Blog · 14 October 2026

State Millionaire Tax 2027: Rhode Island Surtax, Washington’s 9.9% Tax and North Carolina’s Rate Cut — What US CPA Firms Should Tell Clients

By Keshav Bansal, CA

The state millionaire tax is moving from headline to filing reality. Rhode Island’s millionaire surtax starts January 1, 2027, Washington has a 9.9% millionaires income tax on the books for 2028 that voters may repeal on November 3, and North Carolina is cutting its flat rate again while asking voters to cap it. For US CPA firms with high-income or multistate clients, these changes affect 2027 estimates, residency conversations and state return workflows well before anyone files a 2027 return.

Rhode Island millionaire surtax: 1% from January 1, 2027

Per IncomeTaxPro (October 1, 2026), Rhode Island’s new surtax applies 1% on taxable income over $1 million starting January 1, 2027, rising to 2% in 2028 and 3% in 2029. The same $1 million threshold applies to single and joint filers, which means a married couple does not get a doubled threshold. The same coverage notes a new refundable $330 per child state child tax credit.

Two practical points follow. First, the single-and-joint threshold is a marriage-penalty conversation: two high earners who each sit below $1 million can cross it together on a joint Rhode Island return. Second, the rate steps up three years in a row, so any plan that times large income (a business sale, bonus or Roth conversion) should use the rate for the year the income lands.

Rhode Island tax amnesty: December 3, 2026 to February 15, 2027

Rhode Island clients with old problems have a separate, shorter window. Per the Rhode Island Division of Taxation’s tax amnesty page and Deloitte’s State Tax Matters (October 9, 2026), amnesty authorized by H.B. 7127 (signed June 12, 2026) runs December 3, 2026 to February 15, 2027 for delinquent Division of Taxation liabilities for periods ending through December 31, 2025. Qualifying taxpayers who bring filings current and pay the tax plus 75% of the interest get 100% of penalties waived and interest cut by 25%. A worked example in that coverage: $500 tax, $1,000 interest and $500 penalty, a $2,000 balance, settles for $1,250.

Amnesty covers personal income, sales and use, corporate income and other Division taxes, but not employer taxes administered by the Department of Labor and Training (UI, JDF and TDI). Statement-of-account notices mail in November with December 15, January 15 and February 15 due dates. Amnesty forgives penalties and part of the interest, not the tax itself. Use the weeks before December 3 to prepare missing returns and confirm addresses, and warn clients about amnesty-themed phishing.

Washington’s 9.9% millionaires tax and the November 3 repeal vote

Per the Washington State Standard (via the Snoqualmie Valley Record, October 9, 2026) and KNKX (October 9), Washington’s millionaires income tax under SB 6346 (signed March 30, 2026) is a 9.9% tax that starts January 1, 2028, with first returns due in April 2029. It is projected to raise about $3.5 billion from about 25,000 filers. The base is federal AGI minus a $1 million deduction, and married couples share that one deduction. Initiative 645 on the November 3, 2026 ballot would repeal it.

Nothing is due yet and the law may not survive the vote, so avoid locking clients into irreversible moves now. What firms can do is identify which Washington clients would plausibly cross the $1 million deduction in 2028, and note that because the base starts from federal AGI, federal planning (timing of capital gains, retirement distributions, entity choices) flows straight into the Washington number if the tax stands.

North Carolina: 3.49% in 2027 and a constitutional cap on the ballot

North Carolina is moving the other way. Per IncomeTaxPro and the trigger law described by Elon News Network (Miles Hayford, October 13, 2026), the personal flat rate is 3.99% for 2026, falls to 3.49% in 2027 (S.L. 2026-41) and is set to fall to 2.99% for 2028 and later. The corporate rate is 2%.

Separately, a November 3, 2026 ballot amendment (S.L. 2026-4 / SB 1080) would lower the constitutional income tax cap from 7% to 3.5% for tax years starting January 1, 2027, covering personal and corporate rates. Elon News Network reports a Catawba poll showing roughly two-thirds support, with Gov. Stein and advocacy groups opposed. Keep the distinction straight for clients: the statute sets each year’s rate, and a constitutional cap is only a ceiling on future rates. Returns use the statutory rate for the tax year, so the 3.49% figure is what matters for 2027 estimates whichever way the amendment goes.

What this means for multistate clients

Each of these is a separate state return question, and the usual multistate rules still apply. A resident generally reports all income to the home state; a nonresident files where income is sourced; and the home state typically grants a credit for tax paid to other states. High earners in Rhode Island, or moving in or out of Washington before 2028, need that residency and credit analysis done deliberately.

State income tax still runs through the federal SALT deduction and its cap, so a higher Rhode Island bill does not become a dollar-for-dollar federal deduction for most high-income clients.

A practical checklist for US CPA firms

1. Flag the exposed clients now. List Rhode Island residents and nonresidents with Rhode Island-source income likely to exceed $1 million of taxable income in 2027 or later, and Washington clients likely to exceed the $1 million deduction in 2028.
2. Reset 2027 estimates. Add the 1% Rhode Island surtax and use North Carolina’s 3.49% rate when you set 2027 state estimated payments.
3. Model joint filers carefully. Rhode Island’s single-and-joint $1 million threshold, and Washington’s shared $1 million deduction, both treat a married couple as one taxpayer for the threshold.
4. Work the Rhode Island amnesty list before December 3. Identify clients with unfiled or unpaid Division of Taxation periods through 2025 and get returns ready so they can pay from the statement of account.
5. Wait for November 3 before acting on Washington or the North Carolina cap. Brief clients on both outcomes, then follow up after the results are certified.

Where this fits with year-end work

Many of the same high-income clients are finishing extended 2025 returns this week; our October 15 extension deadline checklist covers that crunch. Withholding and estimates for 2027 are a parallel task, and the draft 2027 Form W-4 guide covers the federal side. For clients who receive state notices after a filing mismatch, our note on IRS audit rates and CP2000s explains the difference between a matching notice and an audit.

If extra state returns, amnesty catch-up filings and 2027 estimate work are stretching your team, outsourced tax prep and bookkeeping support for US CPA firms can handle document gathering and draft work while your signing preparers keep the judgment calls. Email info@taxbrewglobal.com.

Check current state guidance: this article summarizes sources as of 14 October 2026 (IncomeTaxPro, October 1, 2026; Rhode Island Division of Taxation amnesty page and Deloitte State Tax Matters, October 9, 2026; Washington State Standard via Snoqualmie Valley Record and KNKX, October 9, 2026; Elon News Network, October 13, 2026). It is general information, not tax advice. Ballot results, state statutes and official Division of Taxation and Department of Revenue guidance control. Confirm every figure before acting.