Implementation of E2SHB 2158, the Workforce Education Investment Surcharge, has been cancelled due to the recent passage of ESSB 6492. This new legislation eliminates the Workforce Education Investment Surcharge for most taxpayers, except for certain advanced computing businesses. Instead, the new legislation will increase the service business and occupation (B&O) tax from 1.5% to 1.75% for certain taxpayers beginning April 1, 2020. In general, only taxpayers, and their affiliates, with at least $1 million in combined gross income that was subject to the service B&O tax during the prior calendar year will be impacted by this B&O tax rate increase. Please check back for updates.
Effective Jan. 1, 2020, a new law creates a three-tiered Workforce Education Investment Surcharge to train Washington students for Washington jobs. This surcharge is in addition to the Service and Other Activities B&O tax rate of 1.5%.
- The first tier is a 20% surcharge on select businesses primarily engaged in any combination of specified activities (effective Service and Other Activities B&O tax rate of 1.8%).
- The second tier is a 33.33% surcharge on affiliated groups engaged in select advanced computing activities with worldwide gross revenue of more than $25 billion, but less than $100 billion (effective Service and Other Activities B&O tax rate of 2.0%).
- The third tier is a 66.66% surcharge on affiliated groups engaged in select advanced computing activities with worldwide gross revenue of more than $100 billion (effective Service and Other Activities B&O tax rate of 2.5%).
Businesses primarily engaged in one or more of the 43 specified business activities will be prompted to report the surcharge on their excise tax return. Primarily engaged means more than 50% of your cumulative gross income reportable under any B&O tax classification is generated from one or more of these activities in the current or preceding calendar year.
Advanced computing businesses will report the advanced computing surcharges quarterly and separately from other excise taxes.
What businesses may be affected?
Selected business activities include 43 categories of activities, including, but not limited to:
- Advertising services
- Architecture and engineering services
- Aerospace manufacturing
- Consulting services
- Design services
- Legal services
- Information technology services
- Insurance carriers
- Financial services
- Medical services (excluding hospitals)
- Newspaper, magazine, and other media publishing
- Software services
- Software publishing
- Scientific research
- Retailing using non-store means
- Telecommunications services
Where do the surcharge funds go?
The funds from this new surcharge will be deposited into the workforce education investment account (WEIA). The account may only be used for higher education programs, higher education operations, higher education compensation, and state-funded student aid programs.