New Millionaires’ Tax Fully Funds School Meals, Advances Tax Relief Programs and Community Investments
Following a marathon debate lasting more than 24 hours, the Washington Legislature passed the Millionaires’ Tax, marking a historic step toward rebalancing the state’s regressive tax code and delivering an estimated $3 billion annually for tax relief programs and community investments. These investments include greatly expanding the Working Families Tax Credit and fully funding school meals for all K-12 students in the state.
Washington has the second most regressive tax code in the US (second only to Florida), driven by overreliance on regressive taxes like the sales tax, which squeeze low and middle incomes the most. In Washington, households earning over $1 million pay around 4% of their income in state and local taxes, compared to 11% for median incomes, and 14% for the lowest-income households.
Starting in 2029, the Millionaires’ tax, which places a 9.9% tax on household earnings above $1 million per year, would make meaningful progress toward addressing this regressive tax system. As an organization committed to ending hunger and advancing food justice, we believe progressive revenue policies are an important tool for advancing equity. Investments made possible by this proposal would put more resources directly into the hands of families managing the costs of basic needs, increasing food security and building long-term economic stability across our state.
With the tax, school breakfast and lunch will be fully funded for all Washington K-12 students. Research finds universal free school meals reduce household food insecurity by up to 12 percent overall—and nearly 20 percent for the most vulnerable families.
In a statement Governor Ferguson said, “I’m especially pleased that funding for a policy particularly close to my heart is included: Free school lunch and breakfast for all Washington students. Hungry kids can’t learn, and this funding puts money back in the pockets of Washington families.”
Revenue from the new tax will also dramatically expand the Working Families Tax Credit (WFTC) – a proven anti-poverty program we helped pass in 2021 – which has provided much-needed relief to low- and middle-income households that file taxes up to $1,330 in a payment each year (like a tax refund). The expansion of the WFTC will remove age restrictions so that low-income young adults and seniors without children at home can qualify. The WFTC will also expand its income limits to reach more moderate-income households. Together, these expansions will bring the credit to 460,000 more households, allowing over 20% of Washington households to benefit. For families with children, the impact is even greater: nearly half of all kids in the state, up from just 25% today, will now be covered.
The legislation also includes a sales tax exemption for many household items like over-the-counter drugs, diapers, and hygiene products (such as soap, toothpaste, and shampoo), which will help make these products more affordable, freeing up money for food and other expenses.
Beyond school meals, the tax will provide broader support for children and schools across the state. Five percent of generated revenues will be dedicated to the Fair Start for Kids Account, which funds free and low‑cost childcare and early learning programs. The proposal will also exempt public libraries and K–12 schools and districts from sales and use taxes on certain services.
Small businesses will benefit from strong tax protections, and businesses with less than $250,000 in gross receipts will pay no Business & Occupation (B&O) tax. Business owners earning over $1 million annually will receive a 100% credit for any B&O taxes paid to the state, directly reducing their Millionaires Tax liability.
Households subject to the Millionaires’ Tax will also be eligible for several safeguards. Taxpayers may claim up to a $100,000 charitable deduction for donations to Washington‑based nonprofits. In addition, those who pay Washington’s capital gains tax and earn over $1 million will receive a full credit for those payments, ensuring there is no double taxation.
By rebalancing the tax code, the Millionaires’ Tax provides direct relief to working families and funds vital public programs, marking a significant step toward a more equitable Washington.