Washington's millionaire tax is now law. Here's what one Seattle wealth advisor is telling clients

Washington has long prided itself on having no income tax – a feature that made the state something of a haven for high earners and tech executives for decades.

That chapter ended on March 30, when Gov. Bob Ferguson signed Senate Bill 6346 into law, imposing a 9.9% levy on households with income above $1 million a year. Collections are expected to begin in 2029, translating to around $3 billion annually from an estimated 21,000 filers.

For advisors serving ultra-high-net-worth clients in the Pacific Northwest, the signing was the starting gun – not the finish line. Before the ink was dry, the Citizen Action Defense Fund announced plans to sue, arguing the tax is unconstitutional and conflicts with state Supreme Court precedent set in 1933. Former state attorney general Rob McKenna is leading that litigation, according to Olympia Today, alongside former Washington State Supreme Court Justice Phil Talmadge.

For Kaycee LeCong, managing director of family office at Brighton Jones – a Seattle-based wealth management firm overseeing $30 billion in client assets – the weeks since the signing have meant a steady stream of client conversations that don't all look the same.

"If you’re less mobile and tied to Washington, most of the conversation is about whether or not the tax will really stand," LeCong told InvestmentNews. "If you do have the ability to leave, that’s a different conversation." 

No easy way out

LeCong, who focuses on families with balance sheets of $100 million or more, says the first question she works through with clients isn't strategy – it's mobility. The honest answer, for many, is that they're not going anywhere.

Compared to her mobile clients, high earners tied to companies requiring in-person work, particularly in the tech sector, face a muddier calculation: whether the law will even survive long enough to matter. In cases where clients have no option but to stay in Washington, she says most of the conversation is about whether or not the tax will really stand. The law doesn't take effect until January 2028, leaving room for legal challenges to play out – and for some clients to wait and see.

For those who do have the flexibility to move, LeCong's guidance is more proactive. She says her team is encouraging those clients to begin their domicile planning this summer – lining up the steps, getting the process started in 2027, and clearing out of Washington before the 2028 deadline.

Read more: Washington’s new millionaire tax: what advisors need to watch

The burden of proof on domicile 

One recurring theme in LeCong's client conversations is the gap between what people think changing their residency involves and what the law actually requires. There's a common assumption, she says, that getting a letter to confirm you're no longer a Washington resident is sufficient.

"There's a misconception that you can get a letter to confirm you're not a resident here," LeCong said. "It's always on you to prove where you are living and where you work."

She's careful to draw a distinction between the legal concepts of residency and domicile, which carry different weights depending on the type of tax at stake. While residency is a more straightforward question of physical presence that applies to income tax, domicile – which is more consequential to estate taxes – encompasses where a person's cars are licensed, where they're registered to vote, where their children and spouse are based, and even where their veterinarian practices.

Those details, LeCong said, are the ones Washington would likely comb through in cases of high-net-worth individuals attempting to establish that they've left. Even if someone were absent from their Washington home for more than six months in a year, the state can still come after them assuming those lifestyle anchors remain in place.

Planning into the unknown

With numerous legal challenges already being launched against Washington's millionaire tax law, whether the law actually takes effect in 2028 will depend on the outcome of that litigation, which could ultimately be decided in the state's Supreme Court. That ambiguity can make it genuinely difficult to calibrate how aggressively clients should be planning.

For her part, LeCong says she and her team has been working through 2024 tax returns with clients, gaming out what the exposure would look like if the tax takes effect as written. That exercise reveals a much harder tax hit for some than others. Based on that, she encourages clients who can't or won't leave to stay informed and avoid making drastic moves based on a law that could still be struck down at the eleventh hour.

While income and estate taxes might suck up a lot of the oxygen in tax planning conversations, LeCong says there are other questions worth asking for clients weighing a move out of state.

"There are other factors to make sure you’re educated on such as: What are property taxes in that state?  What about sales tax?" she says. "If you're a Washington resident, that's a community property state - and others aren't. You need to be educated on that before you make that decision to move."   

The estate tax angle

Running alongside the income tax measure was companion legislation, SB 6347, which provides some relief on a separate front. For decedents dying on or after July 1 this year, estate tax rates in Washington have been reverted to a range of 10% to 20%, down from the current range of 10% to 35%, with the exemption threshold now being $3 million per individual.

LeCong says there's a sense of relief among clients that the estate tax rate has come back down, though she's careful not to overstate what that means.

"You still owe estate tax in Washington," she said.

"A lot of times with clients, pre-income tax, they'd say 'I’ll stay here until I retire and then go to California or Arizona.' We're helping them decide if it makes sense to go to Nevada, Texas, or Florida."