WA will hire 300 employees as it enacts high-earners income tax

OLYMPIA – The state’s new income tax on millionaires won’t go into effect until 2029, but preparing for its implementation will require the state to hire hundreds of employees in the coming years.

According to Mikhail Carpenter, spokesperson for the state Department of Revenue, funding the new positions at the agency will start July 1, when the new fiscal year begins. By 2030, the agency plans to hire more than 300 new employees to do the work required under the tax changes approved this year, such as administering the new tax, supporting the expansion of the Working Families Tax Credit and repealing parts of a tax on services enacted in 2025.

Filling those positions – whether by moving existing employees or by hiring new workers – will happen over several years, Carpenter said.

A majority of the new employees, or about 131, are “directly tied to administering the new tax,” while about 106 will support the expansion of the WFTC, Carpenter said. Employee wages alone for the new positions are estimated to total approximately $45 million by the 2029-31 biennium, according to a fiscal note from the Office of Financial Management.

The total cost to the Revenue Department for the 2029-31 biennium, when the tax takes effect, is about $557.4 million including salaries, benefits, and office equipment. About $467 million of that is for WFTC subsidies.

Gov. Bob Ferguson signed the income tax into law on March 30. The law levies a 9.9% tax on annual income earnings over $1 million, with first payments due in 2029, and is estimated to bring in about $3 to $4 billion a year in revenue from approximately 21,000 households.

As anticipated, legal challenges arose shortly after the governor signed the bill. Earlier this week, the state Supreme Court agreed to consider a lawsuit filed by conservative group Let’s Go Washington challenging a clause in the law that prevents a referendum. The group argues that the clause is unconstitutional, and a hearing is expected at the end of April.

The Citizen Action Defense Fund, former state Attorney General Rob McKenna, and former state Supreme Court Justice Phil Talmadge filed a lawsuit challenging the new law on Thursday.

Regardless of those legal challenges, DOR will begin hiring in the 2027 fiscal year for the implementation of the tax. According to the OFM fiscal note, the agency will incur total costs of $10.1 million that year related to the implementation of the income tax, including labor and object costs. Some of the expenses will go toward things like hiring a project director and external quality assurance consultant to build processes for the tax, as well as purchasing new computer equipment and software.

Most of the revenue from the income tax will be directed to the state’s operating fund for schools and state services. Additionally, revenues would be used for eliminating sales tax on hygiene products, diapers and over-the-counter medicine. The new law also exempts hospitals, prescription drug resellers, and health care providers from a surcharge on high-grossing businesses, and increases the business and occupation tax filing threshold to $300,000 in annual gross revenue, which could offer relief for small businesses.

Under the income tax, an additional 460,000 households will also qualify for the WFTC, a state tax credit provided annually to low-income individuals. About 350,000 households currently qualify for the program.

Current credit amounts vary from about $335 to $1,300 depending on an individual’s income and the number of children in a household. The income tax will expand eligibility for more households and raise the threshold for annual income. Under current guidelines, married couples with three kids are eligible if they make under $69,000 but starting in 2029, that income threshold will increase to $138,000, for example.

Age limits to claim the credit are between 25 and 64 for individuals without children, but there are no age restrictions for those claiming children. The income tax will expand eligibility for those 18 and older.