Who needs to file (and the most important requirement)
You may have a filing requirement under Washington’s proposed Millionaires Tax if you are an individual whose income is above a very high cutoff and you are:
- A Washington resident (including many green card holders and long-term visa holders who live in Washington), or
- A nonresident with Washington-source income that would be included in the proposal’s tax base, or
- A part-year resident who moves into or out of Washington during the year, or
- An owner of a pass-through business (S corporation, partnership, or LLC taxed as a partnership) with Washington activity.
The most important requirement to grasp is this: the proposal’s calculation starts from federal adjusted gross income (AGI). That means your federal return drives the state math, including for many immigrants with foreign income, foreign dividends, or capital gains.
Because this is a proposal, details can still change. The filing and payment system may also evolve during rulemaking.
⚠️ Warning: Many immigrants correctly focus on federal residency tests. Washington may still treat you as “in scope” based on Washington residency or Washington-source income, even if you are a federal nonresident.
Tax year note: This guide is written in the context of tax year 2026 (returns filed in 2027). The Millionaires Tax proposal is aimed at a later start date, but your 2026 federal filing affects future planning.
Section 1: Overview of the Millionaires Tax proposal
Washington lawmakers have introduced a proposed Millionaires Tax, aimed at very high-income individuals. In broad terms, it would apply only above a high-income cutoff, and it would affect only a small share of households.
The policy goal is to raise new revenue for public services. The proposal highlights public education and other programs, including early learning and child care, health care, and related services.
Two practical points matter for immigrants and globally mobile families:
- The proposal uses federal AGI as a starting point. That can pull in foreign income items that appear on a U.S. return.
- The proposal can reach some nonresidents with Washington-source income. That creates sourcing and documentation issues.
This proposal is not yet enacted. Rates, thresholds, definitions, and administration can change as the bill moves through the legislative process.
Eligibility checklist (quick screen)
Use this checklist as a first pass. It does not replace legal advice, and it does not address every edge case.
| Question | If “Yes,” what it means |
|---|---|
| Are you an individual (not a corporation) with income above the proposal’s high-income cutoff? | You may be in scope. The tax is aimed at individuals, not entities. |
| Were you a Washington resident for any part of the year? | You may owe tax as a resident or part-year resident. Track move dates and days. |
| Are you a nonresident with Washington-source income included in the proposal’s base? | You may owe tax even without Washington residency. Sourcing records matter. |
| Do you receive K-1 income from a partnership or S corporation with Washington activity? | Owners can be taxed at the individual level on distributive shares. |
| Does your federal return include capital gains or other items requiring adjustments under the proposal? | You may need extra schedules and brokerage statements. |
| Do you pay income tax to another state or a foreign country on the same income? | A nonrefundable credit may apply, but you must document the tax. |
Section 2: Tax structure and timeline (and why the timing matters)
Structurally, the proposal works like this:
- Start with your federal AGI.
- Apply a large “standard deduction” style threshold concept.
- Apply the Millionaires Tax rate to income above that threshold.
- Apply any allowed nonrefundable credits, such as credits intended to reduce double taxation.
Married couples and registered domestic partners are treated differently than many people expect. The proposal describes a shared deduction concept, even if spouses file separately. That can affect planning for mixed-status families and couples with different income sources.
The timeline also matters. The proposal contemplates an effective date before the first filing season, with first returns due in a later spring filing season, and later inflation indexing for the deduction. In real life, that means:
- You may need to adjust estimated taxes or cash-flow planning.
- You may need stronger residency and sourcing documentation.
- You may want to revisit immigration-driven moves. Moving midyear can create part-year complexity.
Federal filing for 2026 still matters, because federal AGI is the base concept. Your 2026 choices can change future AGI, including capital gain timing and stock sales.
Section 3: Legislative status and process (what to watch next)
Washington tax bills typically move through a standard path:
- Committee hearing (public testimony and written comments).
- Executive session and committee vote.
- Vote by the full chamber.
- Repeat in the other chamber.
- Governor signature or veto.
What most often changes during this process is practical, not philosophical. Watch for changes to:
- Definitions of taxable income and adjustments.
- Effective dates and transition rules.
- Credits and double-tax protections.
- Administration details, enforcement, and filing mechanics.
If you want to participate, you can usually submit written comments or testify during hearings. For tracking, follow the bill pages and fiscal notes through Washington’s legislative tools and committee schedules.
Section 4: Revenue allocation and tax reductions (how it may affect you)
The proposal pairs a high-income tax with targeted relief measures. Conceptually, the revenue is split between a broad state funding bucket and a smaller dedicated account. That matters for budgeting, because general-fund revenue can be appropriated across programs, including public education.
The bill also proposes consumer and small-business relief. Even if you never owe the Millionaires Tax, you may still see effects through:
- Reduced sales tax on certain consumer items.
- Business tax relief that may lower costs for some small businesses.
- Expansion of a working-family credit style program.
In practice, this is a “pay here, relieve there” design. It can shift who bears the overall tax cost. High-income households may pay more, while many other households see smaller offsets.
Timing matters here too. Some relief provisions are described as starting around the same general window as the new tax system. Implementation can lag if agencies need time to build forms and procedures.
Section 5: Who would be affected and how taxable income is calculated (step-by-step)
The proposal potentially covers:
- Washington residents (including many immigrants who live and work in Washington).
- Part-year residents, such as someone moving from California to Washington on an H-1B midyear.
- Nonresidents with Washington-source income (the example often discussed is an Oregon resident with Washington earnings).
- Pass-through owners, taxed at the owner level, not at the entity level.
Step-by-step calculation (high level)
While details can change, the proposal describes a sequence like this:
Step 1: Start with federal AGI.
Federal AGI is a familiar anchor. It appears on Form 1040. It can include wages, interest, dividends, and capital gains.
Step 2: Apply state-specific adjustments.
The proposal discusses adjustments tied to capital gains and other modifications. It also references adjustments related to state and local income tax deductions taken on the federal side.
Step 3: Apply the large deduction/threshold concept.
Only income above the threshold is meant to be taxed.
Step 4: Apply nonrefundable credits.
Credits are proposed to reduce double taxation. Examples include income taxes paid to another state or a foreign country on the same income. Another credit category relates to Washington business taxes paid on the same income.
Cross-border and immigrant-specific issues
If you are an immigrant, these are the recurring pain points:
- Federal residency drives federal AGI reporting.
Use IRS rules in Publication 519 to determine resident vs. nonresident status. See Publication 519 (PDF). - Treaty positions can change AGI.
If you claim a treaty benefit, you may change what flows into AGI. Treaty disclosure can require Form 8833 in some cases. Publication 519 and Publication 901 discuss treaties. - Foreign tax credit records matter.
If foreign tax was paid on the same income, your federal Form 1116 package may become part of your Washington support file. - Sourcing evidence becomes essential.
Keep work location calendars, payroll allocation, and travel logs. This matters for hybrid work and frequent travel.
Documentation you should plan to maintain
For many high earners, the hard part is not the math. It is proving the right sourcing and residency facts.
- Residency day counts and move dates.
- Employer work-location policies and travel calendars.
- Brokerage statements, cost basis records, and gain/loss reports.
- K-1s, entity apportionment workpapers, and state allocation statements.
- Copies of other-state returns or foreign returns showing tax paid.
Step-by-step filing process (federal forms first, then Washington filing)
Because the proposal uses federal AGI as the starting point, your federal return is step one even though the Millionaires Tax is state-level.
Step 1: Determine your U.S. federal tax residency for tax year 2026
- Use the green card test or substantial presence test.
- See Publication 519 for details.
- Many F-1 and J-1 holders may have an exempt period for the substantial presence test. That can affect whether you file Form 1040 or 1040-NR.
Step 2: File the correct federal income tax return
Common forms include:
- Form 1040 (U.S. Individual Income Tax Return) for residents.
- Form 1040-NR for nonresident aliens.
- Form 8833 if a treaty-based return position requires disclosure.
- Form 1116 for the foreign tax credit, if applicable.
- Schedule D and Form 8949 for capital gains.
- Schedule E for pass-through income (often tied to K-1s).
You can find forms at IRS Forms and Publications.
Step 3: Confirm federal AGI and keep a “Washington support file”
Print or save:
- The filed Form 1040 or 1040-NR.
- Key schedules and statements supporting AGI.
- Brokerage 1099 package and realized gain reports.
- K-1s and allocation schedules.
Step 4: Prepare for Washington’s filing mechanics
Washington forms, e-filing options, and payment procedures will be set by the state if enacted. Expect:
- A Washington return that references federal AGI.
- Attachments or schedules supporting adjustments and credits.
- Estimated payment rules for high-income taxpayers.
If enacted, high earners should plan early for estimated payments. Underpayment penalties can apply in many systems when payments lag.
Deadlines for tax year 2026 (filed in 2027) + extensions
Even though the Millionaires Tax proposal starts later, you still must file your federal tax year 2026 return on time.
| Tax event (tax year 2026, filed in 2027) | Deadline | Extension available |
|---|---|---|
| File Form 1040 / 1040-NR | April 15, 2027 | Yes, to October 15, 2027 with Form 4868 |
| Pay federal tax due | April 15, 2027 | No extension to pay (interest applies) |
| FBAR (FinCEN 114), if required | April 15, 2027 | Automatic extension to October 15, 2027 |
📅 Deadline Alert: If you extend with Form 4868, file by October 15, 2027, but try to pay by April 15, 2027 to limit interest and penalties.
For international taxpayers, IRS rules sometimes allow extra time to file, depending on your tax home and presence abroad. See IRS International Taxpayers.
Documents you’ll need (checklist)
Use this list for 2026 filing and Millionaires Tax planning.
Identity and immigration
– SSN or ITIN letter.
– Visa category history, I-94 travel record, green card dates if applicable.
Income
– Forms W-2, 1099, and year-end paystubs.
– Brokerage 1099s, realized gain reports, and cost basis records.
– K-1s (Forms 1065 / 1120-S) and state allocation statements.
Foreign items (common for immigrants)
– Foreign income statements and foreign tax paid records.
– Prior-year carryovers for Form 1116.
– Foreign bank and financial account maximum balances for FBAR.
Deductions and credits
– Mortgage interest (Form 1098), charitable receipts, and other substantiation.
– Treaty documentation, if claiming a treaty position.
Residency and sourcing
– Move-in or move-out documents, lease, home purchase closing statements.
– Work location calendar and employer letters for multi-state work.
IRS resources and when to get professional help
IRS starting points for immigrants and cross-border taxpayers:
Professional help is strongly recommended if any of these apply:
- You moved into or out of Washington midyear and have large capital gains.
- You have foreign income, foreign entities, or complex treaty positions.
- You have pass-through income with multi-state apportionment.
- You expect to be near the proposal’s high-income cutoff in a future year.
Action items for tax year 2026 (filed in 2027):
– Confirm your federal residency status using Publication 519 rules.
– File Form 1040 or 1040-NR by April 15, 2027, or extend with Form 4868.
– Keep a dedicated file that ties your federal AGI to brokerage statements, K-1s, and sourcing records.
⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
