A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Washington state’s proposed new income tax includes the largest “marriage penalty” in the nation, placing higher taxes on certain couples who file jointly, according to tax experts.
The state House of Representatives approved Washington’s first-ever income tax, imposing a 9.9% tax on income of more than $1 million a year. Having also passed the state Senate, it will now go to the governor, who plans to sign it into law. Washington is currently one of only nine states with no state income tax, and the new rate would be the one of the highest in the nation.
While Democratic legislators call it “the millionaire’s tax,” some taxpayers making far less as individuals will also be subject to the tax thanks to a steep marriage penalty. According to the legislation, the $1 million threshold for the tax applies to individuals, couples and domestic partners. So if a married couple each makes $600,000, their combined income of $1.2 million would trigger the tax.
“According to the statute, it doesn’t matter if you’re single or married, the exemption is $1 million,” said Joe Wallin, an attorney who advises companies and tech founders in Washington. “It should be called the half-millionaire tax.”
