Washington’s Proposed “Millionaire Tax”: What Pre-Retirees and Business Owners Should Know
Washington’s proposed “millionaire tax” (ESSB 6346) could reshape how high-income years are taxed—especially for pre-retirees and business owners planning a sale. While not yet law, this proposal highlights a critical truth: it’s not just how much you earn, but when you earn it that matters most. Here’s what to understand now—and how to prepare thoughtfully.
As of March 2026, Washington’s proposed “millionaire tax” (ESSB 6346) has passed the Legislature but has not yet been signed into law. While the outcome remains uncertain, the proposal offers a valuable opportunity to step back and evaluate how future tax policy could intersect with your long-term plans.
At Skyline Advisors, we view moments like this not as cause for alarm—but as an invitation to plan with greater clarity and intention.
A shift in how income is taxed
If enacted, the proposal would introduce a 9.9% tax on certain high-income individuals beginning in 2028, with a $1 million standard deduction per individual (shared between spouses).
What makes this proposal different is its focus:
It is not about whether you are working or retired—it is about when income is realized.
For many households, this tax may never apply. But for those approaching retirement or a significant liquidity event, a single high-income year could become far more consequential.
Why pre-retirement years matter most
The years leading up to retirement are often the most financially complex—and the most impactful from a tax perspective.
Income events that may trigger planning considerations include:
Sale of a business
Stock compensation (RSUs or options)
Deferred compensation payouts
Large capital gains from concentrated investments
Strategic Roth conversions
These are not everyday occurrences—but when they happen, they can temporarily elevate income well beyond typical levels.
The opportunity here is not avoidance—it is intentional timing and coordination.
What retirees should consider
For many retirees with steady, moderate income, this proposal may have little practical impact. However, for those with more dynamic income streams, the picture becomes more nuanced.
Because the tax framework begins with Federal adjusted gross income (AGI), how income is classified at the federal level plays a central role. At the same time, certain technical provisions in the bill suggest that not all traditionally “protected” income categories may be automatically excluded (public pensions could be an example).
The key takeaway is not to assume—but to evaluate.
Particularly relevant scenarios include:
Large one-time withdrawals
Portfolio rebalancing that triggers gains
Deferred income paid after retirement
Transition-year income spikes
In many cases, the most important planning window is not retirement itself—but the years surrounding the transition.
Business owners: a pivotal planning moment
For business owners, this proposal has the potential to be especially impactful.
A business sale often concentrates years of value creation into a single taxable event. If that income is realized in one year, it could fall within the scope of the proposed tax.
That does not mean there are no options—but it does mean planning becomes more important.
Key considerations may include:
Timing of income recognition
Structuring of the sale (lump sum vs. multi-year payments)
Coordination with existing Washington capital gains tax rules
Evaluating residency and income sourcing carefully
Incorporating charitable or legacy planning where appropriate
The goal is not simply to minimize tax—but to align the outcome with your broader vision of financial independence and purpose.
A moment to plan with intention
It is worth emphasizing: this proposal is not yet law.
And yet, the conversations it prompts are valuable regardless of the outcome.
Some of the most resilient financial plans are those built with flexibility—plans that can adapt to changing policy, evolving markets, and personal milestones.
This is an opportunity to:
Identify future high-income years
Build flexibility into major financial decisions
Coordinate across tax, investment, and estate strategies
Ensure your plan reflects not just efficiency—but purpose
Bottom line
For most Washington residents, this proposal will remain in the background.
But for those approaching retirement or preparing for a business transition, it introduces an important question:
Are your biggest financial moments aligned with your long-term plan—or left to chance?
Thoughtful planning today can create freedom tomorrow.
Retiring, selling a business, or receiving a large inheritance in the next 3–5 years?
Let’s think it through—together.
Whether you’re approaching retirement, evaluating a business sale, inheriting a large estate, or navigating a high-income year, these decisions are rarely about taxes alone. They’re about timing, purpose, and the life you’re building beyond the numbers.
At Skyline Advisors, we help you connect those pieces—so your financial decisions support not just efficiency, but clarity and fulfillment.
→ Schedule a conversation with our team
Disclosure: This law has not been passed and will likely be challenged in court. The final outcome is unknown. Any tax planning information mentioned above should not be taken as tax advice or be acted upon without proper consultation with your financial advisor and/or tax professional.