Lawmakers in Washington state have approved a new tax targeting the wealthiest residents, passing legislation commonly described as a “millionaires tax” despite warnings from some business groups that it could encourage high-income individuals to relocate.

The measure imposes an additional levy on certain high levels of income and investment gains earned by top earners in the state.

Supporters say the policy is intended to generate new revenue for education and public services while addressing concerns about economic inequality.

Under the legislation, individuals with substantial investment income will face higher tax obligations, with proceeds expected to be directed toward state programs, including education funding and early childhood initiatives.

Advocates argue the measure ensures that those with the greatest financial capacity contribute a larger share toward public services.

The tax passed after extensive debate in the state legislature, where Democratic lawmakers emphasized the need for additional revenue to support long-term investments in schools and social programs.

Proponents said the new policy reflects a broader effort to modernize Washington’s tax structure and reduce reliance on consumption-based taxes.

However, opponents warned that raising taxes on wealthy residents could create unintended economic consequences.

Business associations and some economists argued that high-income individuals may choose to relocate to states with lower tax burdens, potentially reducing the anticipated revenue over time.

Concerns about wealth migration have been raised in other U.S. states that have introduced similar measures, with critics pointing to the mobility of high-net-worth individuals and businesses.

They argue that tax policy must balance revenue generation with maintaining a competitive economic environment.

Supporters of the Washington measure reject those concerns, saying the state’s strong economy, technology sector and quality of life make it unlikely that significant numbers of residents would move solely because of the tax change.

The legislation now moves forward for implementation as state officials prepare to establish administrative rules and begin collecting the new levy in the coming fiscal period.