Alert
Hawaii and Washington State Propose New Wealth Taxes
The Washington and Hawaii State Legislatures proposed statutes that, if enacted, would impose wealth taxes on people with large investment portfolios. These proposed laws could impact individuals in Washington with over $100 million in financial intangible assets or individuals in Hawaii with over $20 million in assets.
While these net worth taxes are not yet enacted, they represent a significant shift in the tax landscape for these states. These taxes could have significant impacts—making it essential for taxpayers to stay informed about these developments.
Washington’s Proposed Wealth Tax
Washington’s proposed wealth tax would be imposed at the rate of 1% on the fair market value of a Washington resident’s worldwide wealth exceeding $100 million. The assets of business entities would generally not be subject to the tax. A resident’s worldwide wealth would include:
- Cash and cash equivalents
- Annuities
- Mutual funds
- Stocks
- Ownership in a business entity
- Other enumerated financial intangible assets
The proposed statute provides several exemptions. Nonfinancial intangible assets like trademarks, patents, and copyrights would not be subject to the tax, and obligations of the United States government and Washington State would also be exempt. In addition to the exemptions, the proposed law provides a credit for a Washington resident’s liability for amounts paid to other states for similar wealth taxes.
If enacted, the tax would begin on January 1, 2026, with the first tax return due April 15th, 2027.
Hawaii’s Proposed Wealth Tax
Hawaii’s proposed wealth tax would be imposed on individuals, estates, and trusts with more than $20 million in assets. The tax base would include:
- Cash
- Real property
- Stocks
- Interests in business entities or hedge funds
- Bonds and interest-bearing savings accounts
- Art
- Debts owed to the taxpayer
- Other enumerated assets
The tax, like Washington’s, would be imposed at a rate of 1% and would provide a credit for similar wealth taxes paid to other states.
If enacted, the tax would begin on January 1, 2026, with the first return due the following year.
We’re Here to Help
To learn more about the proposed statutes, contact your Moss Adams professional