WA State's $16 Billion Lie EXPOSED: How Washington's $16 Billion Lie Is Pushing Residents to Flee

Washington State Taxes Are Rising Again, and It Is a Spending Problem

If you live or invest in Washington, you have probably felt it already. Costs are up, business owners are getting squeezed, and the state is openly signaling that even more taxes are coming. The frustrating part is that this is not happening because Washington is broke or because revenue collapsed. It is happening because spending keeps ballooning faster than tax collections.

Let’s walk through what is being proposed, who it hits first, and what you can do about it if you are trying to protect your household or your portfolio.

The headline story: more revenue, but even more spending

Since 2021, Washington has pushed through multiple large tax packages. The most recent one alone is estimated to bring in roughly 9.5 to 12.5 billion in new revenue. Some estimates suggest that this wave of taxes costs the average family of four around $2,000 per year once the full pass through shows up in prices.

And yet the state is still projecting a budget shortfall that could land anywhere from 6.6 billion to 16 billion over the next few years. That is the tell. If revenue is rising and the state still has a gap, the core issue is spending discipline, not tax capacity.

The current omnibus operating budget for 2025 to 2027 increases spending by more than 8 percent. That is faster than the economy is growing and faster than new revenue can realistically keep up with. The result is predictable: lawmakers go hunting for the next taxable target.

Who gets hit first? The middle class and small business

A lot of these taxes are sold as “corporate surcharges” or “make big tech pay their fair share.” But taxes on businesses rarely stay on businesses. They move downstream.

Here is what happens in practice:

• Companies take the hit directly in profits.
  
  
• Companies pass some or all of it to consumers through higher prices.
  
  
• Smaller businesses with thin margins cannot absorb it and may shut down or leave.
  
  

That is why this environment functions like a hidden inflation tax on households. Even if a bill is aimed at a corporation, the checkout line or monthly bill is where most people feel it.

A simple example is the B and O tax increases. Big firms like Amazon or Microsoft can survive margin pressure. A local bakery or small contractor often cannot. When their costs rise, they either raise prices, cut staff, or close. None of those outcomes help the community.

The tax expansion already in motion

Several major changes are either already passed or scheduled to hit soon:

1. B and O tax increases
The B and O tax rate is climbing, including increases that step in through 2027. Because it is a gross receipts tax, it hits revenue before profit. That makes it especially painful for low margin businesses.

2. Sales tax base expansion starting October 1, 2025
The state is widening what counts as taxable. That includes areas like software, digital services, and digital advertising. For small businesses that rely on tech tools, this adds cost and compliance friction.

3. Advanced computing surcharge on tech
This one is a direct shot at the tech sector in Washington. The surcharge rate rises to 7.5 percent in 2026, and the cap jumps from 9 million to 75 million. Even if it only applies to certain advanced computing and R and D activities, it creates a giant incentive to relocate those activities elsewhere.

That matters because tech is a pillar of the Washington economy. Pushing high value work out of state does not just hit companies. It hits jobs, demand, and long term growth.

What is being floated next

The legislature is already talking about new layers in 2026 and beyond:

A high income payroll tax
Proposals include an extra 5 percent payroll layer on wages above the Social Security threshold. In a region full of tech workers who clear that limit easily, this becomes a real relocation risk. Workers can move. Companies follow talent.

A wealth tax
A proposed wealth tax targets assets above 50 million. Even if it sounds like it would only affect a tiny group, the practical risk is tax flight. Ultra high net worth individuals are mobile. If enough leave, the state loses not only that tax but also their spending, investment, philanthropy, and company presence.

A higher capital gains tier
Washington already has a capital gains tax, and the top tier has been pushed to 9.9 percent on gains over 1 million. That further reinforces the incentive for wealthy investors to shift residency or structure gains elsewhere.

Lifting the property tax growth lid
This might be the most dangerous policy for everyday homeowners. Washington currently limits property tax growth at about 1 percent. Lifting that lid would force many long time owners, especially retirees on fixed incomes, out of homes they have lived in for decades. When your home value has risen from, say, $150,000 to $1.4 million, even today’s taxes can be brutal. Removing the cap would get ugly fast.

What this means for real estate

There are two simultaneous forces here.

First, higher taxes on households reduce disposable income. That makes it harder for buyers to save, qualify, and compete. Long term, that pushes more people into renting instead of owning.

Second, the state is still not building enough housing. Supply stays tight, especially around Seattle. So even if demand cools briefly, prices tend to stay stubborn. That combo usually supports rents and rental demand even more.

Translation: this policy path acts like a tailwind for rentals, ADUs, duplexes, and multifamily, even while it creates affordability pain for residents.

What to do with this information

No one can control state policy overnight, but you can control your positioning.

1. Keep leaning into assets as an inflation hedge
Real estate remains one of the cleanest hedges in this environment. If taxes and costs keep climbing, asset ownership tends to win over cash sitting still.

2. Max out retirement accounts
Retirement accounts are still protected from most state tax targeting. If you have access to a 401k, IRA, or Roth IRA, maximizing contributions is a straightforward defense.

If you want more control, a self-directed IRA or 401k can let you invest in real estate or private lending with retirement dollars. For many investors, that is a way to grow wealth shielded from current tax drag.

3. Look for commercial pain points
Office and some commercial sectors are already beat up from remote work and vacancy. If taxes add additional relocation pressure, commercial weakness could persist for a while. For patient investors, that can mean better terms and entry points, especially with owner financing.

4. Buy before the rate cycle turns fully
Debt has been expensive and that has slowed the market. If rates trend down through 2025 into 2026, demand will come back. Buying while the market feels awkward is often where the best deals live.

Bottom line

Washington is not suffering from a revenue drought. It is suffering from an overspending habit. The state has already raised taxes sharply since 2021, is still projecting a multi billion dollar gap, and is openly preparing the next round.

That reality creates discomfort for residents and business owners, but it also creates clear signals for investors: protect yourself with assets, structure your wealth efficiently, and pay attention to where policy pressure is likely to distort markets next.