HB 1319
In CommitteeHouse
Wealth tax
Enacting a wealth tax on the ownership of stocks, bonds, and other financial intangible property.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a 1% wealth tax on Washington residents’ worldwide financial intangible assets exceeding $100 million, with revenues dedicated to the state’s general fund to support public services. It aims to make Washington’s tax system more equitable by targeting high-wealth individuals while exempting most residents and common assets like homes.
- Imposes a 1% tax on worldwide financial intangible assets (e.g., stocks, bonds, mutual funds, options, cryptocurrency) exceeding $100 million for each Washington resident.
- Applies to financial intangible assets only—exempts homes, real estate, businesses, and nonfinancial assets like patents or goodwill.
- Only Washington residents are subject to the tax; exemptions apply to artificial persons (e.g., corporations, partnerships), U.S. and Washington state bonds, and certain federal securities.
- Requires annual filing and electronic payment by April 15, with penalties for late filing (up to 25% of tax due) and late payment (interest and standard penalties).
- Includes a credit for similar wealth taxes paid to other states, but only if the other state offers a reciprocal credit and the taxpayer spent more time in Washington than in the other state.
- Provides innocent spouse relief for individuals who can prove they did not know about—and had no reason to know of—misreported assets on a joint return.
Who is affected
- Wealthy Washington residents with over $100 million in financial intangible assets — Approximately 3,400 of the wealthiest Washington residents with over $100 million in financial intangible assets worldwide will owe the tax; it does not apply to most individuals or households.
- Spouses and state-registered domestic partners — Spouses or state-registered domestic partners who file jointly may be held jointly liable for the tax unless they qualify for innocent spouse relief.
- Trusts, estates, and business entities — Trusts, estates, and business entities (e.g., corporations, LLCs) are exempt from the tax, but individuals who are deemed owners of trust assets under specific rules may be taxed.
- Washington residents who benefit from state services funded by the general fund — The state’s general fund receives all wealth tax revenue, which supports public services like education, health care, and wildfire prevention.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The tax applies only to Washington residents with over $100 million in *financial intangible assets* (e.g., stocks, bonds, crypto), exempting homes, businesses, and nonfinancial assets—limiting impact to ~3,400 of the state’s wealthiest individuals and preserving capital for small businesses and working families.
FinancialRef: Sec. 2(7), (15), (16); Sec. 3(1); Sec. 6(1)The bill explicitly aims to reduce Washington’s status as the nation’s second-most-regressive tax system by taxing unearned financial wealth—addressing systemic inequity—while the reciprocal state tax credit and statutory amendments help prevent double taxation and reinforce tax fairness.
FinancialPeopleRef: Sec. 1 (Intent), Sec. 7 (Credit for similar state taxes), Sec. 14 (Amendments to RCW 43.135.034)All wealth tax revenue is dedicated to the state General Fund, supporting K–12 education for 1.1M+ students, early learning, higher education, behavioral health, and long-term care—services that disproportionately benefit low- and middle-income families and vulnerable populations.
EducationPeopleRef: Sec. 1 (Intent), Sec. 3(7) (Revenue to General Fund)The bill provides strong innocent spouse relief with a clear evidentiary standard and procedural fairness, protecting spouses (especially non-working or financially dependent partners) from liability for assets they did not know about or control.
Rights & LibertiesPeopleRef: Sec. 8(1)–(11) (Innocent Spouse Relief)The penalty structure for gross or substantial understatements of asset value deters aggressive tax avoidance while allowing for reasonable valuation disputes—helping ensure the tax is applied fairly and consistently.
FinancialPeopleRef: Sec. 10 (Substantial Valuation Understatement Penalty: 30–50%)
Potential Concerns (5)
The 1% tax on financial intangible assets over $100 million will generate substantial new state revenue ($1.2–$1.8B/year estimated by OFM), dedicated to the general fund to support public services like education, health care, and wildfire response—directly benefiting everyday Washingtonians who rely on those services.
FinancialPeopleRef: Sec. 3(1); Sec. 6(1)The bill includes robust procedural safeguards—including innocent spouse relief, joint filing with shared $100M exemption, and clear burden-of-proof standards—that protect spouses and state-registered domestic partners from unfair liability, especially in cases of asymmetric financial knowledge or control.
Rights & LibertiesPeopleRef: Sec. 8 (Innocent Spouse Relief); Sec. 6(1) (joint exemption)Mandated annual audits of 10–20% of taxpayers subject to the wealth tax (starting in 2027) will help ensure compliance and deter evasion, supporting fair tax administration and public trust in the system.
Public SafetyPeopleRef: Sec. 11 (Enforcement: 10–20% audit rate)The rule of construction favoring tax application may reduce legal ambiguity but could chill legitimate tax planning and create uncertainty for high-wealth filers, potentially discouraging investment or relocation to Washington.
Rights & LibertiesPeopleRef: Sec. 12 (Rule of Construction: construe ambiguity in favor of tax application)The broad anti-abuse provision allowing the Department to disregard transactions designed to avoid the wealth tax—including asset transfers where control is retained—may deter legitimate estate and wealth-transfer planning, especially for closely held businesses and family trusts.
Business & EmploymentPeopleRef: Sec. 15(3)(d) (Tax avoidance doctrine for asset transfers to avoid wealth tax)
Who Is Most Affected
Approximately 3,400 Washington residents with over $100M in financial intangible assets will owe the tax; this group will face new compliance costs, potential audit risk, and possible behavioral responses (e.g., relocation, asset restructuring). While the tax is narrow, its administrative complexity and reputational risk may disproportionately affect this group.
Spouses and state-registered domestic partners filing jointly face joint liability unless they qualify for innocent spouse relief. While the bill offers strong protections, the burden of proof and filing requirements may still create stress and administrative burden—especially for non-financially literate or economically dependent partners.
Trusts, estates, and business entities are exempt, but individuals deemed owners of trust assets (e.g., grantors, beneficiaries with control) may be taxed. This creates complexity for estate planners and may discourage use of certain trusts, potentially harming intergenerational wealth transfer for mid-wealth families.
The general fund revenue supports public services broadly used by everyday Washingtonians—including K–12 education, behavioral health, wildfire response, and long-term care—benefiting low- and middle-income households most, as they rely more heavily on public services and pay a larger share of income in regressive taxes.
The Department of Revenue gains new authority to audit and enforce the tax, with statutory mandates for increasing audit rates. While this improves compliance, it also increases administrative burden and may require new staffing and technology investments—potentially diverting resources from other enforcement priorities.