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 Jan. 1, 2026, with the first tax return due April 15, 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