issue area reports | budget and taxation
Sen. Noel Frame, D-Seattle, is the finance vice chair of the Senate Ways & Means Committee.
HB 2081 across-the-board b & o tax increases
Passed / AWB opposed sponsor: Rep. Joe Fitzgibbon, D-Seattle
The Legislature voted to permanently raise business & occupation tax rates across industries. The bill is expected to increase tax revenue by $ 5.6 billion over the next two biennia— the single largest tax increase in state history. The vote was 50-48 in the House and 26-22 in the Senate, with nine Democrats joining Republicans in opposition.
The state’ s major B & O tax rates— 0.471 % and 0.484 %— will increase to 0.5 % on Jan. 1, 2027, impacting manufacturers, retailers, wholesalers, and many other businesses. In addition, businesses in the services and other activities category with annual income over $ 5 million will see their B & O rate jump from 1.75 % to 2.1 %. The bill also
enacts a temporary B & O surcharge on companies with more than $ 250 million in annual income; companies would be subject to the 0.5 % surcharge for three years starting Jan. 1, 2026. Some businesses, including manufacturers and farmers, would be exempt from the surcharge.
Financial institutions with more than $ 1 million in annual income will see their B & O surcharge increase to 1.5 %. Lastly, the advanced computing surcharge paid by large technology companies will increase to 7.5 %, with the annual payment cap increasing from $ 9 million to $ 75 million.
SB 5814 sales tax on services
Passed / AWB opposed sponsor: Sen. Noel Frame, D-Seattle
A major expansion of the state’ s sales tax also passed the Legislature on a largely partisan vote. Starting Oct. 1, 2025, many services that were previously not subject to retail sales tax will now be taxed like a product you buy in a store. The bill will impact any business that provides or pays for the following services: IT support and training, data processing, website services, advertising, security, temporary staffing, live events and training and more, with certain exemptions. In particular, the bill will hit small and mid-sized firms who are less likely to employ their own staff for these services and more likely to outsource them. The wide-ranging bill is likely to have unintended consequences and leaves many questions unanswered.
SB 5813 capital gains tax and estate tax expansions
Passed / AWB opposed sponsor: Sen. Claire Wilson, D-Auburn
The Legislature also passed significant changes to Washington’ s capital gains and
Bill considered as part of AWB’ s voting record
Favorable outcome for Washington businesses
Missed Opportunities
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