Are wealthy WA residents really mulling out-of-state moves due to new tax?
AI-generated summary reviewed by our newsroom.
- A 9.9% levy on annual household income over $1M passed during the 2026 session.
- Survey found 55% of Washington employers considered relocating their personal residence.
- Some wealthy residents have plans to leave the state amid tax climate.
Washington’s controversial new income tax on high earners has spurred warnings from some of a looming wealth exodus.
The-rich-are-leaving anecdotes have bubbled up since majority-party state lawmakers began crafting the 9.9% levy on annual household income exceeding $1 million, nicknamed the “millionaires tax,” which passed during the 2026 session.
In a recent survey from the Association of Washington Business, 55% of the state’s employers said they’d mulled relocating their personal residence out of state.
Supporters of Senate Bill 6346 have argued that the tax is needed to ensure the rich pay their fair share. They say the law, which is facing a repeal effort and legal challenge, would help rectify an upside-down tax code.
Democrats and some tax experts also contend that myriad factors influence where someone decides to live (think: quality of life, family, etc.), not just taxes alone. Leaders behind the law, including Gov. Bob Ferguson, have expressed doubt that it would drive innovators from the state.
Venture capitalist Aviel Ginzburg with the Seattle venture firm Founders’ Co-op splits his time between Washington, California and Florida. He said he’s seen high-net-worth investors who have made moves out of Washington.
Ginzburg said there are about 100 limited partners (LPs) in his fund. Starting several years ago, Washington tax hikes led some of his LPs to reconsider where they want to live and invest, Ginzburg said.
“You add what’s now happened this year, and we’ve had dozens of LPs … I think I can confidently say over a quarter of our LP base has redomiciled,” he said.
Proponents point out that the income tax offers some tax relief to working families and small businesses; eliminates sales taxes on diapers, over-the-counter medicine, and hygiene and grooming products; and helps generate revenue for child care and early learning.
Some Washington millionaires have advocated for the tax, such as travel writer Rick Steves, who posited in a viral Facebook post that it will lead to “shared prosperity.”
McClatchy caught up with Washingtonians who say they’ll be affected by the income tax and are now thinking of leaving — or have already left — the state.
Why some of WA’s wealthy say they may leave
Zach Abraham, chief investment officer with Bulwark Capital in Tacoma, was born and raised in Gig Harbor. His wife, he said, is a Tacoma native, and they both attended Pacific Lutheran University: “We’re Washington kids through and through.”
They have three children and in 2015 started their firm, he said. Today they employ 19 people and manage more than $1 billion, Abraham added.
“We love this state,” he said. “We don’t ever want to leave.”
But now they might.
Abraham described the income tax — and the way it was enacted — as the final straw in an increasingly harsh tax environment.
He said he’s not going to leave his business, which is valued between $40 million and $60 million if he were to sell it, in a state that’s “openly hostile” to him. He also questions the constitutionality of the tax.
If the tax is ultimately upheld, Abraham said he’ll leave, likely for Arizona — a state with a flat 2.5% individual income tax, according to the Tax Foundation, a nonpartisan tax policy nonprofit. When looking at that state’s entire tax picture, such a move would save him between $400,000 to $500,000 a year, he said.
“If you don’t think people are going to move for a half a million a year, you’re out of your mind,” he said. “I don’t want to, but I’m not going to just spend an extra half million dollars a year to live somewhere that doesn’t like me and tells me that I’m greedy and don’t pay my fair share.”
Abraham added that when someone like him waves goodbye to Washington, the state loses out on other tax revenue, such as the $300,000 in excise and business and occupation taxes he paid last year. In his view, the income tax spells bad news for everyone; it’s the working- and middle-class residents who remain who will “pay the price,” he said.
Senate Majority Leader Jamie Pedersen, prime sponsor of the millionaires tax, has acknowledged that one past state tax policy — the 35%-top-estate tax rate that was adopted in the 2025 session — had pushed some rich residents to eye the exit. That prompted lawmakers in this year’s session to return the top marginal estate tax rate to 20%, which is tied with Hawaii for highest in the nation.
But the Seattle Democrat argued that a millionaires tax wouldn’t put Washington out of line with a large portion of the 41 other states with some sort of personal income tax.
“There may be individual people, but I don’t think that there’s going to be any significant change in taxpayer location as a result of the passage of the tax,” Pedersen told reporters in February.
For business leader and philanthropist Rich Bacigalupi and his wife, the 35% estate tax was a big motivator in planning where to live. The income tax further pushed them over the edge. Washington’s competitive business advantage over other West Coast states was its lack of income tax, but once the millionaires tax came about, that all but evaporated, he said.
Although Whidbey Island’s Bacigalupi had already planned to move to Arizona, he said he realized his family couldn’t keep one foot planted in both states without their finances taking a serious hit. He said the income tax stripped them of the chance of having a life in Washington while living in Arizona.
Last July, Bacigalupi said, they purchased their long-term home in Arizona. They also notified the Washington state charities they’d supported that they’d no longer be donating. They’re also moving his elderly parents from Whidbey Island to Tucson.
Next year, Bacigalupi said that he might have to sell his island estate, depending on whether their advisers say a summer home could also lead to tax obligations in this state.
“While Arizona was always going to be our new home,” he said, “we still wanted to stay engaged here, because we have too much life invested here that we now have to give up on.”
Bacigalupi believes that philanthropic giving in Washington will likely decline. Some business owners will leave, he said, and those that don’t will need to raise prices.
“So the cost of living is going to go up in Washington state to cover the cost of this tax, and it’s going to make it harder and harder,” he said.
Jesse Proudman, president and chief technology officer of generative AI platform Venice.ai, grew up in Tacoma’s North End. He said he’s “been a startup guy” his whole life and is on his third company now.
“I’ve been part of this Washington state entrepreneurial scene for almost 30 years,” he said, “and really have watched the climate deteriorate from what I remember as a kid.”
Proudman, who today lives in Seattle with his family, said over time he’s seen tech companies start to be viewed as “piggy banks,” citing taxes like capital gains or Seattle’s Jump Start, and now the millionaires tax. He referenced recent comments from Seattle Mayor Katie Wilson, who dismissed claims that millionaires are leaving Washington as overstated and said: “The ones that leave — like, bye.”
Proudman says many entrepreneurs he knows are viewing that as a sign that they’re no longer welcome. He said some are now looking to tax-friendly places like Texas, Nevada, Tennessee and Florida that are vying to welcome the business community.
Looking ahead, Proudman said, the next generation of Boeing, Starbucks, Microsoft or Amazon might choose to launch in other states as Washington becomes less competitive, he said.
In recent months, Proudman has teamed up with Let’s Go Washington in the political group’s effort to undo the income tax. LGW is spearheading an initiative to repeal the tax; the group says it’s well on its way to gathering enough signatures to qualify it for the fall ballot. Former Washington Attorney General Rob McKenna is also leading a lawsuit to overturn the tax.
Proudman said he wants to continue raising his kids in Washington, but he’s started looking at properties in Austin and won’t stay to pay the tax if it’s ultimately allowed to stand.
“It’s not a business climate I want to be in, and I don’t want to participate in a state that is willing to illegally change its tax laws against the will of the Constitution,” he said.
Abraham doesn’t think the income tax will stick around, but he said beating it would be a first step.
“Because to win businesses back,” he said, “you’ve got to convince them that something like this isn’t going to happen again.”
This story was originally published June 14, 2026 at 5:00 AM with the headline "Are wealthy WA residents really mulling out-of-state moves due to new tax?."
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