wa-law.org > bill > 2025-26 > HB 2023 > Original Bill

HB 2023 - Investment income taxation

Source

Section 1

The legislature finds that the application of the business and occupation tax deduction provided in RCW 82.04.4281(1)(a) has become the subject of uncertainty as a result of the recent decision of the state supreme court in Antio, LLC v. Department of Revenue. This decision could lead to a restrictive, narrow interpretation of the deductibility of investment income for business and occupation tax purposes. Numerous Washingtonians may be impacted by the uncertainty and the legislature finds that these impacts require careful consideration. Therefore, it is the intent of the legislature to delay change in the manner or extent of taxation of the investment income deduction until definitions or standards can be developed and enacted by the legislature.

Section 2

  1. The department of revenue may not assess business and occupation tax on the investment income of persons that are not banking, lending, or security businesses as those terms are defined in RCW 82.04.4281 on the grounds that the person's investment income is not eligible for the deduction provided by RCW 82.42.4281(1)(a) because such amounts or the person's investment activities are more than incidental.

  2. This section expires July 1, 2026.

Section 3

  1. A work group is established to consider the taxation of investment income under RCW 82.04.4281, which must be convened and facilitated by the department of revenue. The work group must provide recommendations to the legislature by November 30, 2025, regarding changes to the statute to clarify the deduction provided by RCW 82.04.4281(1)(a).

  2. The work group members must be appointed by the director of the department of revenue and must consist of the following members:

    1. One representative from the department of revenue;

    2. One representative from the office of financial management;

    3. One member representing an international investment management services company;

    4. One member representing a statewide nonprofit arts and cultural organization;

    5. One member representing a union pension fund;

    6. One member representing general business associations; and

    7. One member representing a certified public accountant association.

  3. The work group may meet in person or by telephone conference call, videoconference, or other similar telecommunications method, or a combination of such methods.

  4. The work group must hold its first meeting within 45 days of appointment to the work group and must meet at least monthly thereafter until delivering its recommendations to the legislature.

  5. The department of revenue must comply with the requirements of RCW 43.18A.020 in making appointments provided in this section. The department must provide the report required in RCW 43.18A.030.

  6. This section expires November 30, 2026.

Section 4

This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.

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