Washington's New Income Tax

Gov. Bob Ferguson signed SB 6346, a new state income tax called the “Millionaire’s Tax.” Supporters say it targets only the wealthy, but it could also affect small businesses, including home builders.

Many builders operate as LLCs or S-corps, which means business income often passes through to personal tax returns. In a strong year, a builder could pass the $1 million threshold because of project-based income, even if that money is already tied up in land, labor, materials, or debt.

The tax also treats individuals, married couples, and domestic partners the same, creating a marriage penalty for couples with combined income over $1 million.

BIAW and other small business advocates opposed the tax because construction income is unpredictable, cash flow is tight, and this could create a new income-based tax structure that expands over time.

Builders should talk with a CPA, follow legal challenges, stay engaged politically, and review more information from Future 42 at IncomeTaxWashington.com.

Read more about it here: https://www.biaw.com/news/washingtons-new-income-tax-what-builders-need-to-know