Taxing the Rich:
Which States Have Surtaxes on High Earners
Washington State's House passed a 9.9% tax on income over $1 million on March 10, 2026 - and the governor is ready to sign. Here's a full breakdown of every state that has gone down this road, when they did it, what they projected it would raise, and what actually happened.
Overview
For most of American history, the idea of singling out millionaires for a special tax rate above and beyond the standard top bracket was a political non-starter. States competed to attract wealthy residents, not drive them away.
That calculus started shifting in the 2000s, and it's been accelerating ever since. California fired the first shot in 2004, tucked inside a mental health ballot measure. New Jersey followed in 2020. Massachusetts voters approved the "Fair Share Amendment" in 2022. And now Washington State - a state that has never had a personal income tax - is on the verge of enacting a 9.9% tax on income over $1 million.
The interesting story isn't just which states are doing it. It's what happened to revenue projections once these taxes actually went into effect. In Massachusetts, the state collected more than double what it initially forecast. In California, what started as a modest mental health levy now generates between two and three and a half billion dollars a year.
The standard argument against millionaire taxes is that wealthy people will just leave. New Jersey critics said it in 2020. Massachusetts opponents said it in 2022. Washington opponents are saying it right now. The data from the states that have already done this doesn't really support the exodus narrative - but the counterargument is that we may not have seen the full long-term effects yet. Either way, the revenue numbers have consistently beaten projections, which tells you something about how hard it is to model the behavior of people in the top income brackets.
Geographic View
State Millionaire Surtaxes - Mapped
State by State
The Full Breakdown
over $1 million
(top rate: 13.3% all-in)
California's Proposition 63, the Mental Health Services Act, was the first state millionaire surtax in the US. Voters approved it with 53.8% of the vote. The 1% surcharge on income over $1 million layered on top of California's already-high income tax structure, bringing the effective top rate to 13.3%. Revenue goes directly to county mental health programs.
(was 8.97% on $5M+ until 2020)
New Jersey has a long, complicated millionaire tax history. It first created an 8.97% top bracket on income over $500,000 in 2004. In 2009 it temporarily pushed the rate to 10.75% (expired 2010). In 2018 it restored 10.75% but only on income above $5 million. The 2020 law - signed during the COVID fiscal crisis - dropped that threshold to $1 million, affecting roughly 20,000 filers.
over ~$1.08M (2025)
(top rate: 9%; was flat 5%)
The Fair Share Amendment rewrote Massachusetts' flat-tax constitution. The state had taxed all income at a flat 5% since the 1990s. The amendment added a 4% surcharge on income above $1 million, with the threshold indexed to inflation annually. Revenue is constitutionally earmarked for education and transportation - including free public school meals, free community college, and MBTA funding. The tax has blown past every projection.
over $25M
(9.65% on $1M-$5M)
New York doesn't use a formal surtax structure like Massachusetts, but its 2021 budget aggressively expanded high-income brackets. The rate on income over $1 million jumped from 6.85% to 9.65% - a 2.8-point increase. New York City residents face a further local income tax of up to 3.876%, making New York City one of the highest-tax jurisdictions for high earners in the country at roughly 14.78% combined state and city.
(9.75% on $500K-$1M)
While not a state, the District of Columbia has built one of the most progressive income tax structures in the country. Its tiered top brackets - 9.25% on $250K+, 9.75% on $500K+, and 10.75% on $1M+ - effectively constitute a millionaire surtax. The D.C. bracket structure has been expanded several times to push higher rates specifically onto higher earners.
over $1M
(applies to investment income only)
Minnesota took a targeted approach in 2024, implementing a 1% surtax specifically on net investment income over $1 million - mirroring the federal Net Investment Income Tax structure. This affects investment returns from dividends, capital gains, and interest for high earners, rather than taxing all forms of income. It's a narrower but still significant addition to Minnesota's already high top income tax rate of 9.85%.
(expired 2010 - one year only)
Maryland's 2009 "millionaire tax" was one of the earliest state experiments with high-income taxation - and one of the most cautionary tales critics point to. The temporary 6.25% bracket on income over $1 million was projected to generate $106 million. When it expired after one year, the number of Marylanders reporting $1 million+ in income had dropped sharply. Opponents cited exodus; supporters argued the Great Recession was the primary cause. Maryland never reinstated the formal surtax.
(WA currently has zero income tax)
Washington State's Senate Bill 6346 - the "Millionaires Tax" - is on the verge of becoming law. Governor Bob Ferguson has said he will sign the amended version. The bill creates a 9.9% tax on personal income above $1 million, a first-of-its-kind move for a state that has never taxed wages. The 24-hour-plus House floor debate was described as "certainly the longest floor debate in recent history." The bill faces near-certain legal challenges after passage.
Revenue Reality Check
Projected vs. Actual Revenue
When states announced millionaire surtaxes, how close were the early projections? In almost every case where we have data, actual collections exceeded what officials forecast - sometimes by a wide margin.
By The Numbers
Key Figures Across All States
Breaking: March 11, 2026
Washington State: The Biggest Domino Yet
A State That Never Had An Income Tax Is About To Have One
Washington State has defeated income tax ballot initiatives ten times since 1934. The state's constitution has been interpreted since 1933 as effectively prohibiting graduated income taxes. And yet, Senate Bill 6346 is heading to Governor Bob Ferguson's desk.
The House passed it 51-46 on March 10, 2026, after a marathon floor debate that ran more than 24 hours straight. The Senate had already passed it 27-22 on February 16. Governor Ferguson has said he'll sign the amended version.
The bill imposes a 9.9% tax on personal income above $1 million, effective January 1, 2028. A household earning $1.5 million would owe $49,500 in additional state taxes per year. The revenue - projected at $3.5 billion annually - is directed toward the Working Families Tax Credit, small business B&O tax relief, childcare, and school funding.
Legal challenges are essentially guaranteed. The bill includes language framing the tax as a levy on the "receipt of income" (analogous to Washington's capital gains tax upheld in 2023) to sidestep the property tax argument. Whether that holds in court is the next question.
- Dec 2025Governor Ferguson signals support for a 9.9% millionaire tax
- Jan 12, 2026Legislative session opens - SB 6346 introduced
- Feb 16, 2026Senate passes SB 6346, 27-22, after 3.5-hour debate
- Mar 10-11, 2026House debates 24+ hours, passes 51-46
- Mar 12, 2026Legislative session ends - bill returns to Senate for final concurrence
- ExpectedFerguson signs - court challenges follow
- Jan 1, 2028Tax takes effect (if upheld)
Washington's situation is uniquely interesting because the state has no income tax at all. This isn't a bracket adjustment - it's a brand new type of taxation for the state. The legal hurdles are real. The 1933 precedent is real. But the political winds clearly shifted. Microsoft and Amazon have made Seattle home to a disproportionate number of very high earners, and there's been growing resentment about the state's heavy reliance on sales taxes, which hit lower-income residents harder. This was probably inevitable once Massachusetts showed it could be done.
Historical View
The Millionaire Surtax Timeline
Quick Reference
All States - Side by Side
| State | Surtax / Top Rate | Threshold | Year | Estimated Annual Revenue | Actual / Current Revenue | Status |
|---|---|---|---|---|---|---|
| California | +1% (top: 13.3%) | $1,000,000 | 2005 | ~$750M (yr 1) | $2.0-$3.5B/yr | Active |
| New Jersey | 10.75% on $1M+ | $1,000,000 | 2020 | ~$390M/yr | $500M-$1B+ est. | Active |
| Massachusetts | +4% (top: 9%) | ~$1.08M (2025) | 2023 | ~$1.5B/yr | $2.46B (FY24) / $3.0B (FY25) | Active |
| New York | 9.65%-10.9% | $1M-$25M+ tiers | 2021 | ~$4.3B/yr (hike) | Varies (market sensitive) | Active |
| Washington D.C. | 10.75% on $1M+ | $1,000,000 | Est. 2016 | N/A published | N/A published | Active |
| Minnesota | +1% on net invest. income | $1,000,000 | 2024 | N/A published | Too early | Active |
| Maryland | 6.25% temp bracket | $1,000,000 | 2009-2010 | ~$106M | Expired 2010 | Expired |
| Washington State | 9.9% (new income tax) | $1,000,000 | 2028 (if upheld) | ~$3.5B/yr projected | TBD - awaiting signature | Pending |
The Debate
Arguments For and Against
The Case For Millionaire Surtaxes
Proponents argue that the progressive rate structure creates a more equitable tax code. Most states rely heavily on sales and excise taxes - regressive by nature - which place a higher proportional burden on lower-income households. A millionaire surtax offsets that structural imbalance.
Massachusetts is the best real-world test case supporters have right now. The Fair Share Amendment didn't just hit its target - it doubled it. And the number of millionaire households in Massachusetts actually grew in the years following passage - the predicted exodus never materialized at scale.
Supporters also point to earmarking: California's surtax funds mental health care. Massachusetts' funds education and transit. These visible, popular programs make it politically harder to repeal the taxes once in place.
The Case Against Millionaire Surtaxes
Critics argue that high earners are the most mobile segment of the population. Unlike middle-income workers whose jobs are location-dependent, many millionaires - especially entrepreneurs, investors, and retirees - can establish residency in a no-income-tax state like Florida or Texas with relative ease.
Maryland's 2009 experience is often cited: after the temporary millionaire tax was introduced, the number of Marylanders reporting $1 million+ incomes dropped sharply. Supporters blamed the Great Recession; critics blamed the tax. The truth is probably some of both, but the story remains a fixture in anti-surtax arguments.
There's also the revenue volatility problem. States that rely heavily on capital gains and investment income from a small number of filers see massive budget swings when markets decline. New York has experienced this repeatedly - millionaire tax receipts can swing by billions based on Wall Street performance.
More states are adding these taxes, and they're collecting more money than they initially project. The Massachusetts case essentially demolished the "millionaires will flee" argument as a dealbreaker - though the long-run effects still aren't fully settled. What's changed politically is the template. Massachusetts showed it could be done via ballot. New Jersey showed the governor could push it through the legislature. And now Washington is about to show that even a state with zero income tax history isn't immune. The question now is which state is next - and whether Washington's legal challenges set the whole thing back.