Washington, Illinois Push New Millionaire Taxes As Wealth Levy Talk Spreads
[Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.]
Washington state and Illinois are moving closer to new taxes on millionaires, joining a fast-growing list of states seeking more revenue from high earners as budget pressures mount. The proposals differ sharply in design, but both signal a broader shift in state tax policy that financial advisors say is no longer theoretical.
That shift is already widespread. Five states—California, New York, New Jersey, Massachusetts, Minnesota and the District of Columbia—have enacted millionaire taxes, and at least seven more are actively considering them. Together, those 12 jurisdictions are home to more than half of the nation’s high-income households with $1 million or more in income, according to IRS data and legislative analysis. For advisors, the question is no longer if many clients could be affected—but when and how.
Washington lawmakers are advancing a proposal to impose a 9.9% surcharge on taxable personal income above $1 million, a dramatic change for a state that has long avoided a traditional personal income tax. Unlike the existing capital gains excise tax, the proposed levy would apply broadly to ordinary income, including wages, business income and pass-through earnings once the threshold is crossed.
The so-called millionaire tax cleared the Washington Senate on Monday, pushing the measure to the House and marking a key step forward for legislation that supporters say would help fund schools, health care and small-business relief. The bill was amended to expand eligibility for business and occupation tax exemptions, addressing earlier criticism that it did too little for small businesses.
Supporters estimate the tax would raise roughly $3 billion to $3.5 billion annually and affect about 30,000 households, or roughly 0.5% of the state’s population.
The moves in Washington and Illinois echo similar efforts nationwide. Virginia lawmakers are advancing a proposal to impose a 10% tax on income above $1 million, along with a new tax on investment income. California continues to debate a wealth tax on billionaires tied to net worth rather than income. New York City’s mayor has proposed a 2% surcharge on city income for residents earning more than $1 million to help close budget gaps.
Ultimately, tax increases must be approved by governors and state legislatures. The governors in New York and California, both of which already have millionaire’s taxes, have opposed the recent proposals and Virginia’s new governor has not yet taken a position.
But taken together, the proposals reflect a clear trend: states are increasingly willing to test higher taxes on the wealthy as traditional revenue sources strain.
For more information see Tracey Longo “Washington, Illinois Push New Millionaire Taxes As Wealth Levy Talk Spreads,” Financial Advisor, February 17, 2026.