Small Businesses Threaten to FLEE Washington Over New Income Tax

Washington small businesses are warning that the state's new 9.9% income tax could push companies to relocate, reduce hiring and discourage investment. Patrick Conner, Washington state director of the National Federation of Independent Business (NFIB), says business owners are increasingly considering Idaho, Texas, Florida and other states as Washington's tax and regulatory costs rise. In this Washington In Focus report, The Center Square examines the potential economic impact of Washington's millionaires' tax, concerns about business departures, and the growing political fight over the income tax repeal initiative. WASHINGTON INCOME TAX SPARKS SMALL BUSINESS CONCERNS Washington's new 9.9% income tax applies to taxable income above $1 million. NFIB says 98% of the members it surveyed opposed the tax during the 2026 legislative debate. Conner argues that small business owners operating pass-through businesses could face additional taxes on income that might otherwise be reinvested in equipment, hiring and expansion. He says NFIB members have discussed relocating to states with more competitive tax and regulatory environments, including Idaho, Oregon, Arizona, Texas and Florida. Some members, according to Conner, have already left Washington. 18,000 FEWER JOBS? ECONOMIC STUDY RAISES CONCERNS A study from the Washington Policy Center and Buckeye Institute projects that Washington could have approximately 18,000 fewer jobs than it otherwise would if the income tax remains in place. The estimate reflects a projected economic impact, not 18,000 confirmed layoffs or jobs already lost. Opponents argue that Washington's income tax could discourage investment, reduce business expansion and make the state less competitive. DEMOCRATS DEFEND WASHINGTON'S MILLIONAIRES' TAX Supporters of the income tax argue that the policy can help address affordability challenges and support public services. Washington state Sen. Manka Dhingra, a Democrat from Redmond, defends the tax and discusses why labor unions are supporting the campaign to preserve it. The debate comes as Washington voters prepare to decide whether to repeal the income tax. WASHINGTON ELECTION BALLOT RETURNS The report also examines early Washington election ballot return data, including statewide turnout, challenged ballots and voting participation by age group. Subscribe to The Center Square for Washington state news on taxes, jobs, small businesses, economic growth, government accountability and elections. Get important Washington government and policy updates delivered by text about twice a week. Text TCSWA to 206-944-3016 for Washington news updates. #WashingtonNews #WashingtonIncomeTax #SmallBusiness #WashingtonEconomy #NFIB