Statement from Real Residential Regarding the Millionaire's Tax (April 2026)

Dear Real Residential Team and Community:

Unless you are in a media blackout or a very anti-social mood for the past 60 days, you have probably been inundated with conversations and questions about Washington State's proposed "Millionaire's Tax".

Regardless of political leanings, this topic has generated strong emotions and even some knee-jerk determinations from many in our community. As real estate professionals, we are often on the front lines of the sentiment around a subject like this. Under our primary tenet that everyone deserves honesty, we are sharing our unvarnished perspective with you. As always, we are more than happy to connect one-on-one on how this may impact your current residential endeavors.

Competitive advantage:

For decades, Washington has been a hub of innovation. As a state without an income tax, we have thrived by attracting talented minds to the region. This has been a big advantage and catalyst for a more diverse community, truly placing Seattle on the map as one of the cosmopolitan winners of the past 30 years.

It is important to note that a substantial majority of clients we have assisted in relocating to the region refer to taxes as a driver. However, taxes are generally listed well after enticements such as geography, amenities, stunning scenery, incredible food, entertainment, and strong schools. While we may be on the precipice of losing the advantage of zero income taxes, the other priorities still favor Washington and Washingtonians long-term.

A tax with branding:

The unfortunate labeling of a "millionaire's tax" is a misstep by Washington leadership in our opinion. Real Residential is fortunate to work with high earners and we know first-hand that many of their contributions to the community, both financially, and civically, have helped enhance the ethos of Seattle and Washington in general.

Targeting a specific group of earners with a tax is not a new concept but the branding is off-putting and feels unnecessarily punitive to many who have worked incredibly hard to achieve at a high-level. The timing of this tax comes on the heels of excise taxes on capital gains, higher property taxes, and other levers that make some feel as though "versions of success" are not desired in Washington. Governor Ferguson would be wise to find a time machine and rethink that label.

Return on "investment”:

For many anticipating the sting of additional taxes, we have heard compelling anecdotes that people are not as much "anti-tax" as they are "anti-waste". We have heard valid concerns that government spending without private sector experience leads to tremendous waste.

For those of us who have worked hard to earn a living, manage a P&L, employ people thoughtfully, and save for a rainy day, it is hard to observe the reckless spending our state has engaged in. If the investment's ROI were clearly articulated, we suspect sentiment might differ.

Pandora's Box:

Many Washington residents who oppose this tax are concerned it will be the first of several income tax tiers. Once a tax on a specific earner is enacted, deploying it at a lower earning threshold will be much easier. This has happened in other states. No crystal ball is required.

The Fight Has Begun:

Strong opposition led by former AG, Rob McKenna has mobilized. Lawsuits and battles in the Washington State Supreme Court over the constitutional legality will be lengthy and, from our perspective, will elongate the uncertainty around this tax as we head toward the proposed implementation in 2028.

Our Thoughts:

Real Residential has enjoyed a market free of income tax friction. We would be disingenuous if we didn't state that this potential tax has created a bit of a headwind in our market.

We have been active in the local real estate market for over two decades. We have navigated the choppy waters of tech booms and busts, a financial crisis, macroeconomic challenges, a pandemic, and a higher interest rate environment.

What has always held true? Seattle and the Eastside are incredible places to live, enjoy world-class experiences, connect with nature, raise a family, and innovate in business. We don't see that going away.

Thank you for your continued trust in Real Residential,
Your Partners at Real Residential

FAQ:

As a Seller, should I be rethinking strategy on listing, pricing, etc?

At this time, no major shift is warranted based on this proposal alone. This tax, along with other challenges like inflation, global unrest, and higher interest rates, is simultaneously impacting buyer sentiment.

Therefore, if you plan to sell in this market environment, it is critical to price fairly and diligently prepare your home to stand out, as buyers have more selection than at any time in the last decade.

An important detail is that the sale of real property is explicitly exempt from this tax. Whether you are selling a primary residence or an investment property, the proceeds from that sale do not count toward the $1 million threshold.

What other states do not have an income tax?

Currently nine: Texas, Florida, Nevada, Wyoming, Alaska, South Dakota, Tennessee, New Hampshire and Washington have historically been attractive for this reason.

However, in our experience, tax structure is only one factor. Lifestyle, employment opportunities, schools, and community tend to carry a lot of weight in relocation decisions.

What is the long-term impact on real estate values?

We acknowledge that this legislation has triggered some departures from Washington. For those exiting, these plans were already in the works and this was the proverbial "straw that broke the camel's back.

What we are seeing on the ground is that clients who are deeply rooted here, with kids in school, active in sports and community, and invested in their work and relationships, are staying. The tax is unwelcome, but it is not pulling them away. Community runs deeper than a tax rate.

The Western Washington real estate market remains well-positioned because inventory is constrained by geographic challenges and our local job market is the envy of many other American cities. The tech layoffs in 2025 have had more impact on buyer hesitancy than the recent tax news.

The legislation knocked a meaningful number of sellers off the fence and, as (potential) implementation looms in 2028, we will likely see some more residents redomicile to a more tax-friendly state. This will be a loud minority that will be making moves but we are expecting some downward pressure on high-end prices as higher earners put their homes up for sale.

As a Buyer, does this give me more leverage on a purchase?

Buyers have much more selection and leverage in the current market. Properties are selling at a slower pace than in 2025 with average days on market exceeding 40 days across all price tiers in King County. This gives buyers opportunities to conduct more due diligence and negotiate on price and terms for a home.

It is important to note that well prepared and attractively priced homes in coveted locations are still selling quickly, sometimes with multiple bidders. There is no shortage of cash in our market at this time.

Has California's income tax harmed their real estate values?

California first enacted an income tax in 1935 during the Great Depression. In 2012, the state of CA passed Proposition 30, which increased taxes on higher earners.

In Washington, we experienced a sizable uptick in buyers relocating from California between 2010 and 2025 with taxes being a big driver.

Even though California has lost residents due to taxes and has one of the highest cost-of-living indexes in the country, its real estate has performed well. Regions near major metropolitan hubs such as LA, San Francisco, and San Diego have outperformed national averages despite the heavy tax burden on higher earners.

Are major employers going to leave the state?

Some have already reduced their footprint in Washington in part due to cost of living and local taxation on businesses. Many employers have sought to diversify their corporate coverage for reasons beyond taxes.

As some employers revisit their growth in Washington, they must consider recruiting talent to other regions, many of which lack the beauty and culture of Western Washington.

We expect some companies to downsize in Washington but moving a large company is far more challenging than moving a family of four.