wa-law.org > bill > 2025-26 > HB 2045 > Original Bill
The legislature finds that funding education, public safety, health care, and basic human needs helps Washington succeed and thrive. The state's paramount duty is to provide every child with an education, thereby creating the opportunity for each child to succeed in school and achieve success in life. To promote and improve public safety, the state funds the basic law enforcement academy to train and certify every peace officer in the state. The state invests in health care programs that deliver critical, life-saving services, and protect the well-being of the public. The state also supports vital basic needs assistance to the state's lowest-income households, educates the youngest learners, and strengthens food security for seniors.
Therefore, the legislature intends to levy an incremental surcharge on the gross revenue of the state's highest earning businesses and amend the surcharge on the gross revenue of large financial institutions to meet the state's obligation to provide adequate funding for K-12 education, public safety, health care, and other human service investments. The legislature finds the levying of this tax is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions.
Beginning January 1, 2026, in addition to all other taxes imposed under this chapter, persons must pay a surcharge on Washington taxable income over $250,000,000 in a calendar year.
The rate of the tax is one percent of the amount of Washington taxable income over $250,000,000.
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Any Washington taxable income subject to the tax in RCW 82.04.29004 is exempt from the surcharge imposed in this section.
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Any Washington taxable income subject to the manufacturing tax rates in RCW 82.04.240, 82.04.2404, 82.04.241, 82.04.260, 82.04.2602, 82.04.287, 82.04.2909, or 82.04.294(1) is exempt from the surcharge imposed in this section.
Any Washington taxable income attributable to the wholesale or retail sale of products so manufactured by a person subject to the manufacturing tax rates specified in (b)(i) of this subsection (3) is exempt from the surcharge imposed in this section.
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The surcharge imposed under this section does not apply to taxable income for which a credit is allowed under RCW 82.04.440.
The surcharge imposed under this section does not apply to a person engaged in business primarily as a farmer or eligible apiarist as defined in RCW 82.04.213.
Any income that is exempt from the surcharge imposed under this section is not included in the calculation of Washington taxable income in subsection (1) of this section.
(a) From January 1, 2020, through June 30, 2025, in addition to any other taxes imposed under this chapter, an additional tax is imposed on specified financial institutions. The additional tax is equal to the gross income of the business taxable under RCW 82.04.290(2) multiplied by the rate of 1.2 percent.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Affiliated" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person. For purposes of this subsection (2)(a), "control" means the possession, directly or indirectly, of more than 50 percent of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise.
"Consolidated financial institution group" means all financial institutions that are affiliated with each other.
"Consolidated financial statement" means a consolidated financial institution group's consolidated reports of condition and income filed with the federal financial institutions examination council, or successor agency.
"Financial institution" means:
Any corporation or other business entity chartered under Titles 30A, 30B, 31, 32, and 33 RCW, or registered under the federal bank holding company act of 1956, as amended, or registered as a savings and loan holding company under the federal national housing act, as amended;
A national bank organized and existing as a national bank association pursuant to the provisions of the national bank act, 12 U.S.C. Sec. 21 et seq.;
A savings association or federal savings bank as defined in the federal deposit insurance act, 12 U.S.C. Sec. 1813(b)(1);
Any bank or thrift institution incorporated or organized under the laws of any state;
Any corporation organized under the provisions of 12 U.S.C. Sec. 611 through 631;
Any agency or branch of a foreign depository as defined in 12 U.S.C. Sec. 3101 that is not exempt under RCW 82.04.315;
A production credit association organized under the federal farm credit act of 1933, all of whose stock held by the federal production credit corporation has been retired;
Any corporation or other business entity who receives gross income taxable under RCW 82.04.290, and whose voting interests are more than 50 percent owned, directly or indirectly, by any person or business entity described in (d)(i) through (vii) of this subsection other than an insurance company liable for the insurance premiums tax under RCW 48.14.020 or any other company taxable under chapter 48.14 RCW;
ix.(A) A corporation or other business entity that receives more than 50 percent of its total gross income for federal income tax purposes from finance leases. For purposes of this subsection, a "finance lease" means a lease that meets two requirements:
(I) It is the type of lease permitted to be made by national banks (see 12 U.S.C. Sec. 24(7) and (10), comptroller of the currency regulations, part 23, leasing (added by 56 C.F.R. Sec. 28314, June 20, 1991, effective July 22, 1991), and regulation Y of the federal reserve system 12 C.F.R. Part 225.25, as amended); and
(II) It is the economic equivalent of an extension of credit, i.e., the lease is treated by the lessor as a loan for federal income tax purposes. In no event does a lease qualify as an extension of credit where the lessor takes depreciation on such property for federal income tax purposes.
(B) For this classification to apply, the average of the gross income in the current tax year and immediately preceding two tax years must satisfy the more than 50 percent requirement;
x. Any other person or business entity, other than an insurance general agent taxable under RCW 82.04.280(1)(e), an insurance business exempt from the business and occupation tax under RCW 82.04.320, a real estate broker taxable under RCW 82.04.255, a securities dealer or international investment management company taxable under RCW 82.04.290(2), that receives more than 50 percent of its gross receipts from activities that a person described in (d)(ii) through (vii) and (ix) of this subsection is authorized to transact.
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i. "Specified financial institution" means a financial institution that is a member of a consolidated financial institution group that reported on its consolidated financial statement for the previous calendar year annual net income of at least $1,000,000,000, not including net income attributable to noncontrolling interests, as the terms "net income" and "noncontrolling interest" are used in the consolidated financial statement.
ii. If financial institutions are no longer required to file consolidated financial statements, "specified financial institution" means any person that was subject to the additional tax in this section in at least two of the previous four calendar years.
The department must notify the fiscal committees of the legislature if financial institutions are no longer required to file consolidated financial statements.
To aid in the effective administration of the additional tax imposed in this section, the department may require a person believed to be a specified financial institution to disclose whether it is a member of a consolidated financial institution group and, if so, to identify all other members of its consolidated financial institution group. A person failing to comply with this subsection is deemed to have intended to evade tax payable under this section and is subject to the penalty in RCW 82.32.090(7) on any tax due under this section by the person and any financial institution affiliated with the person.
Taxes collected under this section must be deposited into the general fund.
RCW 82.32.805 and 82.32.808 do not apply to this act.
Section 2 of this act takes effect January 1, 2026.
Except for section 2 of this act, 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 July 1, 2025.