Nearly 1 in 4 Washington Businesses Now Considering Relocation, Survey Finds

OLYMPIA, Wash. – A growing number of Washington employers are actively considering moving their businesses out of state, citing an increasingly burdensome tax and regulatory environment. According to a spring 2026 survey by the Association of Washington Business (AWB), nearly one in four employers (24%) are now exploring relocation, a sharp increase from 17% in the previous quarter and nearly triple the level from winter 2025.

The survey, which polled over 400 employers, highlights deepening pessimism about the state’s economic direction. The escalating tax burden was listed as the top challenge facing businesses. This sentiment reflects a significant downturn in Washington’s perceived business climate, which has fallen from being ranked 6th best in the nation in 2014 to near the bottom today, according to the Washington Policy Center.

While the survey numbers are alarming, we've seen that the decision to relocate a business is far more complex than simply moving to a state with a zero percent income tax. The operational and logistical hurdles can be immense, often involving untangling supply chains, re-establishing vendor relationships, and, most critically, managing human capital. A state may offer tax incentives, but if the local talent pool doesn't match a company's needs, the long-term costs of recruitment and training can easily outweigh the initial tax savings. In our experience, a comprehensive strategic analysis is essential before making such a foundational change. This includes modeling financial projections under different state tax codes and assessing non-financial factors like workforce availability and quality of life. For companies contemplating such a move, services like business formation are not just about filing paperwork but about structuring the enterprise correctly from day one in a new jurisdiction. To navigate these complexities, business owners can contact C&S Finance Group LLC at csfinancegroup.com.

The exodus consideration is fueled by several recent and long-standing state tax policies. A significant point of contention is a new tax passed by the state legislature in March, which critics have dubbed a "millionaires tax." The policy marks a major shift for a state that has historically avoided a personal income tax, introducing a 9.9% tax on individual income exceeding $1 million. For entrepreneurs and high-earning professionals, this creates a substantial new liability. Jesse Proudman, a Seattle-based startup founder, told KOMO News the tax was a potential breaking point after nearly three decades of building companies in the state.

This is compounded by Washington's existing 7% tax on long-term capital gains over $250,000. For founders and investors planning a major liquidity event, such as an IPO or the sale of a company, the tax implications are stark. A business sale generating $20 million in long-term capital gains could trigger a state tax liability of nearly $2 million. In competing states like Nevada, Texas, or Florida, that same transaction would incur zero state-level capital gains tax.

Another structural challenge is the state’s Business and Occupation (B&O) tax. Unlike a traditional corporate income tax levied on net profit, the B&O is a gross receipts tax applied to total revenue. This means that businesses, including pre-profitability startups, can owe significant taxes even if they are operating at a loss. The 2025 state budget package increased the B&O rate for many service businesses, further squeezing margins.

The trend is not just theoretical. A growing list of companies has already moved headquarters or shifted significant operations out of Washington. Fisher Investments relocated its headquarters from Camas, Washington, to Plano, Texas. Boeing moved its corporate headquarters first to Chicago and then to Arlington, Virginia. More recently, Starbucks announced it was shifting hundreds of jobs from Seattle to lower-tax states like Tennessee. Other companies, including ZoomCare, Oracle, and Nike, have either left or significantly reduced their footprint in the state.

The departure of high-profile individuals, including Amazon founder Jeff Bezos and former Starbucks CEO Howard Schultz, both of whom relocated to Florida, has further underscored the migration of wealth. This corporate and personal flight is having a tangible impact on the commercial real estate market. In the first quarter of 2026, downtown Seattle’s office vacancy rate hovered between 28% and 35%, among the highest in the nation, reflecting both the shift to remote work and the relocation of businesses.

In a statement accompanying the survey results, AWB President Kris Johnson urged state policymakers to view the findings as an emergency. “It’s tempting for lawmakers to dismiss this kind of report and to suggest that businesses won’t really leave, but that would be a mistake,” Johnson said. “We are already seeing evidence of employers moving operations or moving their personal residence to other states, and we expect to see more in the coming years as plans that are being made right now are put into motion.”

As Washington's legislature weighs its next budget cycle, business leaders and policymakers will be closely watching whether these survey results translate into a more pronounced wave of corporate departures. The state's ability to retain and attract businesses will depend heavily on its response to the growing concerns over its tax and regulatory competitiveness.