Five-second answer

Claim we investigated

Washington's millionaires tax is mainly a tax increase, not a tax swap: the state keeps about 70% of the revenue after the tax cuts passed with it.

True. After its tax cuts and credits, the state keeps about 70% of the new tax for general spending. The Legislature's fiscal note shows the bill's sales and B&O relief taking 13-23% of gross collections, the Washington Research Council puts the state's share after relief and tax credits at about 70%, and our own calculation from the fiscal note agrees (about 71% in 2029-31).

Quote or cite this fact-check

FactHub rates the claim “Washington's millionaires tax is mainly a tax increase, not a tax swap: the state keeps about 70% of the revenue after the tax cuts passed with it” True (high confidence): After its tax cuts and credits, the state keeps about 70% of the new tax for general spending. Reviewed October 22, 2026. https://facthub.org/n/article/wa-millionaires-tax-net-increase/5

One-minute summary

What the evidence establishes

  • Established. The bill's sales-tax and B&O relief costs $0.35-0.83 billion a year in FY2029-32, against $2.7-3.7 billion of gross income-tax collections.
  • Established. Counting the Working Families Tax Credit expansion too, the state keeps about 70% of the new tax: WRC's estimate, and 70.7% for 2029-31 by our calculation from the fiscal note.
  • Established. WRC ranks the package's net effect as Washington's largest inflation-adjusted tax increase since at least the early 1990s.
  • Established. By ITEP's measure the package also makes the tax system less regressive: the lowest fifth's share falls from 13.8% to 12.9% of income; the top 1%'s rises from 4.2% to 6.6%.
  • Context. Under I-645 the relief stays; repeal would remove the increase and keep most of the low-income help. The 2026 law voids the relief, though, if a court strikes the tax down (Sec. 1202).
  • Context. I-1098 (2010) and Connecticut's 1991 income tax, often cited as swaps, were also net increases.
Important context: ESSB 6346 (2026) created a 9.9% tax on household income over $1 million, starting with 2028 income, and in the same bill exempted diapers, hygiene products and over-the-counter drugs from sales tax, cut business and occupation taxes for small businesses, and expanded the Working Families Tax Credit. Supporters describe the package as rebalancing an upside-down tax code; critics call it a tax increase. This check measures how much of the new tax the bundled relief gives back. A tax swap here means a package that returns roughly as much as it raises.

The evidence

The conclusion rests on the combined record. Expand each item to see its role and limitations.

Independence note: This check uses 4 methods across 6 institutions and 1 country or international grouping.
Evidence map
Method Institution / country Year(s) What it shows Key limitation Primary links
Compared the fiscal note's gross income-tax line with the bill's net state revenue by year, then subtracted the Working Families Tax Credit expansion (appropriated spending) as reported by WRC; compared with WRC's own estimate. Washington Department of Revenue, Washington Office of Financial Management, Washington Research Council United States 2026 The fiscal note projects net state revenue of $2.301 billion in 2027-29 and $5.343 billion in 2029-31 against gross income-tax collections of $2.698 billion and $6.899 billion. Subtracting the tax-credit expansion ($226 million and $467 million) leaves 76.9% and 70.7% of the gross tax (our calculation). WRC: the state will retain about 70% of annual revenue for general spending. All figures are static estimates from March 2026; the relief's cost is fairly stable but the income tax is volatile, so the share kept will vary by year. Splitting WRC's biennial tax-credit figure evenly across years is our assumption. WRC is business-funded and has criticized the tax. Washington Research Council FactHub Research Team
WRC compared the fiscal-note estimates of major Washington tax bills since the early 1990s for each bill's first fully implemented biennium, adjusted for inflation. Washington Research Council United States 2026 WRC's April 2, 2026 update found the net impact of ESSB 6346, after its sales and B&O cuts, makes it the largest tax increase going back at least to the early 1990s, using inflation-adjusted revenue estimates. A single analyst's ranking from fiscal notes; WRC notes that digital records before the 2000s are spotty and some 2026 fiscal notes were not final. Washington Research Council
ITEP microsimulation of the enacted package (tax, credit expansion, sales and B&O changes), as published by the Budget and Policy Center. Institute on Taxation and Economic Policy, Washington State Budget and Policy Center United States 2026 ITEP's March 2026 model shows the lowest-income fifth's state and local taxes falling from 13.8% to 12.9% of income and the top 1%'s rising from 4.2% to 6.6%. This is the sense in which supporters call the package a rebalancing, and it holds alongside the finding that most of the money is new revenue. ITEP and BPC are advocacy groups that support the tax; ITEP's assumptions about who bears sales and business taxes are disputed. The measure is tax as a share of income, not dollars paid. Washington State Budget and Policy Center
Read the Attorney General's explanatory statement on what I-645 repeals, and the 2026 law's null-and-void clause. Washington Attorney General's Office United States 2026 The AG states that the credits, exemptions and deductions enacted with the tax would not be repealed by I-645. Repeal therefore removes the tax increase but keeps the relief, including most of the help to low-income households. A future Legislature could repeal the relief by simple majority with or without I-645. The relief stays if voters repeal the tax through I-645, but the 2026 law voids it if a court strikes the tax down (Sec. 1202), as the pending Petter v. State lawsuit asks. Washington Attorney General's Office Washington State Legislature
1. The state keeps about 70% of the new tax after the relief Compared the fiscal note's gross income-tax line with the bill's net state revenue by year, then subtracted the Working Families Tax Credit expansion (appropriated spending) as reported by WRC; compared with WRC's own estimate.

The fiscal note projects net state revenue of $2.301 billion in 2027-29 and $5.343 billion in 2029-31 against gross income-tax collections of $2.698 billion and $6.899 billion. Subtracting the tax-credit expansion ($226 million and $467 million) leaves 76.9% and 70.7% of the gross tax (our calculation). WRC: the state will retain about 70% of annual revenue for general spending.

Limit: All figures are static estimates from March 2026; the relief's cost is fairly stable but the income tax is volatile, so the share kept will vary by year. Splitting WRC's biennial tax-credit figure evenly across years is our assumption. WRC is business-funded and has criticized the tax.

Verify: State will retain about 70% of annual income tax revenues (March 31, 2026) Fiscal note: tax relief bundled with the income tax, FY2029-32

2. Net of its relief, it is the largest tax increase in decades WRC compared the fiscal-note estimates of major Washington tax bills since the early 1990s for each bill's first fully implemented biennium, adjusted for inflation.

WRC's April 2, 2026 update found the net impact of ESSB 6346, after its sales and B&O cuts, makes it the largest tax increase going back at least to the early 1990s, using inflation-adjusted revenue estimates.

Limit: A single analyst's ranking from fiscal notes; WRC notes that digital records before the 2000s are spotty and some 2026 fiscal notes were not final.

Verify: Income tax bill is by far the largest tax increase in the modern era (April 2, 2026)

3. The package also makes the tax system less regressive, by ITEP's measure ITEP microsimulation of the enacted package (tax, credit expansion, sales and B&O changes), as published by the Budget and Policy Center.

ITEP's March 2026 model shows the lowest-income fifth's state and local taxes falling from 13.8% to 12.9% of income and the top 1%'s rising from 4.2% to 6.6%. This is the sense in which supporters call the package a rebalancing, and it holds alongside the finding that most of the money is new revenue.

Limit: ITEP and BPC are advocacy groups that support the tax; ITEP's assumptions about who bears sales and business taxes are disputed. The measure is tax as a share of income, not dollars paid.

Verify: 2026 Millionaires Tax Fact Sheet (September 2026)

4. Under I-645 the relief stays Read the Attorney General's explanatory statement on what I-645 repeals, and the 2026 law's null-and-void clause.

The AG states that the credits, exemptions and deductions enacted with the tax would not be repealed by I-645. Repeal therefore removes the tax increase but keeps the relief, including most of the help to low-income households.

Limit: A future Legislature could repeal the relief by simple majority with or without I-645. The relief stays if voters repeal the tax through I-645, but the 2026 law voids it if a court strikes the tax down (Sec. 1202), as the pending Petter v. State lawsuit asks.

Verify: Ballot Title and Explanatory Statement for Initiative IP26-645 (July 23, 2026) ESSB 6346, Chapter 238, Laws of 2026 (session law)

Common questions

“Gov. Ferguson's office says 47.3% of the revenue goes back to Washington families and small business owners.”

Short answer: Counts planned spending

WRC reports that the governor's 47.3% for FY2030 counts, besides the tax relief and tax credits, the 5% Fair Start deposit, $144 million for free school meals and $200 million for city and county aid. Those are general-fund spending plans (two of them not in the law), not money returned to taxpayers. WRC called including them a stretch; without them, about 30% goes back.

“Supporters say the package rebalances an upside-down tax code.”

Short answer: Partly, by ITEP's measure

By ITEP's measure it does shift tax shares: the lowest fifth pays a smaller share of income and the top 1% a larger one. But a rebalancing in that sense can still raise revenue, and this one does: about 70% of the new tax stays with the state. Both descriptions fit; "tax swap" does not.

“Earlier income-tax plans, such as I-1098 and Connecticut's 1991 tax, were tax swaps.”

Short answer: No, they also raised revenue

Neither was revenue-neutral. I-1098 (2010) used its income tax to replace a 20% property-tax cut and a larger B&O credit and sent the rest to education and health. Connecticut paired its 1991 income tax with a sales-tax cut from 8% to 6% while closing a large budget deficit. ESSB 6346 follows the same pattern of an income tax paired with smaller cuts.

“If I-645 passes, the low-income tax help goes away with the tax.”

Short answer: No

The Attorney General says I-645 leaves the credits, exemptions and deductions in place. Repeal removes the increase and keeps the relief, though a later Legislature could repeal the relief by majority vote. A court ruling is different: if a court strikes the tax down, the 2026 law voids the relief too (Sec. 1202). Keeping the relief under I-645 also means repeal costs the budget the full gross revenue.

Conclusion

The relief is real but small next to the tax. In the Legislature's fiscal note, the bill's sales and business-tax relief costs $0.35-0.83 billion a year in FY2029-32, against gross income-tax collections of $2.7-3.7 billion, so net revenue is 77-87% of the gross tax. The Working Families Tax Credit expansion is appropriated spending rather than a tax cut; counting it too, the Washington Research Council puts the state's share at about 70%, and our calculation from the fiscal note gives 70.7% for 2029-31. On WRC's inflation-adjusted list, the package's net effect is the largest Washington tax increase since at least the early 1990s. That does not make the supporters' word "rebalancing" wrong. By the measure of the Institute on Taxation and Economic Policy, an advocacy group whose model supporters cite, the package lowers the lowest-income fifth's state and local tax share from 13.8% to 12.9% of income and raises the top 1%'s from 4.2% to 6.6%. Both things are true: the package makes the system less regressive by ITEP's measure, and most of the money it raises stays with the state. What it is not is a swap. Two earlier precedents often described as swaps were also net increases. Washington's I-1098 (2010) used its income tax first to replace the property-tax and B&O cuts it made and sent the rest to education and health; voters rejected it 64-36. Connecticut adopted its 1991 income tax with a sales-tax cut while closing a deficit the state's museum history puts at $963 million. For I-645 voters, the key point is that the relief does not depend on the tax surviving at the ballot box: the Attorney General says repeal would leave it in place. Repeal would remove the increase and keep most of the low-income help, which is also why repeal costs the state the full gross revenue rather than the net (see our companion check on the $13 billion). The relief stays if voters repeal the tax through I-645, but the 2026 law voids it if a court strikes the tax down (Sec. 1202). We rate the claim True with high confidence because the fiscal note, WRC and our own arithmetic agree within a few percentage points. The shares are estimates: the relief's cost is fairly predictable, but the income tax is volatile, so the share kept will vary from year to year.

How we checked

  1. Defined a tax swap as a package that returns roughly as much revenue as it raises, and the claim as the share of new revenue the state keeps after the bill's own relief.
  2. Compared the fiscal note's gross income-tax line with the bill's net revenue by year (FactHub revenue-estimates dataset), then subtracted the tax-credit expansion; labeled this arithmetic as ours.
  3. Checked the result against WRC's independent estimate and its inflation-adjusted ranking of tax increases.
  4. Gave the supporters' rebalancing argument its strongest evidence (ITEP's model via BPC) and stated where it holds.
  5. Checked the two precedents often cited as swaps against primary or official histories.

Editorial note: Scope: how much of ESSB 6346's new revenue its own tax relief returns. We do not rate whether the increase is justified or whether the tax code should be more progressive; those are values. "Tax swap" means a roughly revenue-neutral exchange of one tax for another. The plan for this article proposed rating "not a rebalancing"; we rate "not a tax swap" instead, because by ITEP's measure the package does partly rebalance tax shares, and the evidence settles the revenue question, not the label. Our arithmetic is labeled as ours.

Expert-review status

No external specialist review has been recorded.

Funding and conflicts

Funding: No external funding for this piece.

Ownership: Published by the FactHub Research Team.

Conflicts: None declared.

Sources

Sources are labeled by kind, with what this fact check takes from each, so readers can check the evidence independently.

  1. Advocacy group Washington Research Council. State will retain about 70% of annual income tax revenues (March 31, 2026)

    WRC's analysis of the enacted bill's fiscal note, by provision.

    Reliability: Business-funded nonpartisan research group that has criticized the income tax; its figures here restate the official fiscal note.

    • After the tax relief and tax credits, the state keeps about 70% of annual income-tax revenue.

      What the source says
      After the tax reductions and WFTC remittances, the state will retain about 70% of annual income tax revenues for general spending.
      Paragraph 5

    • The fiscal note puts the bill's net revenue at $2.301 billion in 2027-29 and $5.343 billion in 2029-31.

      What the source says
      increase state revenues by a net of $2.301 billion in 2027–29 and $5.343 billion in 2029–31
      Paragraph 2

    • The tax-credit expansion is appropriated spending of $226 million in 2027-29 and $467 million in 2029-31.

      What the source says
      State spending on WFTC remittances is estimated to increase by $226.0 million in 2027–29 and $467.0 million in 2029–31.
      Paragraph 3

    • WRC says the governor's 47.3% figure counts Fair Start deposits, free school meals and city and county aid, which it calls a stretch.

      What the source says
      I think including the last three items is a stretch.
      Paragraph 6
  2. Advocacy group Washington Research Council. Income tax bill is by far the largest tax increase in the modern era (April 2, 2026)

    WRC's inflation-adjusted ranking of Washington tax increases by fiscal-note estimate.

    Reliability: Business-funded nonpartisan research group; the ranking is one analyst's compilation of official fiscal notes.

    • Net of its sales and B&O cuts, ESSB 6346 is the largest tax increase since at least the early 1990s.

      What the source says
      The net impact of ESSB 6346, which imposes an income tax and reduces some sales taxes and business and occupation taxes, makes it the largest tax increase going back at least to the early 1990s.
      Paragraph 3

    • The ranking adjusts revenue impacts for inflation.

      What the source says
      I adjusted the revenue impacts for inflation.
      Paragraph 1 (method)
  3. Advocacy group Washington State Budget and Policy Center. 2026 Millionaires Tax Fact Sheet (September 2026)

    Fact sheet presenting ITEP's March 2026 microsimulation of the enacted package.

    Reliability: Has a stake in this finding. BPC and ITEP are progressive groups that support the tax; ITEP's incidence assumptions are disputed by the Tax Foundation.

    • Qualifies: ITEP's model shows the lowest fifth's tax share falling from 13.8% to 12.9% of income and the top 1%'s rising from 4.2% to 6.6%.

      What the source says
      Washington Millionaires Tax and Enhanced WFTC Provide Important Steps Toward a More Equitable Tax System
      Chart, p. 2: bars for the bottom 20% (13.8%, 12.9%) and top 1% (4.2%, 6.6%)

    • Qualifies: Supporters describe the package as rebalancing the tax code.

      What the source says
      The Millionaires Tax will make progress toward rebalancing the tax code
      Section 5, p. 2
  4. Government Washington Attorney General's Office. Ballot Title and Explanatory Statement for Initiative IP26-645 (July 23, 2026)

    The AG's official explanation of I-645's effect, printed in the voters' pamphlet.

    Reliability: Written by the AG's office as required by law and approved by Thurston County Superior Court.

    • Qualifies: I-645 keeps the tax relief that passed with the income tax.

      What the source says
      The non-income tax credits, exemptions, and deductions that accompanied this tax would not be repealed and would remain in place.
      The Effect of the Proposed Measure if Approved, p. 2
  5. Government Washington State Legislature, Senate Committee Services. 2010 Summary of Initiative 1098

    Nonpartisan legislative staff summary of the 2010 income-tax initiative.

    Reliability: Staff summary of the measure's text; it does not include OFM's revenue estimate.

    • Qualifies: I-1098's income tax was to replace its property-tax and B&O cuts and send the rest to education and health.

      What the source says
      The tax revenues would replace revenues lost from the reduced levy and increased credit; remaining revenues would be directed to education and health services.
      Ballot Measure Summary, p. 1
  6. Government Connecticut Museum of Culture and History. Lowell Weicker Jr. (governor biography)

    Official state history of Gov. Lowell Weicker's term, including the 1991 income tax.

    Reliability: State museum biography; a secondary historical account.

    • Qualifies: Connecticut faced a large budget deficit when Weicker took office in 1991.

      What the source says
      budget deficit was $963 million
      Governorship section

    • Qualifies: Connecticut's 1991 budget paired a 4.5% income tax with a sales-tax cut from 8% to 6%.

      What the source says
      Finally on August 22, 1991 the General Assembly passed a budget that included a 4.5 percent flat income tax and a cut in the sales tax from 8 to 6 percent.
      Governorship section
  7. FactHub record FactHub Research Team. Fiscal note: tax relief bundled with the income tax, FY2029-32

    Saved analysis comparing the fiscal note's gross income tax with the bill's net revenue by year.

    • The bill's sales and B&O relief costs $0.35-0.83 billion a year in FY2029-32; net revenue is 77-87% of the gross tax before the tax-credit expansion.

  8. Government Washington State Legislature. ESSB 6346, Chapter 238, Laws of 2026 (session law)

    The enacted text of the millionaires tax and its tax relief.

    Reliability: Official session law. Sec. 1202 ties the relief to the tax surviving court challenge; I-645 does not repeal Sec. 1202.

    • Qualifies: If a court strikes the tax down, the whole package, including its tax relief, is void; I-645 does not repeal this clause.

      What the source says
      If a court of final jurisdiction invalidates section 201 of this act, sections 1 through 1003 and 1201 through 1209 of this act are null and void in its entirety.
      Sec. 1202, p. 107
  9. FactHub dataset Washington millionaires tax (ESSB 6346): official revenue estimates by fiscal year

    Tables: fiscal-note-net-vs-gross

    Saved analysis relief-share

Update history

  1. New main photo. Disclosure updated to the standard wording. First Look review (grade A, no findings) required no content changes.
  2. Added the court-invalidation caveat: the relief survives repeal by I-645 but is void if a court strikes the tax down (ESSB 6346 Sec. 1202); added the session law as a source.
  3. Removed the link to a draft version of the companion $13 billion check; it will be restored pointing at the published version.
  4. Corrected the measure number in the Attorney General source title to IP26-645.
  5. First draft.

Cited by

Version details

The exact citing versions, and the version of this article each cites.

  • Briefing wa-i-645 — version 6 (published) cites version 5
  • Briefing wa-i-645 — version 4 (published) cites version 5

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