Senate passes SB 6346, a gross‑substitute income tax, 27–22 after hours of debate on constitutionality and amendments

The Washington State Senate on Friday passed engrossed substitute Senate Bill 6,346, a broad tax‑reform measure that would impose a 9.9% tax on income above $1,000,000 and direct revenue to K‑12 education, health care, higher education and other services, by a final roll‑call vote of 27 yeas to 22 nays.

Senator Peterson, the bill sponsor, framed the measure as a revenue source for long‑term investments, saying it “would raise 3 and a half billion dollars a year to make those kinds of investments.” Supporters said the change rebalances an “upside‑down” tax code that they argue has relied too heavily on regressive sales taxes and business gross‑receipts levies.

Opponents raised constitutional and economic objections, arguing the measure amounts to an impermissible income tax under Washington law and risks driving businesses and wealthy residents out of state. Senator Gildan called it “the largest tax increase this century at a time when state revenues have never been higher,” and warned of capital and philanthropic flight if the policy is adopted.

The floor considered multiple proposed amendments in a lengthy process. Lawmakers debated, adopted and rejected a series of changes — including adoption of a complex striking amendment (0679, as amended) and rejection of other amendments that would have altered exemptions and referendum language. An amendment that would have exempted diapers from sales tax (0694) was defeated on a voice vote; amendment 0691 was adopted. Several amendment roll calls tested legal framing and referendum provisions but failed to secure a majority.

Supporters said the bill also expands the working‑families tax credit and increases relief for small businesses through a larger small‑business B&O credit and other technical provisions intended to mitigate impacts on pass‑through entities. Opponents countered those offsets were insufficient and said the package exposes small businesses and pass‑through entities to new tax burdens.

Floor debate repeatedly returned to the bill’s legal character. Proponents pointed to prior precedent and tax design choices that aim to conform to constitutional constraints; opponents pointed to the state constitution’s property and uniformity clauses and urged that any graduated income tax belongs in the constitution.

Following the roll call, the president declared the engrossed substitute SB 6,346 passed and ordered that “the title of the bill will be the title of the act.” The bill’s effective dates, implementation steps and administrative details will be determined as the legislative process continues toward transmittal to the governor and any potential legal scrutiny.

The passage followed earlier floor action on multiple other bills during the session. The Senate moved quickly this afternoon to advance other measures before taking up SB 6,346 for extended debate.