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Below are summaries of tax-related bills passed by the legislature and signed into law by Governor Ferguson during the 2025 legislative session.
Newspaper tax preference
This bill clarifies that businesses claiming the tax preference provided under RCW 82.04.759 must file an annual tax performance report and outlines the consequences of not doing so.
Effective July 27, 2025 (HB 1060, Chapter 15, Laws of 2025).
Reusable bag fees
This bill modifies the requirements related to fees that retail establishments are required to collect on reusable plastic bags.
Effective July 27, 2025 (ESHB 1293, Chapter 312, Laws of 2025).
Special notice coming soon.
Real estate excise tax exemption: Community purpose
This bill creates a real estate excise tax exemption for the sale of qualified space in an affordable housing development to a qualifying organization for an exempt community purpose.
Effective Jan. 1, 2026 (SHB 1791, Chapter 159, Laws of 2025).
Special notice coming soon.
Public safety funding
This bill authorizes local governments to impose an additional .1% local sales/use tax to fund public safety.
Effective July 27, 2025 (ESHB 2015, Chapter 350, Laws of 2025).
Payment card processing services
This bill creates a new business and occupation (B&O) tax rate and a new B&O tax deduction related to income from providing payment card processing services. The bill also makes this income subject to certain surcharges.
Effective Jan. 1, 2026 (HB 2020, Chapter 401, Laws of 2025).
Special notice coming soon.
Eliminating the Washington Employee Ownership Program
This bill eliminates the Washington Employee Ownership Program that was enacted in 2024.
Effective July 1, 2026 (SHB 2047, Chapter 366, Laws of 2025).
Special notice coming soon.
Duty-free sales enterprises
This bill creates a new concession fee that applies to duty-free sales enterprises.
Effective Jan. 1, 2026 (ESHB 2061, Chapter 406, Laws of 2025).
Zero-emission vehicle (ZEV) credits
This bill creates a new excise tax on the sale or banking of surplus ZEV credits.
Effective May 20, 2025 (SHB 2077, Chapter 419, Laws of 2025).
Special notice coming soon.
B&O tax changes
This bill:
- Modifies B&O tax rates.
- Modifies existing B&O tax surcharges.
- Clarifies the B&O tax deduction for certain investments.
- Creates a new temporary surcharge on large companies.
Effective dates vary (ESHB 2081, Chapter 420, Laws of 2025).
Special notices coming soon.
Nonresident vessel permits
This bill modifies the cost of permits for nonresident vessels and adds a new fee for vessels between 201 and 300 feet in length.
Effective Sept. 1, 2025 (ESSB 5281, Chapter 244, Laws of 2025).
Capital gains tax modifications
This bill modifies the capital gains tax to clarify ambiguities, make technical corrections, and replace the B&O tax credit with a capital gains tax credit.
Effective Jan. 1, 2026 (SSB 5314, Chapter 409, Laws of 2025).
Special notice coming soon.
Radio and television broadcasters
This bill removes radio and television broadcasters from RCW 82.04.280 and creates a new section for them under chapter 82.04 RCW. It also clarifies the meaning of “radio and television broadcasting.”
Effective July 27, 2025 (SB 5457, Chapter 9, Laws of 2025).
Customized employment training credit program
This bill extends the B&O tax credit through July 1, 2033.
Effective July 27, 2025 (SB 5682, Chapter 289, Laws of 2025).
Special notice coming soon.
Tax preferences
This bill does the following:
- Modifies the B&O tax exemption for credit unions provided under RCW 82.04.405.
- Repeals outdated tax preferences provided under:
- RCW 82.04.062 "Sale at wholesale," "sale at retail" excludes sale of precious metal bullion and monetized bullion—Computation of tax.
- RCW 82.16.0497 Credit—Light and power business, gas distribution business.
- RCW 82.04.44525 Credit—New employment for international service activities in eligible areas—Designation of census tracts for eligibility—Records—Tax due upon ineligibility—Interest assessment—Information from Employment Security Department.
- RCW 82.04.434 Credit—Public safety standards and testing.
- Adds the rental or lease of individual storage space at a self-storage facility to the list of activities subject to the Service and Other Activities B&O tax.
Effective Jan. 1, 2026, except for the change to self-storage spaces, which takes effect April 1, 2026 (ESSB 5794, Chapter 423, Laws of 2025).
Special notices coming soon.
Transportation taxes and fees
This bill does the following:
- Creates luxury taxes on the purchase or use of certain motor vehicles and noncommercial aircrafts.
- Creates an additional tax on the sale of recreational vessels.
- Increases the motor vehicle sales tax.
- Increases the rental car tax.
- Increases the tire fee.
- Creates a new tax for peer-to-peer car sharing vehicles.
- Creates a new exemption for the purchase of zero emission buses by transit agencies or federally recognized Indian tribes for providing transportation services.
Multiple effective dates (ESSB 5801, Chapter 417, Laws of 2025).
Special notices coming soon.
Capital gains tax and estate tax rates
This bill increases the capital gains tax rate on annual long-term capital gains in excess of $1 million. It also makes modifications to the estate tax, including, but not limited to, adjusting the applicable exclusion amount and increasing the estate tax rates.
Effective May 20, 2025 (ESSB 5813, Chapter 421, Laws of 2025).
Special notices coming soon.
Excise taxes
This bill does the following:
- Adds the following activities to the definition of retail sales:
- Information technology, training, technical support, and other similar services.
- Custom website development services.
- Investigation, security, security monitoring, and armored car services.
- Temporary staffing services.
- Advertising services.
- Live presentations.
- Sales of custom software and customization of prewritten software.
- Creates an exclusion from retail sales for certain sales of digital products between members of an affiliated group.
- Eliminates the following exclusions from digital automated services (DAS):
- Services that primarily involve the application of human effort by the seller.
- Live presentations.
- Advertising services.
- Data processing services.
- Creates a new exclusion from DAS for telehealth services.
- Adds nicotine products to the definition of tobacco products for purposes of the tobacco products tax.
Effective Oct. 1, 2025, except for nicotine products, which take effect Jan. 1, 2026 (ESSB 5814, Chapter 422, Laws of 2025).
Special notices coming soon.
