Think Tank Study Projects Employment and Investment Declines Under Washington Income Tax

A joint study published by the Washington Policy Center and The Buckeye Institute projects that Washington's upcoming income tax structure could reduce future employment and private investment across the state. The tax, scheduled to take effect in 2028, establishes a 9.9% rate on taxable income exceeding a $1 million deduction.

According to the analysis, titled "Washington's tax gamble: An evaluation of Washington's income tax hike," the measure is projected to result in approximately 7,800 fewer full-time-equivalent jobs in 2028 compared to baseline estimates, with the projected employment shortfall increasing to roughly 18,800 jobs by 2036. The report also forecasts a $3.1 billion decrease in private investment and a $3.6 billion reduction in consumer spending in 2028.

Additionally, a sensitivity model in the study estimates that the state could see approximately 1,400 fewer new employer business formations annually, translating to roughly 6,100 fewer associated jobs created each year. The report notes that these economic adjustments would occur alongside an August 2026 state unemployment rate of 4.9%, which exceeded the national average of 4.1%.