The measure imposed a 7% tax on the sale of stocks, bonds, and other high-end assets in excess of $250,000 for both individuals and couples.
It was projected to bring in $415 million in 2023, the first year the state would see money from the tax.
The legal challenge stems from two lawsuits that were later consolidated. The first was filed last April by The Freedom Foundation, an Olympia-based conservative think tank. A month later, former Washington Attorney General Rob McKenna filed the second on behalf of state residents including manufacturing business owners, investors, and the Washington State Farm Bureau.
“Washington’s courts have twice rejected previous efforts by the legislature to enact an unconstitutional income tax, while Washington’s voters have rejected 10 straight ballot measures, including six proposed constitutional amendments, that would have created a graduated state income tax,” McKenna said in astatement. “Judge Huber’s decision rightly upholds those precedents and honors the voters’ clearly state preference that we remain a state without a graduated income tax.