Washington's new 9.9% income tax on earnings above $1 million uses the same threshold for married couples and single filers, creating the largest marriage penalty in the United States. Two spouses each earning $600,000 would owe $19,800 annually as a married couple but nothing if divorced, according to CNBC reporting and tax policy analysts examining the new law.
Key Facts
| Detail | Summary |
|---|---|
| What happened | Washington enacted a 9.9% income tax on earnings above $1 million with no marriage adjustment |
| When | March 2026 (effective tax year 2026) |
| Who is affected | Married couples in Washington with combined income above $1 million |
| Maximum marriage penalty | $19,800 per year (two $600K earners, married vs. divorced) |
| Key comparison | Federal tax law doubles the threshold for joint filers; Washington does not |
| Practical impact | Tax professionals and at least one legislator have publicly noted that divorce could eliminate the tax entirely for many dual-income couples |
Washington Went From Zero Income Tax to the Nation's Steepest Marriage Penalty
Washington has historically been one of nine states with no personal income tax at all. The state's fiscal landscape began shifting in 2021 when the legislature passed a 7% capital gains tax, which the Washington Supreme Court upheld in March 2023 in Quinn v. State of Washington. The new 9.9% millionaires tax represents a far more aggressive step: a broad income tax on high earners that applies the same $1 million threshold regardless of filing status.
The marriage penalty problem is straightforward math. A single person earning $900,000 owes nothing under the new law. Two such individuals who marry now have $1.8 million in combined household income, putting $800,000 above the threshold and generating a tax bill of $79,200. If those same two people remained unmarried or got divorced, each would fall below the $1 million line and owe zero.
For a more common scenario among affected households, two spouses each earning $600,000 face $200,000 in combined income above the threshold as a married couple, resulting in $19,800 in annual taxes. Divorced, each earns well under $1 million and owes nothing. As CNBC reported, one Washington legislator remarked that "the tax savings alone would more than pay the costs of a divorce lawyer."
That legislator is not wrong about the math. The average contested divorce in Washington costs between $15,000 and $30,000 in legal fees, according to Washington State Bar Association surveys. An uncontested dissolution runs $3,000 to $7,000. A couple saving $19,800 to $79,200 annually would recoup even a contested divorce's costs within one to two years.
How Washington Divorce Law Intersects With the New Tax
Washington is one of nine community property states, meaning all income earned during marriage is presumptively owned 50/50 by both spouses under RCW 26.09.080. This community property framework creates a specific wrinkle for couples considering tax-motivated separation.
Under RCW 26.09.030, Washington is a pure no-fault divorce state. Either spouse can file for dissolution by stating the marriage is "irretrievably broken," and no court will inquire into the reasons. Washington imposes a mandatory 90-day waiting period from the date of filing and service before a divorce can be finalized under RCW 26.09.030, but the process itself is procedurally straightforward.
Property division in Washington follows a "just and equitable" standard rather than a strict 50/50 split. Courts consider factors including the nature and extent of community property, the duration of the marriage, and each spouse's economic circumstances under RCW 26.09.080. For high-income couples with relatively balanced earnings, an agreed property division can be completed efficiently.
Spousal maintenance (Washington's term for alimony) is governed by RCW 26.09.090, which gives courts broad discretion based on factors including the financial resources of each party, the time needed to acquire education or training, and the standard of living established during the marriage. When both spouses are high earners, maintenance awards are less common, making the divorce-and-remain-together strategy more financially clean.
The "Tax Divorce" Strategy and Its Legal Risks
Before anyone rushes to the King County Superior Court clerk's office, there are serious legal complications with divorcing solely for tax purposes.
The IRS has historically scrutinized sham transactions designed to avoid tax liability. While the new Washington tax is a state-level levy, the IRS substance-over-form doctrine and related state enforcement principles could apply if tax authorities determine that a divorce lacks economic substance beyond tax avoidance. Couples who divorce on paper but continue living together, sharing finances, and holding themselves out as married risk having the arrangement recharacterized.
Washington's Department of Revenue will almost certainly develop enforcement guidance as the new tax takes effect. Other states with marriage penalties, including California and New Jersey, have seen taxpayers attempt similar strategies with mixed results. The penalty exposure for fraudulent filing can include back taxes, interest, and civil penalties of 25% to 75% of the underpaid amount.
Additionally, divorce has real legal consequences beyond taxes. A finalized dissolution under RCW 26.09.080 terminates community property rights, changes inheritance and beneficiary designations, affects health insurance coverage, and alters Social Security benefit calculations. Couples who divorce to save $19,800 in state taxes could lose far more in federal benefits and estate planning advantages.
Practical Takeaways for Washington Residents
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Run the actual numbers before making any decisions. The marriage penalty only applies when combined household income exceeds $1 million, and the tax savings must be weighed against the legal costs of divorce ($3,000 to $30,000), lost federal benefits, and estate planning disruption.
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Consult both a tax professional and a family law attorney. The intersection of Washington's new income tax, federal tax law, community property rules under RCW 26.09.080, and estate planning creates complexity that no single professional can fully address alone.
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Consider legal separation as an alternative. Washington recognizes legal separation under RCW 26.09.030, which may preserve certain marital benefits while potentially changing tax filing status, though the tax treatment of legal separation varies and requires professional analysis.
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Watch for legislative corrections. Marriage penalty provisions in new tax laws frequently get amended in subsequent sessions. Washington legislators may adjust the threshold for joint filers in the 2027 session, particularly given the national attention this disparity has received.
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Document everything if you do proceed with any marital status change. Courts and tax authorities will scrutinize the timing and substance of any divorce filed after this law takes effect, particularly for couples who continue cohabitating.
Frequently Asked Questions
How much could a Washington couple actually save by divorcing under the new tax?
The savings depend entirely on each spouse's individual income. Two spouses each earning $600,000 would save $19,800 per year (9.9% of $200,000 above the $1 million joint threshold). Two spouses each earning $900,000 would save $79,200 annually. The savings disappear if one spouse earns most of the household income, since that spouse would exceed the $1 million threshold individually.
Is it legal to get divorced in Washington just to avoid taxes?
Washington allows no-fault divorce under RCW 26.09.030 without requiring any specific reason, so the divorce itself would be legally valid. However, the IRS substance-over-form doctrine could treat a sham divorce as ineffective for tax purposes if the couple continues living and functioning as married. Penalties for fraudulent tax filings can reach 75% of the underpaid amount.
How long does a divorce take in Washington state?
Washington requires a minimum 90-day waiting period from filing and service under RCW 26.09.030. An uncontested dissolution where both parties agree on all terms can be finalized shortly after the 90-day period expires. Contested divorces involving property disputes or parenting plans average 9 to 12 months in Washington superior courts.
Does Washington's community property law affect the tax calculation?
Yes, community property rules under RCW 26.09.080 mean that all income earned during marriage is presumptively owned equally by both spouses. For married couples filing in Washington, the $1 million threshold applies to their combined community income. After divorce, each former spouse reports only their own earned income, potentially keeping both below the threshold.
Could the Washington legislature fix the marriage penalty?
Yes, the legislature could amend the law to set a higher threshold for joint filers, as the federal tax code does for most brackets. The standard federal approach doubles the single-filer threshold for married couples. If Washington adopted this model, the joint threshold would rise to $2 million, eliminating the marriage penalty for most affected couples. Tax policy analysts expect this issue to be raised in the 2027 legislative session.
Washington residents navigating high-income divorce or tax planning decisions can find experienced family law attorneys in their county through our directory.
This article discusses recent news and provides general legal commentary. It does not constitute legal advice. Every case is unique. Consult a qualified family law attorney for advice specific to your situation.