Washington RIAs hear ‘disbelief’ from clients over new 9.9% millionaire tax

Washington RIAs are beginning to weigh relocation strategies for both their firms and wealthy clients after the state enacted a new 9.9% tax on annual income above $1 million.

The law is set to take effect in 2028, ending Washington’s run as a state without a personal income tax. Legislators have estimated that fewer than 0.5% of Washingtonians will pay the millionaires tax, or about 20,000 to 30,000 households. Former Amazon employee Eric Franklin, who co-founded his Seattle-based RIA Prospero Wealth in 2016 to serve the state’s tech industry and other high-income earners, says the looming tax has been met with shock among clients. 

“I'd say most of it has been disbelief so far,” Franklin told InvestmentNews. “I have heard from multiple clients already considering moving their families out of the state. Anybody who has a business or who envisions themselves as eventually leaving technology to start a business, several of them have reached out already to try and discuss options where it might be a better state for their family to go.” 

Prospero Wealth manages around $140 million in client assets. Franklin says most of his RIA's client households make between $300,000 to $800,000 per year, but roughly 20% of Prospero’s clients meet the $1 million income threshold and would be subject to the new tax.

After ending 2024 with four advisors, Prospero has grown to seven advisors and one support staff member. While governor Bob Ferguson’s new income tax would be used to fund childcare programs, free school meals, tax credits for working families and tax breaks for small businesses, it could trigger an exodus for RIAs like Prospero.  

“I would consider moving to set up the business somewhere where it would have lower taxation. We're not at a scale yet where that's a real consideration for us [but] we're growing quite quickly and I think it could be a larger decision for us in the years ahead,” said Franklin.  

Former Starbucks CEO Howard Schultz announced his move to Florida from Washington as lawmakers advanced the 9.9% tax. Tacoma-based Bulwark Capital Management, which offers advisor services through the SEC-registered RIA Trek Financial, is now planning to move out of Washington, according to the New York Post.  

“We have a very good thing where we live—we love our kids' schools, we love our neighborhood, we love everything about it,” said Franklin. “But I will admit to having multiple conversations with my wife since this was looking like it was going to pass about where the right financial home for us could be in the future.” 

Remaining states without personal income tax—Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming—could stand as natural relocation destinations for wealthy migrants from Washington. Jason Stephens, who runs Florida-based RIA Evertern Wealth, says his $2.4 billion firm is ready to capitalize on a growing wave of tax-motivated migration. 

“When I started my career over 25 years ago, we would never really see anyone from the West Coast of the United States looking to migrate to Florida, Texas and these areas. Today, it's very common,” said Stephens. “We saw it out of Illinois. We saw it out of other states like New Jersey, New York, Connecticut, and Washington is just the next one.” 

Merit Financial Advisors made its first move into Wyoming this week by acquiring Strategic Retirement Plans, a former Commonwealth practice that expects the Mountain West to attract wealthy prospects from the Evergreen state ahead of the millionaire’s tax arrival in 2028. 

“Absolutely, I've actually spoken with a couple clients about it, that are in Washington,” said Strategic Retirement Plans advisor Gabe Lapito, who's headquartered in Montana. “Just speaking with some clients of mine who are residents and have owned properties in both states, being a Montana resident makes a ton of sense. Probably even greater is in Wyoming, where there is no state income tax.” 

Mega-RIA Mercer Advisors, which has an office location in the Seattle area, published an analysis of Washington’s proposed Millionaires’ Tax a week before it was signed into law. The upcoming income tax follows Washington’s 7% state capital gains tax on annual long‑term gains above $250,000 that began in 2022, which prompted Amazon founder Jeff Bezos to move to Florida while Fisher Investments moved its headquarters to Texas. 

“Washington is the only state where the capital gains side of this equation cannot be offset by tax-loss harvesting,” said Franklin. “Pretty much in all the other states we can build solutions for people that help them defer state gains as well as federal gains, but in Washington, quite frequently even when we're successful in getting the federal capital gains deferred, clients are still having to pay some level of state capital gains tax.”