House Finance advances millionaires income tax after amendments; committee votes 9–6 to report bill

The House Finance Committee voted 9–6 on Feb. 27 to report engrossed substitute Senate Bill 63-46 out of committee with a due-pass recommendation, advancing a proposal that would impose a 9.9% state income tax on individuals with federal adjusted gross income above $1,000,000 beginning in calendar year 2028.

Staff outlined the bill as imposing the 9.9% rate and dedicating 7% of revenues to city and county public defense services, expanding the working-family tax credit, adjusting business-and-occupation (B&O) credits, raising B&O filing thresholds, creating targeted sales-and-use tax exemptions (including for certain personal grooming products) and repealing several service taxes enacted last year. "There are a number of amendments in the books," staff told the committee as members prepared to consider sponsor and member changes.

The committee adopted several member amendments that clarified who and what the bill would cover and added implementation safeguards. Representative Zahn’s amendment to exempt diapers from retail sales and use tax beginning Jan. 1, 2029 was adopted by voice vote; proponents said the change would reduce costs for families. An amendment creating a tax-advisory implementation group including agency staff, legislators and taxpayer representatives — intended to advise on pass-through entity treatment and other administrative details — was also adopted.

Some amendments failed. A proposal to authorize rolling conformity with the Internal Revenue Code was defeated after members and the chair debated whether static conformity better reflected the Department of Revenue’s expected relationship with the IRS. A variety of pass-through and carryback measures were debated; several were withdrawn or not adopted after members said they needed more stakeholder work.

Debate reflected familiar fault lines. Representative Scott, arguing in favor, described the bill as "a historic achievement" and said it would fund education and social services. Opponents such as Representative Jacobson warned the bill could worsen competitiveness and spur out-migration of high earners: "Capital flight is not a myth," Jacobson said, urging members to reject parts of the proposal.

The committee recorded individual votes by roll call: Berg, Street, Mena, Rammell, Santos, Scott, Springer, Wiley and Zahn voted aye; Orcutt, Jacobson, Abel, Chase, Penner and Wallen voted nay. Staff announced the committee's tally: nine ayes, six nays. By that vote, the committee reported the engrossed substitute Senate Bill 63-46 out of committee with a due-pass recommendation.

Next steps: The bill, as reported with adopted amendments, will move toward floor consideration and any further procedural steps required by the House. The committee also flagged a set of implementation and technical items that proponents said would be addressed through the advisory group and follow-up staff work.