Seattle to Austin: The Tax Case for Moving Has Never Been Stronger

For years, Seattle’s lack of a state income tax made it one of the most financially attractive major cities in America for high earners. Tech workers at Amazon, Microsoft, and a wave of startups built fortunes without giving a dime to a state income tax. That era is ending.

Washington state’s new “millionaires tax” — signed into law by Governor Bob Ferguson on March 30, 2026 — represents the most dramatic shift in the state’s tax landscape in nearly a century. For high earners weighing their options, Austin, Texas has become the obvious comparison point. The numbers are stark.

What Washington Just Did

Senate Bill 6346 imposes a flat 9.9% income tax on household adjusted gross income exceeding $1 million, with a married couple sharing a single $1 million standard deduction indexed for inflation starting in 2030. The tax takes effect January 1, 2028, with first payments due in 2029 — assuming it survives the near-certain legal challenges already underway.

On its own, a 9.9% rate is significant. But it doesn’t exist in a vacuum. When stacked against Seattle’s existing tax layers — the 5% Social Housing Tax on compensation over $1 million, the 2.557% JumpStart Payroll Expense Tax on high-earner wages, and the 0.58% WA Cares long-term care payroll tax — the all-in marginal rate for a high earner in Seattle reaches approximately 18%. According to the Tax Foundation, that would be the highest top income tax rate in the nation.

That’s not all. Washington separately raised its capital gains tax to 9.9% on gains exceeding $1 million (retroactive to January 1, 2025), and had previously increased its estate tax to 35% for the wealthiest residents in 2025 — a rate it was forced to roll back to 20% in 2026 after acknowledging it was prompting wealthy residents to leave the state.

What Texas Offers Instead

Texas has no personal state income tax — a protection that is, as of 2025, constitutionally entrenched. Texas voters have approved multiple constitutional amendments over recent years making it prohibitively difficult to ever impose one. There is also no state capital gains tax; in 2025, voters approved a constitutional amendment permanently banning any tax on realized or unrealized capital gains for individuals. And there is no estate tax, inheritance tax, gift tax, or succession tax of any kind.

For a high earner in Seattle, the math is blunt:

• Income over $1 million: The Seattle all-in marginal rate hits ~18%. Austin’s rate: 0%.
• Capital gains over $1 million: Washington levies 9.9%. Texas levies 0%.
• Estate transfers: Washington imposes up to 20%. Texas imposes 0%.

For a founder whose company exits, or a tech executive with a large RSU vesting event, the difference between the two addresses can easily run into seven figures in a single year.

The RSU Problem Is Particularly Acute

Washington’s new income tax lands especially hard on tech workers with restricted stock units. RSUs that vest in a single year — common at startups going public or during acquisition events — can push a worker’s income well above the $1 million threshold in one lump sum. Unlike a salary, this is often a one-time event with no ability to smooth the income across years.

The Tax Foundation’s analysis specifically flagged RSU vesting as one of the most exposed categories, noting the tax “would be particularly detrimental to employees at startups that have yet to go public and whose RSUs could all vest at once.” Under the new Washington rules, that vesting event would be taxed at the combined Seattle rate — a cost that simply does not exist for the same employee living in Austin.

Property Taxes: The Austin Asterisk

No honest comparison omits Austin’s property tax situation. Texas funds its government largely through property and sales taxes rather than income taxes, and the property tax burden in Travis County (Austin) is among the highest effective rates in the state. A $1 million home in Austin might carry an annual property tax bill of $15,000–$20,000 or more, depending on the school district.

That is real money. But for earners above the $1 million income threshold, the calculus still tends to favor Texas heavily. Property taxes are fixed relative to home value, not income. An executive earning $3 million a year paying $20,000 in Austin property taxes is in a fundamentally different position than the same executive facing an 18% marginal rate on $2 million of income in Seattle — which would represent $360,000 in state and local income taxes before federal obligations.

Sales taxes in Texas cap at 8.25% with local add-ons, another real cost but not one that scales with high income.

Who Should Be Paying Attention Right Now

Tech executives with large RSU grants. If your equity is on a schedule and you’re still in Washington, the 2028 effective date of the income tax gives you a window — but planning takes time.

Startup founders approaching liquidity. The capital gains rate, already at 9.9% in Washington, combined with the new income tax on non-capital-gains income, creates a compounding exposure for anyone whose exit involves meaningful ordinary income.

Business owners and entrepreneurs. A UW business professor quoted in recent coverage noted that privately-held business owners are among “the people that are most likely to be impacted and, quite frankly, the kind of person you don’t want leaving the state.” If your business income flows to you personally above the $1 million threshold, Austin looks very different than it did two years ago.

High-earning retirees. Washington’s 20% estate tax — still among the highest in the country even after the rollback — combined with no estate tax protection in retirement makes Texas comparatively attractive for wealth transfer planning.

The Legal Uncertainty Factor

It is worth noting that SB 6346 faces constitutional challenges. Washington’s Supreme Court has historically interpreted the state constitution in ways that classify income as “property,” subjecting it to uniformity requirements that a flat income tax may not satisfy. Legal scholars are divided, and litigation is underway.

The tax is not scheduled to take effect until January 1, 2028. Some affected residents may choose to wait and see whether courts strike it down before making relocation decisions.

That said, the estate tax (now at 20%) and capital gains tax (already at 9.9%) are not awaiting court resolution. They are in effect now. For anyone with significant capital gains or an estate planning concern, the relevant taxes are already law.

The Bottom Line

Washington built its reputation as a tax haven for high earners on the foundation of no income tax. That foundation has cracked. The state now has a capital gains tax, a recently-modified but still-substantial estate tax, and a millionaires tax that — if it survives legal challenge — will push Seattle’s combined top rate to 18%, the highest in the country.

Texas, by contrast, has spent recent years constitutionally locking in its zero-income-tax status, banning capital gains taxes, and eliminating estate taxes — at the ballot box, not just the legislature.

For anyone earning above $1 million annually, holding significant equity, or planning a business exit, the tax differential between Seattle and Austin has never been larger. Moving doesn’t eliminate federal taxes, and it won’t eliminate property taxes. But for the income, capital gains, and estate layers — the comparison is now, effectively, 18% versus 0%.

This article is for informational purposes only and does not constitute tax or legal advice. Readers should consult a qualified tax professional regarding their individual circumstances.