Investment income taxation

AN ACT Relating to establishing a work group to study the 1
taxation of investment income under RCW 82.04.4281; creating new 2
sections; providing expiration dates; and declaring an emergency.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. The legislature finds that the application 5
of the business and occupation tax deduction provided in RCW 6
82.04.4281(1)(a) has become the subject of uncertainty as a result of 7
the recent decision of the state supreme court in Antio, LLC v. 8
Department of Revenue . This decision could lead to a restrictive, 9
narrow interpretation of the deductibility of investment income for 10
business and occupation tax purposes. Numerous Washingtonians may be 11
impacted by the uncertainty and the legislature finds that these 12
impacts require careful consideration. Therefore, it is the intent of 13
the legislature to delay change in the manner or extent of taxation 14
of the investment income deduction until definitions or standards can 15
be developed and enacted by the legislature.16
NEW SECTION. Sec. 2. (1) The department of revenue may not 17
assess business and occupation tax on the investment income of 18
persons that are not banking, lending, or security businesses as 19
those terms are defined in RCW 82.04.4281 on the grounds that the 20
H-1648.1
HOUSE BILL 2023
State of Washington 69th Legislature 2025 Regular Session
By Representatives Berg, Orcutt, Rule, and Parshley
Read first time 02/25/25. Referred to Committee on Finance.
p. 1 HB 2023
person's investment income is not eligible for the deduction provided 1
by RCW 82.42.4281(1)(a) because such amounts or the person's 2
investment activities are more than incidental. 3
(2) This section expires July 1, 2026. 4
NEW SECTION. Sec. 3. (1) A work group is established to 5
consider the taxation of investment income under RCW 82.04.4281, 6
which must be convened and facilitated by the department of revenue. 7
The work group must provide recommendations to the legislature by 8
November 30, 2025, regarding changes to the statute to clarify the 9
deduction provided by RCW 82.04.4281(1)(a).10
(2) The work group members must be appointed by the director of 11
the department of revenue and must consist of the following members:12
(a) One representative from the department of revenue;13
(b) One representative from the office of financial management;14
(c) One member representing an international investment 15
management services company; 16
(d) One member representing a statewide nonprofit arts and 17
cultural organization; 18
(e) One member representing a union pension fund;19
(f) One member representing general business associations; and20
(g) One member representing a certified public accountant 21
association. 22
(3) The work group may meet in person or by telephone conference 23
call, videoconference, or other similar telecommunications method, or 24
a combination of such methods. 25
(4) The work group must hold its first meeting within 45 days of 26
appointment to the work group and must meet at least monthly 27
thereafter until delivering its recommendations to the legislature.28
(5) The department of revenue must comply with the requirements 29
of RCW 43.18A.020 in making appointments provided in this section. 30
The department must provide the report required in RCW 43.18A.030.31
(6) This section expires November 30, 2026. 32
NEW SECTION. Sec. 4. This act is necessary for the immediate 33
preservation of the public peace, health, or safety, or support of 34
the state government and its existing public institutions, and takes 35
effect immediately.36
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p. 2 HB 2023