Taxing the Rich:
Which States Have Surtaxes on High Earners
Washington State's Governor Bob Ferguson signed a 9.9% tax on income over $1 million into law on March 30, 2026 - immediately triggering lawsuits and a ballot repeal effort. Maine is now the newest entrant, having signed a 2% surtax as part of its supplemental budget. Here's the full breakdown of every state that has gone down this road, 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 had never had a personal income tax in its modern history - signed a 9.9% tax on income over $1 million into law in March 2026, with Maine right behind it.
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 certified $2.987 billion in fiscal year 2025 - more than double the $1.3 billion officials had originally agreed to spend. 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 Massachusetts data is nuanced - IRS migration figures show a $4.2 billion income outflow from the state in 2023, which sounds alarming, until you notice that total outflows were actually higher in 2021 before the tax existed, and that the number of millionaires in Massachusetts by net worth grew 39% since 2022. The revenue numbers have consistently beaten projections. The exodus hasn't materialized at the scale critics predicted. That doesn't mean there are no effects - just that they're harder to isolate than a simple before/after story.
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. It has been running for 21 years - the longest of any state surtax.
(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 (it was $1,083,150 in 2025). Revenue is constitutionally earmarked for education and transportation. The tax has blown past every projection, and the number of millionaires in Massachusetts by net worth has actually grown 39% since passage.
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%. NYC residents face a further local income tax of up to 3.876%, making the city one of the highest-tax jurisdictions for high earners in the country. In the first half of fiscal year 2026, New York tax revenue exceeded initial projections by roughly $3 billion - driven significantly by high-income collections.
(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%.
(single) / $1.5M (married)
(top rate: 9.15%; was 7.15%)
Maine is the newest addition to the list, with Governor Janet Mills signing a 2% surtax on high earners as part of the state's $529 million supplemental budget - a reversal of her previous opposition. The surtax applies to income over $1 million for single filers and over $1.5 million for married couples. Mills, who is running for the US Senate, cited the need to protect health care and education investments against federal funding uncertainty. Maine's voter polling showed 69% support for the measure.
(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 had zero income tax until now)
Governor Bob Ferguson signed Senate Bill 6346 into law on March 30, 2026 - a historic moment for a state that had defeated income tax proposals at the ballot box ten times since 1934. The bill creates a 9.9% tax on personal income above $1 million, with the first payments due in April 2029. Within hours of signing, the Citizen Action Defense Fund announced a legal challenge led by former state Attorney General Rob McKenna, arguing the tax is unconstitutional under an 1933 state Supreme Court precedent. Opponents are simultaneously gathering signatures for a ballot repeal initiative, needing 340,000+ valid signatures by July 2, 2026.
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
Update: March 30, 2026
Washington State: Signed, Challenged, and Heading to Court
A State That Never Had An Income Tax Now Has One - And The Fight Isn't Over
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, Governor Bob Ferguson signed Senate Bill 6346 into law on March 30, 2026.
The House had passed it 51-46 on March 10 after a marathon 24-hour floor debate. The Senate passed it 27-21. Ferguson, who had publicly backed the bill from the start, signed it at a ceremony packed with lawmakers, union members, and advocates. "Thank you, thank you, thank you. We did it everybody," Ferguson told the crowd.
The bill imposes a 9.9% tax on personal income above $1 million, effective January 1, 2028, with the first payments due in April 2029. The revenue - projected at roughly $3 billion annually from an estimated 21,000 households - is directed toward the Working Families Tax Credit expansion, free K-12 meals, childcare subsidies, and B&O tax relief for small businesses.
The legal challenge came the same day. The Citizen Action Defense Fund announced it is filing suit, with former Washington Attorney General Rob McKenna leading the litigation. McKenna's argument: under a 1933 state Supreme Court ruling, income is classified as property in Washington, and progressive property taxes are unconstitutional. Opponents are also collecting signatures for a ballot repeal initiative, with a deadline of July 2, 2026 to submit 340,000+ valid signatures. Ferguson has said he expects the Supreme Court to ultimately decide the question - and that he would not have signed a bill he didn't believe would survive legal review.
- 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, 27-21, after 3.5-hour debate
- Mar 10-11, 2026House debates 24+ hours, passes 51-46
- Mar 12, 2026Legislative session ends - bill sent to Governor for signature
- Mar 30, 2026Governor Ferguson signs SB 6346 into law at Capitol ceremony
- Mar 30, 2026Citizen Action Defense Fund announces lawsuit; former AG Rob McKenna leads challenge
- July 2, 2026Deadline for ballot repeal initiative signatures (340,000+ required)
- Jan 1, 2028Tax takes effect - if it survives courts and potential ballot repeal
- April 2029First tax payments due
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. Ferguson signed it knowing full well it was going straight to court. The legal argument against it is real and has nearly 100 years of precedent behind it. At the same time, the state Supreme Court upheld Washington's capital gains tax in 2023 using similar "receipt of income" framing - and that's the hook supporters are hanging this on. Whether it survives the courts, a potential ballot repeal effort, or both is anyone's guess at this point. The story is far from over.
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) / $2.987B (FY25) | Active |
| New York | 9.65%-10.9% | $1M-$25M+ tiers | 2021 | ~$4.3B/yr (hike) | Exceeding proj. (FY26 +$3B surplus H1) | 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 |
| Maine | +2% (top: 9.15%) | $1M (single) / $1.5M (married) | 2026 | ~$91M/yr | Too early - newly signed | 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 effective / 2029 first payments | ~$3.0B/yr projected | Signed Mar 30, 2026 - legal challenge pending | Signed / Contested |
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 by net worth actually grew 39% in the three years following passage - from 441,610 individuals to 612,109. 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.
The Massachusetts IRS migration data adds nuance to the "no exodus" story. In 2023 - the first full year of the surtax - Massachusetts residents who left took a net $4.2 billion in adjusted gross income with them, among the largest totals in the country. Critically, high-income filers (those reporting $200,000+) accounted for 70% of the net outflows. Supporters counter that total income outflows were actually higher in 2021, before the tax existed, suggesting broader migration patterns are the primary driver rather than the surtax itself.
Maryland's 2009 experience is also frequently cited: after the temporary millionaire tax was introduced, the number of Marylanders reporting $1 million+ incomes dropped sharply. There's also the revenue volatility problem - states that rely heavily on capital gains from a small number of filers see massive budget swings when markets decline.
More states are adding these taxes, they keep collecting more money than initially projected, and the predicted mass exodus of millionaires hasn't materialized - though the IRS migration data out of Massachusetts does show some income moving out, even if the millionaire headcount is actually growing. The Massachusetts case gave Washington and Maine a template. Washington just became the most dramatic example yet - signing a 9.9% income tax into law in a state that had rejected the concept at the ballot box ten straight times, and immediately facing both a lawsuit and a repeal initiative. Maine followed within weeks at a much smaller scale. Illinois is actively studying a 3% surtax proposal that polled at 61% support in a 2024 advisory referendum. The trajectory here is clear. The legal and political battles around Washington's version will be the most consequential test of how far this trend can go.