WA HB2738

Imposes a 9.90% state income tax on individuals with Washington taxable income exceeding $1,000,000 ($2,000,000 for married couples/domestic partners), beginning January 1, 2028, contingent on voter approval of a constitutional amendment authorizing income taxes

Provides tax relief measures including: reducing the state sales tax rate from 6.5% to 5.75%, expanding the Working Families' Tax Credit, exempting grooming and hygiene products from sales tax, and increasing the small business B&O tax credit from $55 to $125 per month

Allocates 7% of revenue to a new Local Government Public Defense Funding Stabilization Account for county and city public defense services, with the remainder going to the state general fund

Allows pass-through entities (partnerships, LLCs, S corporations) to elect to pay the tax at the entity level, with owners receiving credits against their individual tax liability

Creates credits for income taxes paid to other states, Washington capital gains taxes, and business and occupation/public utility taxes to avoid double taxation on the same income