Washington Residents Pay Federal Taxes on Tax Day 2026 as State Income Tax Faces Court

(WASHINGTON) — Washington residents filed their federal income taxes on April 15, 2026, Tax Day 2026, as a new Washington state tax on high earners moved toward a court fight and a possible repeal campaign.

Governor Bob Ferguson signed SB 6346 into law on March 30, 2026. The measure imposes a 9.9% tax on adjusted gross household income above $1 million annually, excluding the first $1 million.

The tax does not take effect until January 1, 2028, and collections begin in 2029. Under the law, the income threshold adjusts for inflation every two years.

Washington previously had no state tax on individual wage and salary income. The state instead relied on sales, property and other levies that critics have long described as regressive.

State lawmakers passed Senate Bill 6346 along party lines, with the House approving it 51-46 and the Senate approving it 27-21. Opposition included all Republicans and 11 Democrats, made up of 3 Senate members and 8 House members.

The new tax is expected to affect about 21,000 filers, or roughly 0.5% of households. Backers project it will raise $3 billion annually.

That narrow reach has not insulated the measure from a legal challenge. The Citizen Action Defense Fund, known as CADF, filed suit on April 9, 2026, in Klickitat County Superior Court, seeking to have the tax declared unconstitutional and to block its enforcement.

Former Washington Attorney General Rob McKenna, former State Supreme Court Justice Phil Talmadge and CADF Executive Director Jackson Maynard are leading the challenge. Plaintiffs also include the National Federation of Independent Business, which argues the tax will reach small businesses that report income through pass-through entities.

The lawsuit argues the tax is a property tax on the “receipt of Washington taxable income,” and therefore violates the Washington constitution’s uniformity requirement for property taxes. The plaintiffs rely on Culliton v. Chase, a 1933 decision that they say, along with decades of later precedent, treats income as property under existing state law.

McKenna said: “Washington’s constitution is clear, and the courts have been equally clear for nearly a century, income is property, and progressive income taxes are unconstitutional under existing law.”

Maynard said: “Since lawmakers and the Governor have chosen to ignore both the constitution and decades of settled case law, we will act. This lawsuit is about upholding the rule of law.”

The legal challenge draws a sharp distinction between this tax and Washington’s capital gains tax, which the state Supreme Court upheld in 2021 in Quinn v. State. That tax was treated as an excise tax on asset sales, while Senate Bill 6346 targets income directly.

Challengers may seek a preliminary injunction to stop Department of Revenue preparations before the tax takes effect. With the start date still in 2028, the timing pressure is less immediate than it would be under a tax set to begin this year.

The case is expected to reach the Washington Supreme Court in a process likely to stretch over several years. A ruling there would not only decide the future of Senate Bill 6346, but also test whether the court leaves intact the constitutional reading that has blocked graduated income taxes in the state for decades.

A separate threat to the new law is already taking shape outside the courts. Let’s Go Washington is pursuing a November 2026 ballot referendum to repeal the tax.

The campaign must gather more than 145,000 signatures by June 10, 2026. At the same time, the state Supreme Court agreed to hear a related challenge over whether the tax is referendum-proof because it is essential to the budget, despite its delayed start in 2028.

If voters repeal the law before collections begin, that result could moot the lawsuit. If the referendum effort fails, the constitutional case would remain the main path for opponents seeking to stop the tax.

Washington voters have rejected income tax measures multiple times. Votes in 1932, which was overturned in 1933, and in 2010, when voters rejected a proposal with a threshold of $200,000.

Those defeats have left Washington in an unusual position among states that rely heavily on sales taxes. Supporters of the new tax, including Ferguson, have presented it as a move toward a less regressive system by placing a new levy on very high household income rather than broad consumption.

Opponents describe the measure in very different terms. NFIB and other challengers say its reach extends beyond wealthy wage earners because owners of pass-through businesses report business income on individual returns, potentially pulling small firms into a tax aimed at top household income.

The constitutional dispute turns on a question Washington courts have confronted before: whether income is property for state tax purposes. If the Supreme Court were to overturn Culliton, the decision could clear a path for broader graduated income taxes, a step supporters have sought for years and opponents have fought just as long.

On Tax Day 2026, that larger fight remained unresolved. Washington residents still filed only their federal income tax returns on April 15, 2026, while the state’s first tax on wage and salary income waited for judges, and possibly voters, to decide whether it will ever take effect.