Washington's Millionaire's Tax and I-645: What Eastside Homeowners Should Know

9.9% above $1 million. That is the enacted Washington individual income-tax rate scheduled to begin in 2028. Initiative 645 is now certified for the November 3, 2026 ballot and would repeal that tax while prohibiting state and local individual income taxes. Those are the two numbers Eastside homeowners should start with.

I live and work in Kirkland. My office is on Lake Street, a few blocks from the marina, and most of my clients are within a twenty-minute drive. So when the news cycle fills with headlines about billionaires leaving Seattle for Florida and Nevada, I hear about it locally before I read about it online.

The questions are quieter than the headlines. A Bridle Trails household that bought in 2009 wonders whether it should sell before something changes. A Bellevue engineer with vested stock asks whether Washington taxes mean the house belongs in a different plan. A Clyde Hill homeowner whose children live in Arizona wants to know whether Washington's estate tax is a reason to move, or a reason to plan.

This is my attempt to answer those questions without a scare and without a shrug. I am a real estate broker, not a tax attorney or CPA. This article is educational, and your own advisors should confirm how the rules apply to you.

What the Washington Millionaire's Tax actually is

Washington has historically had no broad personal income tax. In March 2026, the state enacted a 9.9% tax on Washington taxable income above $1 million for individuals and married couples filing jointly. The law is scheduled to apply beginning January 1, 2028. It is separate from Washington's existing capital-gains excise tax.

The repeal effort is Initiative 645. The Washington Secretary of State certified IP26-645 for the November 3, 2026 ballot on August 21. The official ballot-measure page includes the title, full initiative text, explanatory statement, fiscal analysis, and arguments. Read those documents before relying on a campaign summary from either side.

The capital-gains tax is a different tax

Washington's capital-gains tax applies to certain long-term gains allocated to Washington. For tax year 2025 and later, the first $1 million of taxable Washington capital gains is taxed at 7%, and taxable gains above $1 million are taxed at 9.9%. The annual standard deduction is indexed. The Department of Revenue lists $278,000 for 2025; as of September 4, 2026, its public yearly table had not posted a 2026 deduction amount.

The distinction matters because the income tax, capital-gains tax, and estate tax have different bases, effective dates, exemptions, and planning questions. Treating all three as one "millionaire tax" creates bad real estate decisions.

Wealth migration is real. Population migration is a different story.

A September 3 Puget Sound Business Journal analysis used IRS migration data to examine where King County income is moving. The important distinction is between people and adjusted gross income. Losing one ultra-high-net-worth household is nearly invisible in a population count. It can be enormous in an income measure.

Jeff Bezos is the clearest example. He moved to Florida in 2023 and publicly cited family and Blue Origin. Forbes estimated that his $13.6 billion in Amazon share sales during 2024 would have produced a $954 million Washington capital-gains tax bill had he remained a Washington resident. Forbes also reported that he had paused Amazon share sales for two years after the tax began.

Howard Schultz and his wife announced a move to the Miami area in March 2026 after reportedly buying a $44 million residence. Schultz cited family, sunshine, and a new chapter rather than taxes. That is worth taking at face value. People move for family and lifestyle. Taxes can still be a large factor when a household has substantial future income or unrealized gains.

The defensible conclusion is narrower than the headlines: King County remains capable of creating wealth, while Washington's tax structure can make domicile more consequential for highly mobile households after that wealth is created. That is a competitiveness and planning question, not evidence of a housing-market collapse.

What this means for Bellevue, Kirkland, and Medina real estate

Changing domicile does not require a household to abandon the Eastside. A family can establish a primary residence elsewhere while retaining a Washington home, subject to the legal facts that determine domicile. Forbes reported in 2024 that Bezos still appeared to own at least three Washington homes after his move.

At the top of the market, that can shift a property from primary residence to second home. A Hunts Point legacy home becomes the summer house. A West Bellevue condominium remains useful for board meetings and football weekends. Medina waterfront, Yarrow Point, and newer downtown Bellevue condominiums can remain desirable even when an owner's legal home changes.

For a move-up buyer, the useful question is not whether "wealth is leaving." It is whether a specific property has become available, how the seller's timing affects leverage, and what the total monthly and opportunity cost looks like. That is where a headline becomes a buyer decision.

The tax facts that actually apply to your house

Real estate is exempt from Washington's capital-gains tax. The Department of Revenue lists real estate as exempt. Federal capital-gains rules can still apply, including the primary-residence exclusion when its requirements are met. Washington real-estate excise tax is a separate cost. A CPA should model the federal side against your basis, improvements, ownership, and occupancy history.

Washington's estate-tax threshold is $3 million for deaths on or after July 1, 2026. The threshold is based on the gross estate, not just a house or taxable brokerage account. The Department of Revenue's current estate-tax guidance also explains a limited spousal personal-residence filing exclusion and other rules that can change the filing analysis. Eastside home values make this relevant to households that do not think of themselves as ultra-wealthy.

Domicile is a legal fact pattern, not a feeling. Where you spend time, vote, maintain a home, and organize your life can matter. A winter in Scottsdale does not automatically change tax domicile. Build that plan with qualified tax and legal counsel.

How I would think about it if I were you

If you own an Eastside home and this policy makes you anxious, slow the decision down. Tax policy is a reason to calculate, not a reason to sell into a market you have not measured.

If a sale is already part of the plan, calculate your equity, federal exposure, real-estate excise tax, transaction costs, and the next property decision. If you are buying, especially moving up in Bellevue, Kirkland, Sammamish, or Mercer Island, compare real listings and seller motivation instead of making a market-wide assumption from a migration headline.

If your household is weighing a domicile change, decide what the Eastside home is for. It can be sold, retained, rented where permitted, or kept as a second home. Each option changes cash flow, maintenance, financing, insurance, and estate planning. The real estate plan should connect to the tax plan, not substitute for it.

Use the numbers, then choose the property move

Start with a Real Estate Review if you need to map equity, selling costs, and the keep-or-move decision. Review the existing Washington Millionaire's Tax guide for the broader tax cluster. If the next move is an acquisition, compare Washington investment-property options with your CPA's assumptions before you offer.

Call or text (425) 448-6288, or meet me at 15 Lake Street, #200 in Kirkland.

Sources and status

Policy status checked September 4, 2026. Tax law, agency guidance, and ballot measures change.

• Washington Department of Revenue: individual income tax
• Washington Secretary of State: 2026 proposed ballot measures and I-645 documents
• Washington Department of Revenue: capital-gains tax rates, deductions, and exemptions
• Washington Department of Revenue: 2026 estate-tax thresholds
• Forbes: Bezos share sales and estimated Washington tax effect
• Forbes: Howard Schultz's March 2026 move

This article is for general information and is not tax, legal, or financial advice. Consult a licensed CPA or attorney about your situation.