Over the last few weeks, I have had some version of the same conversation with three different homeowners. They have owned their Seattle house for a long time, it is worth a lot more than they paid, and they have heard that Washington just passed a "millionaires tax." The question underneath it is always the same: if I sell, does the state take 9.9 percent?

The short answer is no. Selling your home does not trigger Washington's millionaires tax. But there is a lot of noise out there right now, so let me walk you through what the law actually does and the taxes that really do show up when you sell.

What Washington's Millionaires Tax Actually Is

In March 2026, Governor Bob Ferguson signed Senate Bill 6346 into law. It creates a 9.9 percent tax on Washington taxable income above $1 million per household. Married couples share a single $1 million standard deduction, so it is not $1 million each.

A few details matter more than the headline:

• It does not start yet. The tax takes effect January 1, 2028. The first returns and payments are not due until April 2029.
• It is built on income, not property. The calculation starts with your federal adjusted gross income and then applies Washington-specific adjustments.
• It is aimed at a small group. You only owe it on the portion of household income above $1 million in a given year.

So right off the bat, if you are selling this fall, this winter, or anytime in 2027, the millionaires tax does not exist yet for you.

Why Your Home Sale Is Not Taxed

This is the part most people get wrong. The legislature's own FAQ on the bill says plainly that the sale of a home is not taxed by the millionaires tax, and that the tax does not apply to the equity or appraised value of a home.

The reason comes down to how the law treats capital gains. Washington already has a separate capital gains tax, the one that took effect in 2022, and real estate has always been exempt from it. The millionaires tax pulls long-term capital gains out of the federal number and adds back only the gains that Washington's capital gains tax covers. Since real estate is not covered there, your home sale gain does not flow into the millionaires tax either.

Here is how I explain it to sellers: the price you get for your house does not count as "income" toward that $1 million line. A $1.4 million sale in Wallingford does not make you a millionaire in the eyes of this law.

Where It Can Touch Homeowners

There are a couple of places where I would slow down and get specific advice:

1. Rental income. The FAQ is clear that rental income counts. If you own rentals and your total household income is above $1 million, rent is part of that picture.
2. Unusual or short holding periods. The exemption works through the way long-term capital gains are handled. If you flip properties, hold something less than a year, or have a more complicated setup (trusts, partnerships, investment property), talk to a CPA before you assume anything.
3. Your other income in the year you sell. The home sale itself does not count, but if you also sold a business or a large stock position that year, those can be in play.

For the typical Seattle seller of a primary residence in the $700,000 to $1.5 million range, none of these will apply.

The November Ballot and Why It Adds Confusion

You have probably seen ads about Initiative 645. It is on the November 3, 2026 ballot and would repeal the millionaires tax and prohibit state and local income taxes going forward. A legal challenge has also been discussed.

I am not going to tell you how to vote. What I will tell you is that whichever way it goes, it does not change the math on selling your home. Home sales are excluded either way, so I would not rush or delay a listing because of this measure.

The Taxes That Actually Show Up When You Sell

This is where I want your attention, because these are real and they hit at closing.

Real Estate Excise Tax (REET)

Washington charges sellers a graduated excise tax on the sale price. The state rate starts at 1.1 percent on the portion up to $525,000 and steps up from there, and Seattle adds a local 0.5 percent on top. On a $1 million sale, REET alone is a five-figure line item on your settlement statement. The thresholds are scheduled to adjust on January 1, 2027, so if you are timing a sale around the new year, ask your agent to run both scenarios.

Federal Capital Gains

If the home was your primary residence for at least two of the last five years, you can generally exclude up to $250,000 of gain if you file single, or up to $500,000 if you are married filing jointly. Long-time owners in neighborhoods like Ballard, Ravenna, or West Seattle can blow past that exclusion, and that is a federal question, not a state one. A good CPA is worth every penny here.

The Normal Costs of Selling

Commissions, title, escrow, and prorated property taxes all come out of your proceeds too, which is why I build a net sheet with every seller before we list.

What I Would Do If I Were Selling This Fall

• Ignore the headlines about the millionaires tax as it relates to your house.
• Get a real estimate of your federal capital gain, especially if you have owned for 15 or 20 years.
• Ask for a net sheet that includes REET at your expected price.
• Make your timing decision based on the market, your next move, and your life, not on a ballot measure.

Seattle has shifted toward buyers this fall, with more inventory and longer days on market. That deserves far more of your planning energy than a tax that does not apply to your sale.

If you are thinking about selling and want to know what you would actually walk away with, reach out. I would love to run the real numbers with you and help you think it through. My team at Emerald Group spends a lot of time cutting through exactly this kind of noise.

Ready to sell in Seattle? Brennen Clouse at Emerald Group is here to help. Call or text 206-899-9101 or visit emeraldgroupre.com.

This post is general information, not tax or legal advice. Please talk with a CPA or tax attorney about your specific situation.