AN ACT Relating to funding public schools, including higher education, health care, social services, and other programs and services to benefit Washingtonians by modifying business and occupation tax surcharges, rates, and the advanced computing surcharge cap, clarifying the business and occupation tax deduction for certain investments, and creating a temporary business and occupation tax surcharge on large companies with annual revenues with more than $250,000,000;
SB 5815 is a broad tax measure that would increase and restructure several Washington business and occupation (B&O) tax rates and surcharges to raise revenue for public schools, higher education, health care, social services, and other state programs. The bill states that the revenue is intended to support the state’s general fund and the workforce education investment account, and it includes findings emphasizing the state’s duty to fund education and essential services. It also creates a temporary B&O surcharge on large companies with annual revenues above a specified threshold, in addition to modifying existing surcharges and caps, including the advanced computing surcharge.
The bill revises tax treatment across many industries and business classifications, including manufacturing, retailing, wholesaling, digital goods and services, aerospace, timber, child care, hospitals, financial institutions, and other service sectors. In many cases it raises rates, adds temporary higher rates, or creates new surcharges, while also preserving or adjusting special rates and exemptions for certain activities and industries. It further directs some revenue to the workforce education investment account and imposes reporting and compliance requirements on affected taxpayers, including annual reports for some preferential-rate classifications and quarterly reporting for the new surcharge on high-grossing businesses and financial institutions.
A separate section clarifies the B&O deduction for investment income, responding to uncertainty created by a state Supreme Court decision. The bill narrows the deduction to investment income that is incidental to the main purpose of a business, while directing the Department of Revenue to adopt rules and examples distinguishing personal investment income from business income. It also states that certain non-deductible investment income remains subject to B&O tax under the applicable service or other activity classification.
Overall, the bill’s impact would be to increase tax liability for a wide range of businesses, especially large corporations, select financial institutions, and businesses in higher-rate classifications, while preserving some preferential treatment for targeted sectors such as aerospace and certain manufacturing activities. It would also expand administrative oversight by requiring additional reporting, authorizing audits and information requests, and directing revenues into the general fund and workforce education account. The bill includes severability, effective-date, and expiration provisions, indicating that some surcharges are temporary and others are phased in or out on different dates.
Because no committee transcripts or recorded votes were provided, the available context does not show formal debate or recorded legislative sentiment. Based on the bill text alone, the measure appears strongly revenue-focused and framed by its sponsors as necessary to support public services, but it also clearly imposes new or higher tax burdens on businesses, suggesting likely concern from affected industries over cost increases, compliance obligations, and the breadth of the surtaxes.
The bill would amend numerous provisions of Washington’s B&O tax law, including rates, surcharges, exemptions, and reporting rules across multiple business classifications, and would add new temporary and ongoing surcharges on large businesses and specified financial institutions. It would also revise the statutory deduction for investment income under the B&O tax, requiring the Department of Revenue to provide guidance on when investment income is incidental to a business’s main purpose. Affected parties include large corporations, advanced computing businesses, financial institutions, hospitals, aerospace manufacturers, timber businesses, child care providers, and other service and manufacturing sectors, with some industries receiving preferential rates while others face higher tax burdens.
No committee discussion or vote history was provided, so there is no recorded legislative sentiment from hearings or roll calls. From the bill text, the sponsors’ intent is clearly supportive of the measure as a funding mechanism for education and essential public services, while the structure of the bill suggests that businesses subject to the new or increased taxes would likely view it negatively due to higher tax liability and added reporting requirements.
The main points of contention are likely the new temporary surcharge on large companies, the additional surcharge on specified financial institutions, and the broad rate increases across many B&O classifications. Businesses in technology, finance, aerospace, timber, and other sectors may object to the higher rates, the revenue thresholds, and the compliance burdens, while supporters are likely to emphasize funding for schools, health care, social services, and workforce education. The clarification of the investment-income deduction may also be disputed because it narrows a tax benefit and gives the Department of Revenue significant rulemaking authority over what counts as incidental investment income.