Washington's New Millionaire Tax: Why Florida Just Got More Attractive

On the evening of March 12, 2026, after a marathon 24-hour legislative session in Olympia, Washington Governor Bob Ferguson signed into law the state’s first income tax in 93 years. The bill imposes a 9.9% tax on individual income exceeding $1 million, effective for tax year 2026.

Within hours, Howard Schultz — former Starbucks chairman and Seattle’s most famous corporate citizen — announced he was moving to Miami. He reportedly closed on a $44 million penthouse at the Four Seasons Surf Club in Surfside, Florida.

The signal was unmistakable. Washington’s era as a no-income-tax state is over, at least for high earners, and the people with the most to lose are already moving.

If you’re a high earner in Washington and you’ve been watching this legislation work its way through Olympia, the question isn’t whether the tax is now real. It is. The question is whether you’re going to pay it.

What Washington Just Passed

The new law is simple in its structure and significant in its impact.

Rate: 9.9% on income above $1,000,000. Income below that threshold is unaffected — Washington still has no broad income tax on ordinary earnings below $1 million.

What counts as income: The law taxes total income as defined for federal purposes, which means wages, salary, self-employment income, business distributions, and — critically — capital gains. Washington already had a 7% excise tax on long-term capital gains above $250,000, passed in 2021 and upheld by the state Supreme Court in 2023. The new millionaire tax stacks on top of that for capital gains that push total income above $1 million.

Who it hits: The math is straightforward. A tech executive with a $500,000 salary and $1.5 million in vesting RSUs has $2 million in income. Under the new law, $1 million of that is taxed at 9.9%, producing a $99,000 Washington state income tax bill — on top of federal taxes. Previously, that bill was $0.

When it applies: Tax year 2026. Income earned starting January 1, 2026 is subject to the new rate. If you haven’t moved yet, you’re accumulating liability right now.

Washington Was the Last Holdout Among Major Tech States

Until last week, Washington was one of a small group of states — Florida, Texas, Nevada, Wyoming, Tennessee, South Dakota, and Alaska — with no income tax. What made Washington unusual was the concentration of wealth sitting in that no-tax environment: Amazon, Microsoft, Boeing, Costco, Starbucks, and a deep bench of successful startups have minted an enormous number of millionaires and multi-millionaires in the Seattle metro area.

California built its wealth amid high taxes and has an extensive apparatus for extracting them. Washington built comparable wealth with no income tax at all. The people who made money in Seattle and exercised discipline about their equity timing — selling restricted stock in Washington — paid federal taxes and nothing else at the state level.

That window is now closed, at least for income above $1 million. And because the legislation passed with urgency language, there is no phase-in period, no grandfathering for existing equity grants, and no transitional relief. The rate applies to income you’re earning and equity that’s vesting right now.

The RSU and Stock Option Problem

The new Washington millionaire tax will hit one group particularly hard: tech workers and executives with large unvested equity positions.

Amazon, Microsoft, and the broader Seattle tech ecosystem compensate heavily in restricted stock units (RSUs). These grants typically vest over four years, with quarterly or annual vesting milestones. For anyone with meaningful equity at a major tech company, a single year’s vest can push income well above $1 million.

Consider a senior software engineer at Amazon with $250,000 in base salary and RSUs worth $1.5 million vesting in 2026. Under the old law, state income tax: $0. Under the new law, $750,000 of that income is taxed at 9.9% — a bill of $74,250 in Washington state taxes alone, on top of federal ordinary income tax.

A principal engineer. An engineering manager. A director. A VP. A founder who hasn’t taken a company public yet but has been banking equity for a decade. These are not hedge fund managers in Greenwich. These are people who worked at a company, got their grants, and are watching a nine-figure per year state tax obligation materialize because the legislature changed the rules while they were in the middle of their vesting schedule.

For people with stock options, the picture is similar. When you exercise non-qualified stock options, the spread between exercise price and fair market value is ordinary income. If that exercise pushes you past $1 million, you now owe Washington 9.9% on the excess.

The people most motivated to establish Florida residency before their next major vesting event are not abstract. They are software engineers and product managers at Amazon and Microsoft who are looking at their equity schedules right now and calculating what their next vest costs them under the new rules.

The Math: What Moving to Florida Actually Saves

Washington’s new tax is 9.9% on income above $1 million. Florida’s income tax rate is 0%. The gap between those two numbers, at various income levels, looks like this:

Income Above $1M	Washington Tax (9.9%)	Florida Tax	Annual Savings
$500,000 ($1.5M total)	~$49,500	$0	~$49,500
$1,000,000 ($2M total)	~$99,000	$0	~$99,000
$2,000,000 ($3M total)	~$198,000	$0	~$198,000
$5,000,000 ($6M total)	~$495,000	$0	~$495,000

These are estimates based on the 9.9% rate applied to income above $1 million. Your actual liability depends on your income composition, applicable deductions, and other factors.

But the directional reality is clear. A senior tech executive earning $3 million in a given year — a figure that’s common in Seattle when you include vesting equity — saves approximately $200,000 per year by successfully establishing Florida residency. At $6 million, that number approaches half a million dollars annually. Over a decade, these figures become transformative.

And unlike California, which taxes capital gains as ordinary income, Washington’s existing capital gains excise tax situation means that high earners there are already dealing with state-level capital gains exposure. The millionaire tax adds a second, larger layer on top.

Why Florida — Not Just Any No-Tax State

Washington to Florida is not an obvious geographic migration. Texas and Nevada are closer. Wyoming and South Dakota have no income tax with lower cost of living. So why are Seattle’s wealthy heading to Miami, Naples, and Palm Beach rather than Austin or Scottsdale?

The answer is a combination of factors that Florida’s competitors can’t fully replicate.

Homestead protection. Florida’s homestead exemption is one of the most powerful asset protection tools available in any state. Your primary residence in Florida is protected from creditors — in most circumstances, entirely. There is no dollar cap. Founders who have taken on personal guarantees, executives with liability exposure, or anyone with legitimate concerns about business risk understands the value of that protection in a way that simply living in Nevada does not offer.

No estate tax. Florida has no estate tax. Neither does Washington (though Washington’s estate tax tops out at 20% on estates above $9 million, which is relevant for the same population considering the millionaire tax). Texas also has no estate tax. But Florida combines the no-estate-tax benefit with the homestead protection and the income tax advantage in a single package.

Infrastructure and access. South Florida has direct international flight access that Austin doesn’t. Miami International connects to South America, Europe, and the Caribbean on routes that matter to people who run global businesses. The concentration of private aviation at FBO facilities in Boca Raton, Naples, and Fort Lauderdale Executive has made the region a genuine hub for high-net-worth individuals who travel constantly.

The ecosystem. This is the factor that compounds. Schultz didn’t move to Florida because it was cheap — he moved because the community of people he operates in is increasingly there. Citadel moved from Chicago. Carl Icahn moved from New York. The private equity and hedge fund migration out of Connecticut and New York has created a substantive financial and business community in South Florida that simply does not exist in Wyoming or South Dakota. Wealthy people move where other wealthy people are.

Weather. This sounds obvious, but it matters as a practical consideration for making the move stick. Florida residency requires spending 183+ days in the state. That’s easier when the state is objectively pleasant from October through May. The appeal of escaping Seattle’s gray winters is not incidental — it’s a genuine reason that makes the residency requirement feel less like a constraint and more like a lifestyle upgrade.

What Washington High Earners Need to Know About Florida Residency

Establishing Florida residency is not complicated, but it requires genuine action. The 183-day rule is the floor, not the full story.

The 183-Day Requirement

To be a Florida resident for tax purposes, you need to spend more than 183 days in Florida during the tax year. This is a necessary but not always sufficient condition. You also need to demonstrate that Florida is your domicile — your true home, the place you intend to return to.

For Washington, unlike California or New York, there is not yet a well-developed audit infrastructure for departing high earners. Washington’s Department of Revenue is experienced with the capital gains excise tax — they built audit capacity around that after the 2021 passage — but a comprehensive residency challenge program of the kind New York’s Nonresident Audit Bureau runs is not something Washington has developed over decades. That doesn’t mean you should be careless. It means you have a window to build a clean record before Washington develops those capabilities.

Declaration of Domicile

Once you’ve established your Florida home, your first official act should be filing a Declaration of Domicile with the clerk of the county where your Florida property is located. This is a sworn, notarized statement declaring Florida your domicile. It costs nothing, takes 20 minutes, and creates a dated public record of your stated intention. Do this early — the date on your Declaration of Domicile matters.

The Residency Checklist

The practical steps to establish Florida residency follow a consistent pattern. Do these promptly after establishing your Florida home:

Obtain a Florida driver’s license (within 30 days of establishing residency)
Register your vehicles in Florida
Register to vote in Florida and cancel Washington registration
Update your address with brokerage accounts, banks, and financial institutions
Update your address with the IRS and Social Security Administration
File a Florida Declaration of Domicile with your county clerk
Have your estate attorney update your will and trust documents to reference Florida law

Beyond the paperwork, build Florida into your actual life: find a Florida primary care physician, establish local professional relationships, join community organizations. These are not just checklist items — they are the evidence of a genuine domicile that holds up under scrutiny.

The Timing Question

If you’re reading this in mid-March 2026, you’re already in the tax year in which the millionaire tax applies. Every day you remain domiciled in Washington while earning income above $1 million is a day of potential Washington tax liability.

The fastest path to minimizing 2026 exposure is to establish Florida residency and genuine domicile as quickly as possible, and then manage your Washington presence carefully for the remainder of the year. If you establish Florida domicile by, say, July 1, you will have a stronger argument that income earned in the second half of the year is Florida income than someone who waits until November.

Washington does not have California’s aggressive intent-to-return doctrine or New York’s statutory resident rule, but it will apply the standard domicile analysis: where did you intend to make your permanent home during the year? The cleaner and earlier your Florida establishment, the stronger your position.

One important caveat: partial-year residency is complicated by income timing. If your largest RSU vest happens in Q4 of 2026 and you haven’t established Florida domicile until Q3, Washington will likely claim a portion of that income. Work with a tax attorney who knows both states before you assume the timing is clean.

The Equity Timing Angle

For people with large unvested positions at Amazon, Microsoft, or other tech companies, the most important question isn’t just whether to move — it’s when your next major vest event occurs and whether you can be a Florida resident by then.

RSUs vest and are taxed as ordinary income at vest. If you’re a Washington resident on the vest date, Washington will assert its right to tax the income. If you’re a Florida resident on the vest date, Washington’s claim is significantly weaker — though not necessarily zero. Washington may assert source income rules for income derived from Washington employment, similar to how California applies its pro-rata grant-to-vest calculation.

This is an area where Washington’s new tax law is genuinely novel. Washington has not had an income tax before, which means its source income rules for equity compensation are untested. The legislature passed the rate; the Department of Revenue will need to develop the administrative guidance and enforcement positions over time. That uncertainty cuts both ways — there is no settled rule about how Washington will treat RSUs from Washington employers vesting after an employee has left the state.

What is certain: the earlier you establish genuine Florida domicile and the more clearly your life has moved to Florida before a major vest event, the stronger your position. Waiting until after you’ve received the income to establish residency is not a viable strategy.

The Broader Pattern

Washington is not acting in isolation. It joins a pattern of high-tax states and cities expanding their claims on high earners that has accelerated over the past several years.

California raised its top marginal rate to 13.3% and has been pursuing departing residents with an audit infrastructure that is widely regarded as the most aggressive in the country. New York City’s combined state and city rate exceeds 14% for top earners. Connecticut, New Jersey, and Massachusetts have all enacted millionaire surcharges or raised top rates.

The explicit political logic is that wealthy people won’t leave in large numbers because of taxes. The empirical evidence is increasingly against that argument. Citadel leaving Chicago, hedge funds exiting Greenwich, the sustained flow of high-net-worth individuals from the Northeast to South Florida — these are not anecdotes. They are documented trends in tax filings, U-Haul data, and IRS migration statistics.

Washington’s passage of the millionaire tax is unlikely to be the last move in this direction. If the pattern holds, Washington will face budget pressure as its most productive earners redirect their residency, the legislature will look for other revenue sources, and the rate or threshold may change. The people who move now do so under the current rules. The people who wait are betting that the rules stay favorable.

Florida’s Position

Florida is not passively benefiting from this migration. The state has made deliberate choices that make it attractive to exactly the population now reconsidering Washington.

The homestead exemption is constitutional and has broad political support in Florida — it is not going away. The absence of an estate tax reflects a legislature that has consistently prioritized attracting wealth over taxing it. Florida has no income tax at all, not a reduced rate or a millionaire-only carveout — the Florida constitution currently prohibits a personal income tax, and any change would require both a supermajority legislative vote and a statewide referendum.

Florida’s demographics are also working in its favor. The influx of high earners from New York, California, New Jersey, and Connecticut over the past decade has created a political constituency for keeping the tax environment favorable. The communities in Palm Beach, Boca Raton, Naples, and Miami that have absorbed this migration have political influence proportional to their wealth. The idea that Florida will add an income tax in response to Washington adding one is not credible in the current political environment.

For Washington high earners evaluating a move, Florida is not a risky bet. It is the most legally robust, geographically accessible, lifestyle-compatible no-income-tax state for someone whose work connects them to global markets and whose personal preferences favor something other than a landlocked interior state.

What to Do Right Now

If you’re a high earner in Washington and the new millionaire tax has changed your calculus, the most useful things you can do immediately are:

Get the count right. Understand how much of your 2026 income will be exposed to the new tax and when it will be recognized. If you have a major vest event in Q3 or Q4, that date is your planning horizon.
Talk to a tax attorney before you make any moves. Washington’s new law is days old. The Department of Revenue has not issued guidance. A tax attorney who has handled interstate residency matters and equity compensation will give you a realistic picture of your specific situation.
Start the clock on Florida residency as soon as possible if you’re going to move. The earlier you establish genuine Florida domicile, the more of your 2026 income falls on the Florida side of the line. Waiting until December means spending most of 2026 as a Washington taxpayer.
Start tracking your days. From the moment you establish Florida residency, your day count matters. Know where you are. Document it contemporaneously, not retroactively.

How Southbound Helps

For Washington residents making this move, the day count is the most concrete and controllable part of the residency analysis. Washington doesn’t yet have the audit infrastructure that New York has developed over decades, but that won’t be true forever — and you want a clean, contemporaneous record of your Florida presence regardless of what Washington’s Department of Revenue builds in the coming years.

Southbound builds that record passively. The app runs in the background on your iPhone using iOS’s significant-location-change system — battery-efficient, no check-ins, no daily diary entries. Every day is logged as Florida or not Florida, backed by GPS data and stored in your personal iCloud account. Southbound never sees or holds your location data. This is your record, private to you.

The central feature is the Departure Budget — one number that tells you exactly how many days you can still spend outside Florida for the year and remain on track for 183+. For someone managing time across Seattle, San Francisco for board meetings, and a new home in Naples, that number is the thing you need to see clearly and update automatically. It tells you when you’re running lean before you’ve already overrun the limit.

When a Washington Department of Revenue inquiry arrives two years from now asking about your 2026 residency, you have a clean, exportable log of every day — contemporaneous, GPS-verified, timestamped. Not a reconstructed calendar, not a credit card statement best-guess. The kind of record that reflects someone who took the move seriously from the day they made it.

This post is for general informational purposes only and does not constitute tax or legal advice. Washington’s new millionaire tax is days old, and administrative guidance from the Department of Revenue has not yet been issued. Interstate domicile matters, equity compensation sourcing rules, and residency planning involve complex, fact-specific legal questions that are especially unsettled in Washington given the novelty of the legislation. Work with a qualified CPA and tax attorney who specialize in interstate residency before making decisions based on anticipated tax savings.