The Income Tax and Your Pension
Olympia stripped the pension exemption protecting your pension from being taxed— even though "You Won't Be Affected"
Warning TLDR
Washington's new 9.9% income tax has a $1 million threshold. And every politician who voted for it will tell you: "Don't worry — this only hits millionaires. State employees, teachers, firefighters — you're safe." (However, firefighters please ignore the fact that we must raided your pension for the general fund)
Then why did they rewrite the pension protection statute?
Here's what they actually did. Every public pension in Washington — PERS, TRS, LEOFF, State Patrol, teachers, school employees — had a law on the books that said your pension was:
"exempt from any state, county, municipal, or other local tax"
That protection has been there for decades. ESSB 6346 added a new subsection to each of those 13 statutes that says this:
"Subsection (1) of this section does not exempt any pension or other benefit received under this chapter from tax under Title 82A RCW."
Title 82A is the new income tax.
So here's the question:
If the $1 million threshold protects you, why did they need to strip the pension exemption at all?
The existing exemption — "exempt from any state tax" — would have protected you automatically. They didn't need to touch it. If their guarantee is real, the exemption stripping would be meaningless.
Unless it's not meaningless.
The only reason to surgically remove pension protections from 13 separate statutes is to build the infrastructure to tax those pensions later — when the threshold comes down. And it will come down.
They've already done the legal work removing your exemption. The only thing standing between your pension and a 9.9% tax are promises from legislators who brag about making pie crust promises— easily made easily broken. — and now it can be change any time they want.
Olympia tells you not to worry. But they have taken away the only legal protection that would have made worrying unnecessary.