by Jerry Cornfield, Washington State Standard
February 27, 2026
Washington Democrats’ controversial income tax bill emerged from a state House panel Friday looking much different than when it arrived.
The House Finance Committee stripped out a proposed tax break for large companies, sped up repeal of a new sales tax on services, and eliminated the sales tax on diapers.
Those are among the most notable changes made to the version of the bill approved by the Senate earlier this month.
Senate Bill 6346, dubbed the “millionaires’ tax” by supporters, passed out of the committee on a 9-6 vote with all Republicans and one Democrat, Rep. Amy Walen of Kirkland, opposed.
“I am eager to vote yes today,” said Rep. Sharlett Mena, D-Tacoma. “It ensures that we have the resources to invest in early learning, child care, public education, health care, food assistance and workforce development programs, as well as the working families tax credit. It provides support for businesses, and it now, as of today, provides for tax free diapers.”
Rep. Cyndy Jacobsen, R-Puyallup, said she wasn’t looking forward to voting “because I wish we had never taken it up.”
“We’re taking as a premise that without this income tax, we can’t fund needed services. And I want to say that our revenue has continued to go up every year that I have been in office,” she said. “After we pass these tax increases, we will still be back next year with a deficit because we have not solved the underlying problem, which is that we are spending more every year than we take in.”
The bill is expected to reach the House floor in the coming week. House Speaker Laurie Jinkins has said that a vote will not occur before the March 6 deadline for acting on bills from the opposite chamber that are not tied to budgets.
While most Democratic lawmakers and the governor, Bob Ferguson, are on board with the tax, they have differed on how much of the revenue is used for tax relief and how much is spent on education, health care, social programs and other public services.
What the committee didn’t surprise Sen. Noel Frame, D-Seattle, one of the Senate’s leading voices on tax policy.
“I expected the House to put their stamp on the bill. They have,” she said, adding that she thinks her caucus would concur with the changes based on what she’s seen and knows about them.
What’s in, what’s out
The legislation would impose a 9.9% levy on adjusted gross household income above $1 million a year. Collections of the tax would start in 2029 and could total nearly $2.6 billion for the next budget, according to a fiscal analysis. When fully up and running, it is projected to generate $3.4 billion a year from an estimated 21,000 filers.
On Friday, the committee didn’t mess with the tax rate or income threshold. It retained an expansion of the state’s Working Families Tax Credit to include persons who are at least 18 years of age and who meet other eligibility requirements. This program provides relief for lower-income families in the form of payments ranging from $50 to $1,330 a year.
Also kept in the bill is a full exemption for companies grossing less than $300,000 a year from paying the state’s main business tax, and elimination of sales tax for grooming and hygiene products, like shampoo and deodorant, in 2029.
The committee made two significant changes related to other business taxes.
First, it adopted an amendment from Rep. Shaun Scott, D-Seattle, to axe the provision that would end a tax surcharge on companies grossing more than $250 million annually in 2028 rather than 2029. That move would cost the state about $550 million in lost revenue, he said.
Passing the tax will be a “massive step in the direction of economic justice. That progress would be diminished in some ways by the incorporation of a really large tax break,” he said. In an era of fiscal prudence, Scott added, can the state afford a tax break “that amounts to half a billion dollars to some of the largest corporations?”
Scott, earlier in the week, authored a letter signed by 13 progressive lawmakers calling for that piece to be taken out. They argued those dollars will be needed to support public services.
The other big change is to roll back expanded retail sales taxes lawmakers adopted last year on services. The Senate called for the repeal to take effect Jan. 1, 2030. On Friday, the House committee moved it a year earlier, with supporters saying they wanted to provide more tax relief to businesses sooner.
A tax on advertising services that drew a lawsuit from cable giant Comcast would remain in place.
Two other notable changes. The House panel pencils in $150 million a year for public defense services provided by cities and counties. The Senate pledged 7% of income tax receipts for this purpose.
And the House version allows a person to deduct up to 90% of gambling losses in a year as long as that amount doesn’t exceed the amount of gambling income included in the Washington base income.
It wasn’t immediately clear Friday what Ferguson thinks of the newest version. His office didn’t respond to a request for comment. Earlier this month, he criticized the Senate for not including enough tax relief for families and businesses. But he embraced an early end to the surcharge on corporations.
Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: [email protected].