The forthcoming arrival of a “millionaire’s tax” in Washington state is going to have a detrimental effect on player recruitment and roster development, at least according to Seahawks GM John Schneider—highlighting the growing intersection between athlete compensation and state tax policy.
Washington’s legislature approved the tax measure earlier this week, and it is headed for the signature of Gov. Bob Ferguson, who has already pledged his support. Though legal and ballot-box challenges are likely still forthcoming, the law is set to impose a 9.9% state tax on earnings in excess of $1 million annually, with first payments due in 2029. That elevated tax on high-income residents is countered by expanded tax rebates in lower income brackets.
Projections are that the tax will affect one-half of 1% of Washington residents, but that subset is disproportionately populated by pro athletes. That, in turn, could create a problem for the Seahawks, and likely their pro sports neighbors in Seattle, too. Washington previously did not have a state income tax.
“It’s gonna sting. There’s no question about it,” Schneider said on KIRO-AM. “All the pro teams here in town, [not having a state income tax has] always been a huge attraction, especially competing with the California teams. It’s been a big deal for us. So, yeah, it’s going to sting from a recruiting standpoint.”
The Seahawks, the defending Super Bowl champions, are already in a period of transition as the franchise is now formally up for sale. The team has only signed three external free agents so far, each to one-year deals, and has lost Super Bowl LX Most Valuable Player Kenneth Walker III to the Chiefs since NFL free agency opened Wednesday. Seattle, however, has retained a series of other current players that were part of the title run.
The NFL’s 2026 base salary for any player with at least one year of service time is $1.005 million, meaning any non-rookie player on the Seahawks roster will be subject to the elevated tax.
Elsewhere in the Country
Washington joins several other states—including California, Massachusetts, Minnesota, New Jersey, and New York—and the District of Columbia—that have adopted versions of a millionaire tax.
While several other states are considering similar moves, it’s California and New York that jump out on this list. Those locales are the sites of the two largest contracts in U.S. pro team sports: Juan Soto’s $765 million pact with the Mets and Shohei Ohtani’s $700 million deal with the Dodgers.
Each player, and plenty of others in those states, has taken a series of moves to reduce their local tax exposure. Most notably, Ohtani is deferring $680 million of his Dodgers contract to between 2034 and 2043, to the point that California legislators have pushed for tax reform on deferred income.
Soto’s deal does not contain deferrals, but he has reduced his local tax exposure by maintaining his primary residence in Florida, which does not have an individual state income tax.
Diamondbacks pitcher Merrill Kelly, who returned to the club in a two-year, $40 million deal, somewhat similarly refused a more lucrative contract offer from the Padres because of the elevated California tax rates.
“I don’t think it’s any secret how much money you get taken out of your pocket when you go to California,” Kelly said last month on the Foul Territory podcast.
