Educational assist./B&O tax

AN ACT Relating to establishing a business and occupation tax 1
credit for small business employers providing educational assistance 2
to employees; adding a new section to chapter 82.04 RCW; creating new 3
sections; and providing an expiration date. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW SECTION. Sec. 1. The legislature finds that Washington 6
state faces immense workforce challenges to fill both high paying 7
blue and white-collar jobs. The legislature further finds that nearly 8
half of Washington state high school students are not going into an 9
accredited program after school; this means that high school students 10
are not going to college, community college, or trade school. Rather, 11
these students are largely entering the workforce in predominately 12
low-wage jobs. The legislature intends to work with small businesses 13
to support them while they support their employee's reeducation or 14
training, whether that is through trade school, community college, or 15
college, to ultimately fill high-wage jobs in trades or other 16
industries. The legislature intends to provide small businesses with 17
tax relief in exchange for investments in their employee's education 18
at an accredited institution and participation in the financial aid 19
process to help improve access to the Washington college grant, among 20
other financial aid options. By partnering with small businesses, the 21
H-0932.2
HOUSE BILL 1895
State of Washington 69th Legislature 2025 Regular Session
By Representatives Richards, Paul, Walen, Rule, Volz, Springer, and
Shavers
Read first time 02/07/25. Referred to Committee on Finance.
p. 1 HB 1895
legislature intends to help these businesses invest in their 1
employee's long-term success. The legislature intends that the 2
success of this tax preference to be measured through the increased 3
growth of small businesses and in enrollment in accredited 4
institutions. 5
NEW SECTION. Sec. 2. A new section is added to chapter 82.04 6
RCW to read as follows: 7
(1) Beginning January 1, 2026, a person is allowed a credit 8
against the tax imposed in this chapter equal to 100 percent of the 9
costs related to providing educational assistance to employees of 10
small businesses. 11
(2) The credit claimed may not exceed the tax that would 12
otherwise be due under this chapter. Refunds may not be granted in 13
the place of credits. Any amount of credit earned under this section 14
not claimed by the taxpayer in one calendar year may be carried 15
forward for no more than one calendar year immediately following the 16
year that the credit was earned. 17
(3) The total credit amount approved under this section may not 18
exceed $20,000 for each person claiming the credit in a calendar 19
year. 20
(4) The department must administer the credit. To claim a credit 21
under this section, the person applying must complete an application 22
for credit based on qualifying expenditures incurred by the eligible 23
person the previous calendar year. The department must rule on 24
applications within 60 days of receipt. The department may extend the 25
time of processing an application upon notice to the person and by 26
providing the person an explanation on why the application processing 27
cannot be completed on time. 28
(5) To claim a credit under this section, a person must 29
electronically file with the department all returns, forms, and other 30
information the department requires in an electronic format as 31
provided and approved by the department. Any return, form, or 32
information required to be filed in electronic format under this 33
section is not filed until received by the department in an 34
electronic format. For purposes of this subsection, "returns" has the 35
same meaning as "return" in RCW 82.32.050. 36
(6) The following definitions apply to this section:37
p. 2 HB 1895
(a) "Educational assistance" means any payments from an employer 1
directly to an educational institution for educational or training 2
expenses. 3
(b) "Educational expenses" means tuition, books, and on-campus 4
lodging for the employee relating to a transfer associate degree, 5
applied bachelor's degree, registered apprenticeship, specific 6
professional and technical associates degree, or stackable 7
credential. 8
(c) "Educational institution" means any university, college, 9
community college, junior college, technical, vocational, or 10
professional school, or approved noncampus-based apprenticeship 11
program that participates in state financial aid programs 12
administrated by the Washington student achievement council.13
(d) "Employee" means a full or part-time employee that is a 14
student enrolled in an educational institution in Washington and has 15
filed a free application for federal student aid or filed a free 16
Washington application for state financial aid. 17
(e) "Small business" means any Washington-based corporation, 18
partnership, company cooperative, sole proprietorship, or other legal 19
entity organized or operating for pecuniary or nonpecuniary gain 20
employing 50 or fewer employees in the state of Washington.21
(7) The ability to earn credits under this section expires 22
January 1, 2037. 23
(8) This section expires January 1, 2038. 24
NEW SECTION. Sec. 3. (1) This section is the tax preference 25
performance statement for the tax preference contained in section 2, 26
chapter . . ., Laws of 2025 (section 2 of this act). This performance 27
statement is only intended to be used for subsequent evaluation of 28
the tax preference. It is not intended to create a private right of 29
action by any party or to be used to determine eligibility for 30
preferential tax treatment.31
(2) The legislature categorizes this tax preference as one 32
intended to provide tax relief for certain businesses or individuals, 33
as indicated in RCW 82.32.808(2)(e). 34
(3) It is the legislature's specific public policy objective to 35
provide reduced tax liability for businesses that provide educational 36
expense assistance for employees. 37
(4) If a review finds that after the effective date of this tax 38
preference the number of businesses in the state that provide 39
p. 3 HB 1895
educational assistance for employees increases by five percent and 1
enrollment in educational institutions increases by any amount, then 2
the legislature intends to extend the expiration date of this tax 3
preference. 4
(5) In order to obtain the data necessary to perform the review 5
in subsection (4) of this section, the joint legislative audit and 6
review committee may refer to any data collected by the state.7
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