(The Center Square) – The latest Association of Washington Business quarterly survey shows bad news on the economic front, with 44% of business leaders saying they are considering moving their personal residence out of state and businesses indicating they are now more than twice as likely – 30% to 14% – to expand outside the state than within it.
The results of AWB’s winter survey are based on 429 responses collected by email from business owners and operators across the state between Jan. 12 and Feb. 2.
“Washington employers signaled a continuing collapse in confidence in the state economy in this quarterly survey, with significant year-over-year deterioration across multiple metrics driven largely by the state’s growing tax burden,” according to the survey’s executive summary.
In 2025, the Washington State Legislature passed a $9.4 billion revenue package – the largest in state history – meant to address a projected budget deficit and fund state services, which Gov. Bob Ferguson signed into law. The measures include a broad business and occupation tax hike, a new 0.5% surcharge on large businesses, higher capital gains and estate taxes, and expanded sales tax on services.
Other major results from the survey include:
- 17% of businesses say they are planning to leave Washington, compared to last year’s 9%.
- 64% of respondents rate the overall tax burden as their most important business challenge.
- 75% say they are experiencing higher taxes approved during last year’s legislative session.
- 34% indicate they expect Washington to enter a recession within the next year.
- 9% rate the Washington economy as strong, and 33% rate it weak or very weak.
- One-third of businesses say they are in a downturn or struggling. Nearly half – 47% – report their performance as flat, and only one-fifth say they are growing.
Besides high taxes, the biggest challenges facing business owners in Washington are health care costs (62%), government regulations (54%), inflation (40%) and tariffs (30%), although 54% of respondents reported negative impacts from tariffs.
“Washington employers are growing more pessimistic about the direction of the state economy, largely because of the rising tax burden,” AWB President Kris Johnson said in a news release. “With lawmakers back in Olympia and debating even more new taxes, they need to understand that Washington employers, especially small- and medium-sized businesses, are under severe strain right now. They are not feeling good about the direction of the state economy or their own business prospects.”
On Wednesday, majority party Democrats in the House and Senate introduced a pair of bills to tax the state’s highest earners. Senate Bill 6346 and House Bill 2724 would create a 9.9% income tax for Washingtonians making more than $1 million annually.
