Washington state lawmakers concluded the 60-day short legislative session in Olympia yesterday.
One of the closely watched bills they passed imposes a state income tax of 9.9% on households earning more than $1 million annually. The so-called millionaires’ tax garnered a record-breaking 25-hour debate on the House floor. Gov. Bob Ferguson is expected to sign the legislation which would not go into effect until 2028.
Scott Greenstone, a politics reporter at our partner station KUOW and co-host of the "Sound Politics“ podcast, joins us to discuss the bill and other key developments in the session.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. Washington’s 2026 legislative session is over. It was a so-called short session, but it was not short on drama. Lawmakers passed a new income tax on high earners after a record-breaking 25-hour debate on the House floor. They also addressed artificial intelligence, federal immigration enforcement and local law enforcement.
Scott Greenstone is a politics reporter for our partner station KUOW and the host of the “Sound Politics” podcast. He joins us now. It’s great to have you back on the show.
Scott Greenstone: Hey, thanks for having me.
Miller: So let’s start with the big news of the session, the so-called millionaires’ tax. Can you just first tell us how it’s gonna work?
Greenstone: Yeah, the so-called is definitely a good way to describe it because it’s only if you make over $1 million will you pay this tax – which sticklers will remember, technically a millionaire just owns $1 million in assets. So to pay this tax, you actually need to make more than $1 million. You would pay a little less than a dime out of every dollar over $1 million that you make that will go to this tax. That’s essentially how it works.
Miller: Why did Democrats push for this?
Greenstone: Democrats have greatly increased spending in the last decade plus that they have been in total control of the state government. They control the Senate, the House and the governor’s mansion, and have for some time. Washington state has, for a long time, relied on sales taxes. It has never had an income tax that we’ve paid; whereas Oregon, it’s the opposite. They have an income tax and no sales tax, or you all down there have no sales tax. And I think that worked really well for us when the economy was growing in Washington state, but now it is wobbly, meaning the Democrats will either need to tax more or cut programs.
I think also though, Dave, what’s happening here is this is a political moment that Democrats, I think, want to seize. Sentiment has shifted among liberals especially, and Independents, toward taxing the rich with the tax cuts. I think that President Trump solidified last year in what he called the Big Beautiful Bill. So for a long time in Washington, because of sales taxes, poorer people paid a bigger chunk of their income in taxes than rich people and Democrats have essentially said it’s time to finally fix that
Miller: And to make this more progressive than a regressive taxing system. So what were the arguments in opposition to this tax?
Greenstone: Republicans – and some Democrats – did vote against this bill. They essentially say if you open the door to income taxes, if you let an income tax into Washington state’s borders, or I should say a state income tax because obviously we all pay the federal income tax, voters have rejected that many times in the past 90-plus years at the ballot. So if they pass this tax, if they let it in, it might start at $1 million, but Republicans say it will come down to everyone eventually. That’s how most income taxes imposed on the rich tend to go. Even the federal income tax was briefly just up high before it came down to us normal folks.
And then also, there is an argument from the tech sector that Washington has benefited from this unique tax structure of no income tax, that giant multinational companies like Microsoft, Amazon and Starbucks were born here and grew here because there were relatively few taxes. And we are walking away from that sort of wonderful mix is what they would say.
Miller: Well along those lines, I was struck by the fact that in this same session in which a majority of Democratic lawmakers enacted this income tax on high earners, they also rolled back an estate tax hike. From what I understand, that was done to prevent wealthy people from leaving and taking their money to lower tax rate states. How are lawmakers talking about this balance of revenue raising and keeping wealthy or high-earning folks in the state?
Greenstone: That’s a great question, and it is very interesting. I think part of what’s happening here is just the deal making, right? I have not done a lot of reporting into the behind-the-scenes conversations behind this tax, but it seems to me, what I hear from the rumor mill is essentially just old-fashioned compromise here. Even though big businesses for the most part in the tech sector are not for this tax, it’s sort of a, hey, if it goes to the ballot – which it very likely will – maybe you don’t spend so much to kill it because we bring down the estate tax.
But the other part of it is exactly what you’re describing. That estate tax hike … which Democrats did in the run up to this year when they have been looking at taxes to raise, to be able to get more revenue, so they don’t have to cut services. That real estate tax hike, Democrats said, was a lot higher than other states. This so-called millionaire’s tax is not as high as some states like California and Massachusetts. They’re basically just trying to not stand out in any way, right? They don’t want to do anything edgy. They don’t want to … California’s considering this tax on billionaires that would be a one-time tax. They’re not trying to do anything too intense to drive rich folks out in droves. I’m not saying they would, but that’s the fear.
Miller: This new tax is going to raise more revenue for the state but not until 2028. Meanwhile, lawmakers had to deal with a budget shortfall for this biennium. How big was it?
Greenstone: I should say 2028, at the earliest. This tax will get challenged in court most likely and it may also face a challenge at the ballot. So yes, it’s not showing up. I mean, the governor doesn’t think it’s showing up until 2029, again, at the earliest. The size of that budget shortfall, now in this biennium, was roughly $2 billion. And Democrats just patched that in part by taking roughly $1 billion out of the rainy day fund, the reserves.
Miller: What did they end up cutting?
Greenstone: The largest cuts come to childcare, particularly a program that subsidizes childcare for families that earn below 60% of the state’s median income. It served about 44,000 families across the state as of last year. I’m quoting from the Spokesman-Review’s coverage
Despite these cuts, I should say, Washington state has been spending a lot. The state is still expected to face a nearly $1 billion or roughly $900 million shortfall next year. So, the holes aren’t getting smaller.
Miller: Let’s turn to some policy bills, starting with some responses to federal immigration enforcement. Can you tell us about the bill that bars law enforcement agents from using face concealing masks?
Greenstone: Yeah, so this one is really tied to these videos we’ve all seen of masked immigration or border agents from the federal government. The hope is to end these situations where federal agents with no badge numbers and face coverings, essentially people you can’t even be sure are federal agents, showing up and taking people ... This law would keep federal officers from wearing any opaque mask, a balaclava, a tactical mask, a gator, a ski mask, anything but a medical mask, like a COVID mask, or like a religious head wrapping or something like that. It also does not count for undercover or plain clothes officers.
Miller: Is this enforceable? Can a state law prevent federal agents from wearing a mask?
Greenstone: That’s a good question. It’s an open question, Dave. I think it’s one that we’re going to be watching. California has tried this with some similar bills and it has not had success in court yet. People would say that the supremacy clause in the United States Constitution does not let states regulate the way the feds do law enforcement, but Congress has passed rules about how federal law enforcement should happen. So really, I don’t know, this one is going to be a really interesting one to watch in court.
Miller: OK. Meanwhile, there was another bill focused more narrowly on local law enforcement. It’s about sheriffs and chiefs of police, other law enforcement leaders.
Greenstone: Oh yeah.
Miller: What’s it going to do?
Greenstone: Oh, I’m so glad you asked about this one. This is really interesting. It spurred some of the most fiery debates this session in Olympia. So I think you all in Oregon, like most of us here in Washington, elect our county sheriffs. The top county law enforcement officer is elected in most of Washington state and Oregon. That job is one of the oldest, perhaps the oldest elected official in many parts of the country. There are sheriffs in parts of the East Coast that were there before the United States was a country that was being elected. And in the West, many parts of the West had a county sheriff before they had any other county or city officials.
So I’m zooming out way too far. But to zoom in on this bill, the fact that these sheriffs only answer to their voters, including in parts of the state that are very Republican or very pro-Trump – which most of Washington state, most of Oregon is not – that has been a tension with the Democrats who run the state and the state laws that they’ve passed. So sheriffs in Pierce County or Adams County have tried to work with Trump’s deportation campaign and ICE in defiance of state law, which does not allow them to do that for the most part. The state attorney general or Democrat leaders can take them to court, but cannot remove them from office.
So this bill allows a state board that decides on whether to decertify rank and file police. If you had a police officer who committed misconduct and had his certification taken away, this board would do that. They would also be given the power under this bill that passed to remove elected county sheriffs. And that’s a very controversial question, of course, with law enforcement. It’s an interesting question in general, that question whether you should subvert the will of the voters if their elected leader is no longer a certified law enforcement officer.
For folks who like to go as nerdy with this as I do, we dove into it on a on a recent episode of Sound Politics on February 26, if anyone wants to do a deep dive into that.
Miller: Get it wherever you get your podcasts.
Greenstone: That’s right.
Miller: I’ll say it if you don’t.
Greenstone: OK.
Miller: OK, let’s turn to AI. Lawmakers introduced a lot of artificial intelligence related bills. Which one stood out to you?
Greenstone: There’s been an effort to regulate companion chatbots, AI companions, these chatbots that can provide relationships to people. And what most stood out to me legislates the relationship between people and the AI chatbots that they can grow close to. I don’t know if you’ve seen stories in the news of people getting engaged to their AI companions or when updates came through from the companies that run them to change the personality of them, feeling like their companion had been killed, things like that. Folks grow close to these companions and even tend to believe they’re sentient sometimes.
So, this law would require the owners, the creators of these AI chatbots to provide a clear and conspicuous disclosure that an AI companion chatbot is artificially generated and not human. They’d have to do that at the beginning of the interaction, every interaction and at least every three hours that the interaction continues. So I think that’s really interesting. They’re supposed to do everything they can to prevent AI companion chatbots from claiming to be human, including when asked by the person who’s interacting with them.
It’s really concerned with regulating these chatbots’ relationships with minors, not allowing the chatbots to generate explicit sexual content or encouraging kids to hide things from their parents and things like that. It’s a really interesting bill, and it’ll be interesting to see how it plays out here in Washington.
Miller: I just want to turn to the big picture before we say goodbye. How do you think this session could affect the upcoming midterms?
Greenstone: It’s a really good question. Polling seems good for the Democrats. I’ll be watching to see if Republicans, or just the business community in general, really goes hard against these income taxes. So far, Washington state in general has not rebelled against the Democrats for raising taxes. And I think the question will be, do people believe that the income tax will come for them eventually? Do they believe Democrats want an income tax for everyone? If they do, that’s not a popular idea here. Polling shows that for sure. So Democrats, I think, are sitting pretty unless the argument can be made.
Miller: Scott, thanks very much.
Greenstone: Thanks for having me.
Miller: Scott Greenstone is a politics reporter and a co-host of the “Sound Politics” podcast at KUOW.
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