WA’s new 9.9% income tax only hits household income over $1M, starting in 2028. You don’t have to be rich to owe it, though. You just need one weird year.
Four examples:
🔹 Fremont startup designer
She makes $150K and her teacher husband makes $85K. Her company gets acquired, and $1.1M of stock pays out as wages.
$1.335M − $1M = $335K × 9.9% = $33,165
🔹 Kent warehouse manager
He wins a $2M wrongful-termination verdict. His lawyer takes $800K. Add his wife’s $70K salary.
$1.27M − $1M = $270K × 9.9% = $26,730
If the legal fees aren’t deductible: $2.07M − $1M = $1.07M × 9.9% = $105,930. That includes tax on money his lawyer kept.
🔹 Everett plumber
He sells his 25-year-old shop for $3M. The goodwill is exempt, but the ordinary income isn’t:
$600K equipment recapture + $500K non-compete/consulting + $120K salary = $1.22M
$220K × 9.9% = $21,780
The same sale spread over 2 years: $0
🔹 Tacoma city worker
She makes $95K and her husband makes $65K. They inherit $1.2M from her dad’s Boeing 401(k), and the plan pays it as a lump-sum check.
$1.36M − $1M = $360K × 9.9% = $35,640
Rolled into an inherited IRA and drawn down over 10 years: $0
None of these people are millionaires. They each had one year where a lifetime of work, a legal fight or a family loss landed on a single tax return. Timing and paperwork decide who pays.