wa-law.org > bill > 2025-26 > HB 2734 > Original Bill
The legislature finds that:
Sugar-sweetened beverage consumption contributes to preventable chronic disease, including obesity, type 2 diabetes, cardiovascular disease, fatty liver disease, and dental caries, and imposes significant costs on individuals, families, employers, and public health systems;
Sugar-sweetened beverages are the largest single source of added sugars in the American diet and among the top sources of calories. Further, sources of liquid sugars may be uniquely harmful to health because of the way liquid sugars are metabolized;
Health risks due to sugar-sweetened beverage consumption are particularly pronounced among children, adolescents, lower income populations, and communities of color including Black, Hispanic, Native Americans, Alaska Natives, and Native Hawaiians and Pacific Islanders due to targeted marketing, socioeconomic disparities, and increased exposure to unhealthy beverages;
Meanwhile, food insecurity is rising in communities across Washington state as more households are struggling with higher food and housing costs, and more households are struggling to afford enough food, including nutritious foods that support long-term health and well-being. Eleven percent of all Washingtonians are food insecure, and findings by the University of Washington show that the food insecurity rate among low-income and moderate-income people is 55 percent, five times higher than among the population as a whole, and that food insecurity rates among Hispanic, Black, and Native American households were as much as five to seven times greater than the average Washington household;
Diet-related disease and food insecurity are closely linked and are influenced by unequal access to affordable, healthy food, targeted marketing practices, and disparities in income, housing stability, and health care access;
Public health evidence indicates that excise taxes on sugar-sweetened beverages can reduce sales of these beverages (as demonstrated in places like Seattle, Washington; Philadelphia, Pennsylvania; and Berkeley, California) and generate dedicated revenue that can be invested to improve food security, nutrition, and public health;
A study looking at taxes paid and benefits received from programs supported with sugar-sweetened tax revenues by people with lower and higher incomes in three cities found the net tax effect was to redistribute dollars from higher to lower income households, suggesting a sugar-sweetened beverage tax is a progressive, equitable public policy when tax revenues are intentionally invested in communities with lower incomes;
Food insecurity disproportionately impacts families with young children, seniors living alone, people of color, and rural residents. Reducing food insecurity leads to reduced behavior problems and better academic outcomes for children, improved mental health, reduced anxiety and depression, improved maternal health, and improved health and independent living for seniors; and
Therefore, it is the intent of the legislature to impose an excise tax on sugar-sweetened beverages to:
Establish a dedicated source of revenue to support food security and nutrition assistance programs for low-income populations and communities of color disproportionately affected by food insecurity and unequal access to affordable, nutritious food;
Direct revenues from the tax to fund and administer the supplemental nutrition assistance program, the food assistance program, the fruit and vegetable incentives program established under RCW 43.70.780, and other programs that increase food security and access to affordable, nutritious foods for populations most impacted by socioeconomic and health disparities;
Reduce the sales and consumption of sugar-sweetened beverages and lower rates and burden of obesity, diabetes, cardiovascular disease, tooth decay, and other adverse health conditions associated with the consumption of these beverages; and
Clarify and restore the authority of local governments who established a sweetened beverage tax before January 1, 2018, to impose, administer, and adjust local sweetened beverage taxes consistent with the terms of this chapter.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
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"Beverage for medical use" means:
(A) Oral nutritional therapy for persons who cannot absorb or metabolize caloric or dietary nutrients from usual food or beverages; or
(B) Oral rehydration electrolyte solution formulated to prevent or treat dehydration due to illness; or
ii. Any beverage that meets the statutory definition of "medical food" under the orphan drug act of 1983, 21 U.S.C. Sec. 360ee(b)(3), as amended, as of the effective date of this section.
b. "Beverage for medical use" does not include drinks commonly referred to as "sports drinks" or any other common names that are derivations thereof.
"Caloric sweetener" means any substance or combination of substances that contains calories, is suitable for human consumption, and humans perceive as sweet. Caloric sweeteners include, but are not limited to: Granulated white sugar, brown sugar, sucrose, dextrose, fructose, glucose, and other monosaccharides and disaccharides; corn syrup or high fructose corn syrup; honey; molasses; xylem sap of maple trees; agave nectar; and any other such substance designated by the department.
"Concentrate" means a syrup, powder, frozen or gel mixture, or other product containing one or more sweeteners as an ingredient, intended to be used in making, mixing, or compounding a sugar-sweetened beverage by combining the concentrate with one or more other ingredients.
"Consumer" means a natural person who purchases a sugar-sweetened beverage product in the state for a purpose other than resale in the ordinary course of business and for sale to another.
"Distribution" or "distribute" means to supply to a distributor or retailer, deliver to a retailer, facilitate acquisition by a retailer, or transport into the state for the purpose of selling any sugar-sweetened beverage in the state, or any combination of these activities.
"Distributor" means any person, including a manufacturer, bottler, or wholesale dealer, that distributes sugar-sweetened beverages in the state for sale to retailers that operate businesses in the state, regardless of whether the person also offers sugar-sweetened beverages for retail sale.
"Milk" means natural fluid milk, regardless of animal sources or butterfat content; natural milk concentrate, whether or not reconstituted, regardless of animal source or butterfat content; or dehydrated natural milk, whether or not reconstituted and regardless of animal source or butterfat content; and plant-based milk substitutes that are marketed as milk, such as, but not limited to, soy milk, coconut milk, rice milk, and almond milk.
"Nonalcoholic beverage" means a beverage suitable for human consumption and that is not liquor as defined in RCW 66.04.010.
"Retailer" means any person who serves sugar-sweetened beverages to a consumer.
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"Sugar-sweetened beverage" means any beverage intended for human consumption that contains one or more caloric sweeteners, whether in bottles, prepared from concentrates, served as a fountain beverage, or in any other form.
"Sugar-sweetened beverage" includes all drinks and beverages commonly referred to as soda, pop, cola, soft drinks, sports drinks, energy drinks, fruit drinks, sweetened ice teas and coffees, and other products with added caloric sweeteners including, but not limited to, juice with added caloric sweetener, flavored water with added caloric sweetener, and nonalcoholic beverages that may or may not be mixed with alcohol or any other common names that are derivations thereof.
"Sugar-sweetened beverage" does not include any of the following:
Any beverage in which natural milk is the primary ingredient, in other words, the ingredient listed first in the product ingredient list; or in which water and grains, nuts, legumes, or seeds constitute the first two ingredients in the product ingredient list;
Any beverage for medical use;
Any liquid sold for use as a meal replacement for weight reduction or other purposes;
Any product commonly referred to as infant formula or baby formula;
Any alcoholic beverage;
Any beverage consisting of 100 percent natural fruit or vegetable juice with no added sweetener. For the purposes of this subsection (10)(c)(vi), natural fruit juice and natural vegetable juice mean the original liquid resulting from the pressing of fruits or vegetables;
Any concentrate that the consumer combines with other ingredients to create a beverage;
Any beverage that contains fewer than 20 calories per 12 ounce serving; or
ix. Sweetened medication such as cough syrup, liquid pain relievers, fever reducers, and similar products.
Beginning January 1, 2028, there is a tax imposed upon every person engaging within this state in the business of distributing sugar-sweetened beverages. The tax must be paid upon the first nonexempt distribution of a sugar-sweetened beverage in the state. However, if a distributor or a retailer receives taxable products on which the tax has not been paid, the distributor or retailer is liable for the tax. The amount of tax with respect to such business is equal to the volume of sugar-sweetened beverages the distributor distributes in the state multiplied by the applicable tax rate in subsection (2) or (3) of this section.
For sugar-sweetened beverages that are produced from concentrates, the tax is calculated using the largest volume of beverage that would typically be produced by the amount of concentrate distributed based on the manufacturer's instructions or industry practice. Where a product is produced from more than one concentrate, the rate on each component must be calculated proportionately, so that the combined tax on the total yields a tax rate per fluid ounce of resulting beverage as provided under subsection (3) of this section.
For all sugar-sweetened beverages, the tax rate is $0.03 per fluid ounce of sugar-sweetened beverages the distributor distributes.
The tax collected under this chapter must be deposited into the hunger free Washington account created in section 9 of this act.
If a person, who is a member of an affiliated group that files a federal consolidated return, pays the tax imposed by section 3 of this act on a distribution of sugar-sweetened beverages, then subsequent transfers of those sugar-sweetened beverages from that person to members of the affiliated group are not subject to the tax imposed by section 3 of this act. For the purposes of this subsection, "affiliated group" has the same meaning as provided in 26 U.S.C. Sec. 1504(a), as amended, as of the effective date of this section.
Persons who are exempt from taxation by the state pursuant to federal or state statutes are exempt from the tax imposed by this chapter.
The tax imposed by section 3 of this act is a general excise tax on the privilege of conducting certain business within the state. It is not a sales tax or use tax or other excise tax on the sale, consumption, use, or gross receipts of sugar-sweetened beverages.
The tax imposed by section 3 of this act is in addition to any license fee or tax imposed or levied under any other law.
A distributor may take a credit against the tax due under this chapter for the amount of any similar sugar-sweetened beverage tax imposed by a city in Washington that has a sweetened beverage tax in place before 2018 on the same sugar-sweetened beverages during the same reporting period. The credit may not exceed the tax due under this chapter.
A distributor may take a credit against the tax due under this chapter for any tax paid under RCW 82.64.020 for the same sugar-sweetened beverage during the same reporting period. The credit may not exceed the tax due under this chapter.
A city with an existing sweetened beverage tax may, by ordinance, adjust its local definitions of taxable products, tax rates, exemptions, and administrative procedures to achieve parity with the definitions, procedures, and rate established under this chapter.
Chapter 82.32 RCW applies to the tax imposed in this chapter. The tax due dates, reporting periods, and return requirements applicable to chapter 82.04 RCW apply equally to the tax imposed in this chapter. The department must adopt additional rules, as necessary, for the purpose of carrying out the provisions of this chapter including, but not limited to: Rules to clarify the inclusion or exclusion of particular products and the calculation of tax for concentrates based on manufacturer's instructions or industry practice; rules to implement the tax rates provided under section 3 of this act; and rules to designate caloric sweeteners.
The hunger free Washington account is created in the state treasury. Moneys collected from the tax imposed on sugar-sweetened beverages under section 3 of this act must be deposited into the account. Moneys in the account may be spent only after appropriation. Moneys in the account shall only be used to fund and administer the following food security and nutrition programs:
The supplemental nutrition assistance program under chapter 74.04 RCW;
The food assistance program under RCW 74.08A.120;
The fruit and vegetable incentives program established under RCW 43.70.780;
Free and reduced school meals required under RCW 28A.235.135, 28A.235.300, and 28A.235.160 and elimination of breakfast copays;
Farm-to-school programs under RCW 28A.235.180 and 15.64.060.
All moneys in the account must be expended only for the purposes expressed in this section and must be used only to supplement existing levels of service. Moneys in the account may not supplant any federal, state, or local funding for existing levels of service.
The department of social and health services or any other state agency may not seek a waiver or demonstration project from the United States department of agriculture to exclude the purchase of any sugar-sweetened beverages subject to the tax imposed under section 3 of this act from the definition of eligible foods under 7 C.F.R. Sec. 271.2.
Notwithstanding any other law to the contrary:
Except as provided in subsections (2) through (4) of this section, a local governmental entity may not impose or collect any tax, fee, or other assessment on groceries.
Nothing in this section precludes the continued collection of any existing tax, fee, or other assessment on groceries as is in effect as of January 15, 2018; but no existing tax, fee, or other assessment on groceries may be increased in rate, scope, base, or otherwise after January 15, 2018, except as provided in subsections (3) and (4) of this section and section 7 of this act.
Nothing in this section prohibits the imposition and collection of a tax, fee, or other assessment on groceries if:
The tax, fee, or other assessment is generally applicable to a broad range of businesses and business activity; and
The tax, fee, or other assessment does not establish or rely on a classification related to or involving groceries or a subset of groceries for purposes of establishing or otherwise resulting in a higher tax rate due to such classification.
Nothing in this section prohibits the imposition and collection of a local retail sales and use tax pursuant to RCW 82.14.030 on those persons taxable by the state under chapters 82.08 and 82.12 RCW.
RCW 82.32.805 and 82.32.808 do not apply to this act.