A wave of new and increased taxes, fees, and surcharges officially took effect in Washington state this week, as part of a major tax package designed to generate $9.4 billion in revenue over the next four years.
The tax hikes, signed into law by Gov. Bob Ferguson, aim to support the state’s next budget and close a projected shortfall. The measures, passed during this year’s legislative session, impact everything from estate taxes to gas prices and business operations.
Highest Estate Tax in the Nation
Washington now holds the title for the highest state-level estate tax rate in the country, with a top rate of 35% on estates exceeding $9 million. The first $3 million of an estate’s value remains exempt, but progressive tax rates apply beyond that threshold.
The Tax Foundation highlighted how this new rate dramatically surpasses the previous record-holder, Hawaii, which had a 20% top rate, and more than doubles the 16% top rate seen in several other states.
Gas Tax and License Fee Hikes
Motorists and outdoor enthusiasts are also feeling the impact:
- The state’s gas tax rose from 49.4 cents to 55.4 cents per gallon as of July 1. According to AAA, the average gas price in Washington is now over $4.41 per gallon, compared to the national average of $3.16.
- Hunting and fishing licenses increased by 38%, adding over $16 on average to the cost for those who rely on these activities to put food on the table.
Business Taxes Climb
Washington businesses will see significant tax increases, with more on the horizon:
- Starting October 1, businesses with gross income exceeding $5 million will face a B&O tax increase from 1.75% to 2.1%.
- Large financial institutions will see their B&O tax rise from 1.2% to 1.5%.
- Beginning January 1, 2026, an advanced computing surcharge for select tech giants will soar from 1.22% to 7.5%, applying to companies with over $25 billion in global revenue.
- A new 0.5% surcharge for businesses earning over $250 million in taxable income will also begin in 2026.
- Standard manufacturing, extracting, and retail B&O tax rates will increase to 0.5%.
Additional Fees and Environmental Programs
Further fee increases and new programs are also on the way:
- Marriage licenses will now carry an additional $100 fee to support a new domestic violence co-responder account.
- Liquor license and permit costs are set to rise by 50%.
- A new Solid Waste Producer Responsibility program (EPR) will roll out starting July 27, with most of its provisions taking effect in 2026 and beyond.
Growing Concerns for Residents and Businesses
While state officials argue the measures are necessary to avoid deeper budget cuts and invest in public services, critics say the sweeping tax increases will burden families and businesses already struggling with inflation and high living costs.
The Tax Foundation and other economic groups have raised concerns that Washington’s new tax policies could impact the state’s competitiveness, particularly for industries like tech, manufacturing, and energy.
For now, Washington residents and businesses alike are bracing for the financial impact as the new taxes and fees begin to take hold.
