See Section 207 in the full text of the initiative. The Income Tax Contribution is referred to as the Personal Health Assessment
After a $15,000 exemption, there is a 1% Income Tax Contribution on Adjusted Gross Income (AGI).
AGI is based on either an individual’s income or a married couple’s income if they file jointly. See Adjusted Gross Income (AGI) for an IRS definition.
- If you earn $15,000 or less, this tax will not apply.
- If you earn more than $15,000, subtract the $15,000 from your AGI before calculating the tax.
The Income Tax Contribution is assessed annually and submitted with the federal tax return using a supplemental form of no more than two pages (section 218)
- Employers must withhold the 1% contribution and provide employees with a year-end record of funds withheld.
- This is calculated the same way your federal withholding is calculated for federal taxes.
Gary makes $30,000 Gross Income per year and files individually.
- After deductions his AGI is $27,000.
- Subtracting the $15,000 exemption, the taxable amount is $12,000.
- Multiplying that amount by 1% would be $120.
- Gary’s Income Contribution would be $120/year (or about $10/month would be withheld)
Lashanna and Tim make $160,000 Gross Income per year and file jointly.
- After deductions their AGI is $152,000.
- Subtracting the $15,000 exemption, the taxable amount is $137,000.
- Multiplying that amount by 1% would be $1,370.
- Lashanna and Tim’s Income Contribution would be $1,370/year (or about $114/month would be withheld)
More examples for illustration:
|Adjusted Gross Income||Income Contribution|
|$20,000||$4/month or $48/year|
|$40,000||$21/month or $252/year|
|$60,000||$38/month or $456/year|
|$80,000||$54/month or $648/year|
|$100,000||$71/month or $850/year|
Regarding the constitutionality of a state income tax, Article VII, section 1 of the Washington State Constitution states that all taxes must be uniform (that is, at the same rate for everyone), and the maximum exemption is $15,000. Lawyers have reviewed I-1600 and advised this is within the state constitution.
- Additionally, Section 303 of the Initiative protects the remainder of the act if any provision of this act or application is found invalid.