology companies that could attract talent if the business climate is more favorable than California. An unfavorable tax climate with an income tax and capital gains taxes prevents Washington from building the ecosystem necessary to attract talent.Washington would be left with the worst of both worlds – an AI ecosystem that can’t match California’s and high taxes that prevent us from attracting the talent to create that innovation core needed for the next wave of growth and job creation.We strongly encourage you to pause both the income tax and capital gains tax bills and take the time to think about how we can be a national leader in the AI driven economy, which will be one of the most important new economic sectors of the next decade. AI is at a critical moment, and a hasty decision now would do serious damage to the future of Washington’s innovation economy.We are happy to answer any questions you might have about these issues.