Washington’s New Income Tax Could Make Moving North Less Appealing for Oregon Millionaires

Washington voters rejected Initiative 645, a measure to repeal the state’s new income tax on high earners, on Tuesday, leaving a 9.9% levy scheduled to take effect in 2028 in place. A pending constitutional challenge could still derail the tax.

Washington Voters Keep Income Tax Set to Begin in 2028

Washington currently has no individual income tax, but from January 1, 2028, the state will impose a 9.9% tax on individual income exceeding $1 million.

The new rule was established through Senate Bill 6346 and was signed by Gov. Bob Ferguson in March 2026.

According to the Washington Department of Revenue, the first tax returns will be due in April 2029. The new levy is expected to generate approximately $3 billion annually.

Unofficial election returns showed about 58% of voters rejecting Initiative 645, which would have overturned the tax and prohibited future state and local income taxes.

The law still faces a legal challenge. An April lawsuit, relying on a 1933 state Supreme Court ruling that classified income as property, argues that the tax violates the state constitution’s requirement that property be taxed uniformly.

The case could ultimately determine whether the new tax survives.

Tax Changes for Oregonians Moving North

The tax introduces a new consideration for high-income Oregonians thinking of moving to Washington.

Washington’s rules allocate all income to the state for residents, while nonresidents are taxed on income derived from Washington sources.

The enacted law provides a $1 million standard deduction for individuals, with married couples and registered domestic partners sharing that deduction regardless of whether they file jointly or separately.

Residents can also claim a credit for qualifying income taxes paid to another state on income subject to Washington’s tax.

Oregon already has a 9.9% top marginal income tax rate. For 2025, that rate applies to taxable income above $125,000 for single filers and $250,000 for married couples filing jointly.

Although both states have the same top marginal rate, their tax thresholds differ considerably. Oregon also continues to tax nonresidents on wages for work physically performed in Oregon.