wa-law.org > bill > 2025-26 > HB 1895 > Original Bill
The legislature finds that Washington state faces immense workforce challenges to fill both high paying blue and white-collar jobs. The legislature further finds that nearly half of Washington state high school students are not going into an accredited program after school; this means that high school students are not going to college, community college, or trade school. Rather, these students are largely entering the workforce in predominately low-wage jobs. The legislature intends to work with small businesses to support them while they support their employee's reeducation or training, whether that is through trade school, community college, or college, to ultimately fill high-wage jobs in trades or other industries. The legislature intends to provide small businesses with tax relief in exchange for investments in their employee's education at an accredited institution and participation in the financial aid process to help improve access to the Washington college grant, among other financial aid options. By partnering with small businesses, the legislature intends to help these businesses invest in their employee's long-term success. The legislature intends that the success of this tax preference to be measured through the increased growth of small businesses and in enrollment in accredited institutions.
Beginning January 1, 2026, a person is allowed a credit against the tax imposed in this chapter equal to 100 percent of the costs related to providing educational assistance to employees of small businesses.
The credit claimed may not exceed the tax that would otherwise be due under this chapter. Refunds may not be granted in the place of credits. Any amount of credit earned under this section not claimed by the taxpayer in one calendar year may be carried forward for no more than one calendar year immediately following the year that the credit was earned.
The total credit amount approved under this section may not exceed $20,000 for each person claiming the credit in a calendar year.
The department must administer the credit. To claim a credit under this section, the person applying must complete an application for credit based on qualifying expenditures incurred by the eligible person the previous calendar year. The department must rule on applications within 60 days of receipt. The department may extend the time of processing an application upon notice to the person and by providing the person an explanation on why the application processing cannot be completed on time.
To claim a credit under this section, a person must electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided and approved by the department. Any return, form, or information required to be filed in electronic format under this section is not filed until received by the department in an electronic format. For purposes of this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
The following definitions apply to this section:
"Educational assistance" means any payments from an employer directly to an educational institution for educational or training expenses.
"Educational expenses" means tuition, books, and on-campus lodging for the employee relating to a transfer associate degree, applied bachelor's degree, registered apprenticeship, specific professional and technical associates degree, or stackable credential.
"Educational institution" means any university, college, community college, junior college, technical, vocational, or professional school, or approved noncampus-based apprenticeship program that participates in state financial aid programs administrated by the Washington student achievement council.
"Employee" means a full or part-time employee that is a student enrolled in an educational institution in Washington and has filed a free application for federal student aid or filed a free Washington application for state financial aid.
"Small business" means any Washington-based corporation, partnership, company cooperative, sole proprietorship, or other legal entity organized or operating for pecuniary or nonpecuniary gain employing 50 or fewer employees in the state of Washington.
The ability to earn credits under this section expires January 1, 2037.
This section expires January 1, 2038.
This section is the tax preference performance statement for the tax preference contained in section 2, chapter . . ., Laws of 2025 (section 2 of this act). This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.
The legislature categorizes this tax preference as one intended to provide tax relief for certain businesses or individuals, as indicated in RCW 82.32.808(2)(e).
It is the legislature's specific public policy objective to provide reduced tax liability for businesses that provide educational expense assistance for employees.
If a review finds that after the effective date of this tax preference the number of businesses in the state that provide educational assistance for employees increases by five percent and enrollment in educational institutions increases by any amount, then the legislature intends to extend the expiration date of this tax preference.
In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.