Washington’s 9.9% Income Tax Faces Lawsuit Over Uniformity Rule in Culliton V. Chase

(WASHINGTON) — Former Washington Attorney General Rob McKenna and a group of plaintiffs sued in Klickitat County Superior Court on April 9, 2026, challenging Washington’s newly enacted 9.9% income tax as unconstitutional under the state constitution.

The lawsuit argues the new tax violates Washington’s uniformity requirement for property taxes because it applies a graduated rate to income above $1 million rather than a uniform rate.

McKenna, who the Citizen Action Defense Fund retained to lead the challenge, said the case turns on settled constitutional rules. “Washington state can have an income tax if it follows the rules for property taxes: It has to be uniform and no higher than 1%.”

Benjamin and Lauren Petter, a builder and marketing business owner subject to the tax, lead the plaintiffs. The Ethnic Chamber of Commerce, the Yakima Klickitat Farm Association, the Building Industry Association of Washington, and the National Federation of Independent Businesses also joined the case.

At the center of the lawsuit is Culliton v. Chase, a 1933 Washington Supreme Court decision that held income is “property” under state law. That precedent matters because the Washington constitution requires property taxes to be imposed uniformly and caps the rate at 1%.

Challengers say the new law conflicts with both parts of that rule. It taxes only income above $1 million, and it sets the rate at 9.9%, far above the constitutional ceiling that applies to property taxes.

That legal framing gives the case a direct constitutional target. Rather than disputing how much revenue the state seeks to raise, the suit attacks the structure of the tax itself.

Governor Bob Ferguson signed SB 6346 on March 30, 2026, with legal challenges already expected. The tax is set to take effect in 2028 and is projected to generate $3 million annually.

A repeal effort is also moving on a separate track. A ballot measure seeking to repeal the law is being pursued for the November 2026 election.

The court fight will test whether Washington lawmakers can impose an income-based levy through legislation without first changing the constitution. For opponents, the answer lies in Culliton v. Chase and in the constitution’s plain language on uniform property taxation.

McKenna’s side argues the legislature cannot avoid that barrier by changing labels. Their position draws a line between taxes the court has allowed and the one now under challenge.

That distinction became central after Washington’s 2021 capital gains tax survived constitutional review in Quinn v. State. In that case, the court treated the levy as an excise tax on asset sales, not as a direct property tax.

SB 6346, by contrast, explicitly taxes “the receipt of Washington taxable income.” Challengers say that wording reads like a direct income tax, making the new statute look closer to the kind of tax that Culliton bars than to the capital gains tax upheld in Quinn.

The difference is not academic. If a court sees the tax as a direct tax on income, Culliton v. Chase gives opponents a longstanding precedent to invoke, and the state’s uniformity requirement becomes the constitutional test.

That is why supporters and opponents of tax reform alike have watched the wording of the statute closely. The challenge does not simply ask whether lawmakers may tax high earners; it asks whether they may do so in a way the constitution treats as a property tax without applying the rules that govern property taxes.

Former Washington State Supreme Court Justice Philip Talmadge, a Democrat, supports tax reform but has argued the constitutionally “clean” approach would require a constitutional amendment rather than legislation.

His view highlights a point likely to hover over the litigation even as each side makes narrower legal arguments. If the constitution remains unchanged, the court may have to decide whether the legislature’s chosen design fits within existing doctrine or collides with it.

The state constitution’s framework leaves little room for a graduated property tax. Under the challengers’ reading, once income counts as property, lawmakers cannot tax one band of income at 9.9% while leaving other income outside that rate structure.

That makes the uniformity requirement more than a technical phrase in the case. It is the hinge on which the entire challenge turns.

The Petters and the business groups backing the suit give the case both individual and institutional plaintiffs. Their inclusion signals that opposition extends beyond one taxpayer and into trade and business organizations that say the law affects members who could fall within its reach.

Among those organizations, the Yakima Klickitat Farm Association and the Building Industry Association of Washington bring sectors that often play a visible role in state tax debates. The National Federation of Independent Businesses and the Ethnic Chamber of Commerce broaden that coalition further.

For the Citizen Action Defense Fund, McKenna’s role also adds weight to the challenge. As a former attorney general, he brings experience arguing constitutional questions in Washington courts, and the suit he is leading goes directly to the state’s highest-profile tax doctrine.

Still, the path to a final answer is expected to take time. The case will likely move through summary judgment in superior court over the coming months to a year.

After that, direct review in the Washington Supreme Court is expected around 2027–2028. That timeline means the legal fight could continue even as the repeal effort unfolds and well before the tax is scheduled to take effect in 2028.

When the case reaches the justices, the stakes will extend well beyond one statute. The Washington Supreme Court could reaffirm Culliton v. Chase, distinguish it, or overturn it entirely.

Each option would carry a different consequence for the state’s tax system. Reaffirming Culliton would strengthen the argument that any direct tax on income remains subject to the constitutional rules for property taxation.

Distinguishing Culliton would leave the precedent in place while carving out a new space for the legislature’s approach in SB 6346. Overturning it would reshape one of the longest-running legal barriers to a Washington income tax.

Those possibilities explain why the new case has drawn attention from both tax reform supporters and opponents. The dispute reaches back to a 1933 ruling, but it also points ahead to how Washington may try to raise revenue in the future.

The legal challenge arrives after years of debate over how the state should classify taxes tied to wealth, income, or asset transactions. The 2021 capital gains tax survived because the court accepted the state’s argument that the tax fell on transactions rather than on property itself.

Opponents of SB 6346 say this law is different on its face. By taxing “the receipt of Washington taxable income,” they argue, the legislature described a direct tax on income instead of an excise tax on a transaction.

That wording could become one of the most closely examined phrases in the case. Courts often look to statutory language first, and the challengers are making the text itself part of their constitutional argument.

For Ferguson and lawmakers who backed SB 6346, the fight was expected from the moment the bill became law. The governor signed it on March 30, 2026, with the prospect of litigation already clear.

Now the dispute moves from the legislature to the courts. The superior court will handle the first round, but the case appears headed toward a Washington Supreme Court showdown over whether Culliton v. Chase still controls a tax system that lawmakers continue trying to change.

The lawsuit also places the state’s politics and constitutional law on parallel tracks. Voters may get a chance to weigh in through the November 2026 repeal effort, while judges decide whether the law can stand even before it takes effect.

That dual pressure gives the case an unusual shape. One battle will play out in briefs and constitutional arguments; the other may play out at the ballot box.

For now, the challengers have framed the case in stark terms: Washington may impose an income tax, McKenna said, but only if it follows the constitutional rules for taxing property. “Washington state can have an income tax if it follows the rules for property taxes: It has to be uniform and no higher than 1%.”