Income tax

AN ACT Relating to establishing an income tax on individuals with 1
Washington taxable income over $1,000,000 per year and households 2
with income over $2,000,000 per year, contingent on the passage of a 3
constitutional amendment authorizing such an income tax; amending RCW 4
82.32.050, 82.32.060, 82.32.090, 2.10.180, 2.12.090, 6.15.020, 5
41.24.240, 41.32.052, 41.34.080, 41.35.100, 41.40.052, 41.44.240, 6
41.26.053, 43.43.310, 82.08.0206, 82.04.4451, 82.32.045, 82.04.288, 7
and 1.90.100; amending 2023 c 456 s 3 (uncodified); reenacting and 8
amending RCW 82.08.020; adding a new section to chapter 82.08 RCW; 9
adding a new section to chapter 82.12 RCW; adding a new Title to the 10
Revised Code of Washington to be codified as Title 82A RCW; creating 11
new sections; prescribing penalties; providing an effective date; 12
providing a contingent effective date; and providing an expiration 13
date. 14
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:15
PART I16
DEFINITIONS17
NEW SECTION. Sec. 101. DEFINITIONS. The definitions in this 18
section apply throughout this chapter unless the context clearly 19
requires otherwise.20
H-3582.2
HOUSE BILL 2738
State of Washington 69th Legislature 2026 Regular Session
By Representative Walen
Read first time 02/19/26. Referred to Committee on Finance.
p. 1 HB 2738
(1) "Capital asset" has the same meaning as provided in chapter 1
82.87 RCW. 2
(2) "Department" means the department of revenue of the state of 3
Washington. 4
(3) "Federal adjusted gross income" means adjusted gross income 5
as determined under section 62 of the internal revenue code.6
(4) "Individual" means a natural person. 7
(5) "Internal revenue code" means the United States internal 8
revenue code of 1986, as amended and in effect on January 1, 2026, or 9
such subsequent date as the department may provide by rule consistent 10
with the purpose of this chapter. 11
(6) "Long-term capital asset," "long-term capital gain," and 12
"long-term capital loss" have the same meanings as provided in 13
chapter 82.87 RCW. 14
(7) "Pass-through entity" means a disregarded entity for federal 15
tax purposes, such as a partnership, limited liability company, or S 16
corporation. 17
(8)(a) "Resident" means an individual: 18
(i) Who is domiciled in this state during the taxable year, 19
unless the individual (A) maintained no permanent place of abode in 20
this state during the entire taxable year, (B) maintained a permanent 21
place of abode outside of this state during the entire taxable year, 22
and (C) spent in the aggregate not more than 30 days of the taxable 23
year in this state; or 24
(ii) Who is not domiciled in this state during the taxable year, 25
but maintained a place of abode and was physically present in this 26
state for more than 183 days during the taxable year.27
(b) For purposes of this subsection, "day" means a calendar day 28
or any portion of a calendar day. 29
(c) An individual who is a resident under (a) of this subsection 30
is a resident for that portion of a taxable year in which the 31
individual was domiciled in this state or maintained a place of abode 32
in this state. 33
(9) "Taxable year" means the taxpayer's taxable year as defined 34
under section 7701(a)(23) of the internal revenue code.35
(10) "Taxpayer" means an individual receiving income subject to 36
tax under this chapter. 37
(11) "Washington base income" means federal adjusted gross income 38
as modified under sections 302 through 305 and 401 through 407 of 39
this act. 40
p. 2 HB 2738
(12) "Washington taxable income" means Washington base income as 1
further modified by sections 306 through 309 of this act.2
NEW SECTION. Sec. 102. UNDEFINED TERMS— CONFORMITY WITH FEDERAL 3
INTERNAL REVENUE CODE. Any term used in this chapter has the same 4
meaning as when used in a comparable context in the internal revenue 5
code, unless a different meaning is clearly required or the term is 6
specifically defined in this chapter.7
PART II8
DETERMINATION OF TAX9
NEW SECTION. Sec. 201. TAX IMPOSED— RATES. (1) Beginning January 10
1, 2028, a tax is imposed on the receipt of Washington taxable 11
income. Only individuals are subject to payment of the tax, which 12
equals 9.90 percent multiplied by an individual's Washington taxable 13
income.14
(2) If an individual's Washington taxable income is less than 15
zero for a taxable year, no tax is due under this section and no 16
amount is allowed as a carryover for use in the calculation of that 17
individual's Washington taxable income, for any taxable year. To the 18
extent that a loss carryforward is included in an individual's 19
adjusted gross income and the loss carryforward is derived from or 20
connected with sources in this state, the loss carryforward is 21
included in the calculation of that individual's Washington taxable 22
income. 23
NEW SECTION. Sec. 202. DISTRIBUTION OF TAX REVENUES. (1) Taxes 24
collected under this chapter must be deposited as follows:25
(a) Seven percent to the local government public defense funding 26
stabilization account created in section 711 of this act; and27
(b) The remainder to the state general fund to fund the sales and 28
use tax relief in sections 903, 904, and 909 of this act, the working 29
families' tax credit program, including its expansion in section 901 30
of this act, and the business and occupation tax relief in sections 31
905 and 906 of this act. 32
(2) All interest and penalties collected under this chapter must 33
be deposited in the state general fund. 34
p. 3 HB 2738
NEW SECTION. Sec. 203. CREDIT FOR INCOME TAXES DUE ANOTHER 1
JURISDICTION. (1) A resident individual is allowed a credit against 2
the tax imposed under this chapter for the amount of any income tax 3
paid to another state, or political subdivision of the state, on 4
income taxed under this chapter, subject to the following conditions, 5
which must be imposed separately with respect to each taxing 6
jurisdiction:7
(a) The credit is allowed only for taxes paid to the other 8
jurisdiction on net income from sources within that jurisdiction that 9
is included in the individual's Washington base income; and10
(b) The amount of the credit may not exceed the smaller of:11
(i) The amount of tax paid to the other jurisdiction on net 12
income from sources within the other jurisdiction; or13
(ii) The amount of tax due under this chapter before application 14
of credits allowable by this chapter, multiplied by a fraction. The 15
numerator of the fraction is the amount of the taxpayer's federal 16
adjusted gross income subject to tax in the other jurisdiction. The 17
denominator of the fraction is the taxpayer's total Washington base 18
income. The fraction may never be greater than one.19
(2) If the laws of the other taxing jurisdiction contain a 20
provision exempting a resident of this state from liability for the 21
payment of income taxes on income earned for personal services 22
performed in such jurisdiction, then the department may enter into a 23
reciprocal agreement with such jurisdiction providing a similar tax 24
exemption on income earned for personal services performed in this 25
state. 26
NEW SECTION. Sec. 204. CREDIT FOR BUSINESS AND OCCUPATION AND 27
PUBLIC UTILITY TAXES. (1) Beginning in tax year 2028 with taxes due 28
in 2029, to avoid taxing the same Washington taxable income under the 29
business and occupation tax or public utility tax and the tax imposed 30
under this chapter, a nonrefundable credit is allowed against taxes 31
due under this chapter on income that is also subject to the tax 32
imposed under chapter 82.04 or 82.16 RCW. The credit is equal to the 33
amount of tax paid under chapter 82.04 or 82.16 RCW for income 34
included in both the calculation of the tax paid under chapter 82.04 35
or 82.16 RCW and the tax imposed under this chapter.36
(2) The credit under this section is earned in regard to income 37
reportable for federal income tax purposes and may be claimed against 38
taxes due under this chapter, for the tax reporting period in which 39
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the income is reportable for federal income tax purposes. The credit 1
claimed for a tax reporting period may not exceed the tax otherwise 2
due under this chapter for that tax reporting period. Unused credit 3
may not be carried forward or backward to another tax reporting 4
period. No refunds may be granted for unused credit under this 5
section. 6
NEW SECTION. Sec. 205. CREDIT FOR WASHINGTON CAPITAL GAINS 7
TAXES. Beginning in tax year 2028 with taxes due in 2029, a 8
nonrefundable credit is allowed against taxes due under this chapter 9
for the amount of tax imposed on Washington capital gains for the 10
same tax year. "Washington capital gains" has the same meaning as 11
provided in RCW 82.87.020.12
NEW SECTION. Sec. 206. CREDIT FOR PASS-THROUGH ENTITY TAX 13
PAYMENTS. Beginning in tax year 2028 for taxes due in 2029, a credit 14
is allowed against taxes due under this chapter for the amount of the 15
tax expense incurred by a pass-through entity under section 502 of 16
this act attributable to the owner as provided in section 502 (3) of 17
this act. For a resident, the credit under this section must be 18
reduced by the amount of any credit claimed under section 203 of this 19
act based on the same Washington taxable income.20
NEW SECTION. Sec. 207. CARRYFORWARDS AND CARRYBACKS. The amount 21
of tax credits received by any taxpayer under sections 203 through 22
206 of this act may not exceed the total amount of tax due for that 23
reporting period; however, the carryback or carryforward of any 24
unused excess credits is allowed.25
PART III26
ADJUSTED GROSS INCOME MODIFICATIONS27
NEW SECTION. Sec. 301. INTRODUCTORY. In computing Washington 28
base income for a taxable year, modifications must be made to the 29
taxpayer's federal adjusted gross income as required under sections 30
302 through 305 and 401 through 407 of this act, unless the 31
modification has the effect of duplicating an item of income or 32
deduction. If an item of income is excluded from federal adjusted 33
gross income, including income derived directly from treaty - protected 34
tribal rights, it is excluded from the tax under this chapter unless 35
p. 5 HB 2738
specifically included as provided in sections 302 through 305 of this 1
act. 2
NEW SECTION. Sec. 302. LONG-TERM CAPITAL GAINS AND LOSSES. (1) 3
In computing a taxpayer's Washington base income, the taxpayer must 4
deduct from the taxpayer's federal adjusted gross income any long-5
term capital gains that have been included in computing federal 6
adjusted gross income.7
(2) In computing a taxpayer's Washington base income, a taxpayer 8
must add to the taxpayer's federal adjusted gross income any long-9
term capital losses that have been included in computing federal 10
adjusted gross income. 11
(3) After making the modifications required under subsections (1) 12
and (2) of this section, in computing a taxpayer's Washington base 13
income, a taxpayer must add to the taxpayer's federal adjusted gross 14
income the amount of Washington capital gains subject to tax under 15
chapter 82.87 RCW for the same taxable year, plus the amounts 16
deducted under RCW 82.87.060 (1) and (4). This subsection (3) applies 17
only to taxpayers owing tax under chapter 82.87 RCW for that taxable 18
year. "Washington capital gains" has the same meaning as provided in 19
RCW 82.87.020. 20
NEW SECTION. Sec. 303. STATE AND LOCAL OBLIGATIONS. In 21
computing a taxpayer's Washington base income, the taxpayer must add 22
to the taxpayer's federal adjusted gross income any income that has 23
been excluded under section 103 of the internal revenue code in 24
computing federal adjusted gross income, except interest on 25
obligations of the state of Washington or political subdivisions of 26
the state of Washington.27
NEW SECTION. Sec. 304. STATE AND LOCAL INCOME TAXES — BUSINESS 28
AND OCCUPATION AND PUBLIC UTILITY TAXES. In computing a taxpayer's 29
Washington base income, the taxpayer must add to the taxpayer's 30
federal adjusted gross income:31
(1) Taxes on or measured by net income which have been deducted 32
under the internal revenue code in computing federal adjusted gross 33
income; 34
(2) The amount of taxes paid or accrued which have been deducted 35
for federal purposes, but for which either a business and occupation 36
tax credit or public utility tax credit, or both, is allowed.37
p. 6 HB 2738
NEW SECTION. Sec. 305. FEDERAL OBLIGATIONS. In computing a 1
taxpayer's Washington base income, the taxpayer must deduct, to the 2
extent included, from the taxpayer's federal adjusted gross income, 3
any income derived from obligations of the United States that this 4
state is prohibited by federal law from subjecting to a net income 5
tax. However, the amount deducted under this section must be reduced 6
by any expense, including amortizable bond premiums, incurred in the 7
production of such income to the extent the expense has been deducted 8
in calculating federal adjusted gross income.9
NEW SECTION. Sec. 306. CHARITABLE CONTRIBUTIONS. In determining 10
a taxpayer's Washington taxable income, the taxpayer may deduct from 11
their Washington base income the amount of charitable contributions 12
they claimed for the taxable year under section 170 of the internal 13
revenue code, up to a maximum deduction of $100,000 per individual, 14
or in the case of spouses or domestic partners, their combined 15
charitable deduction is limited to $100,000, regardless of whether 16
they file joint or separate returns.17
NEW SECTION. Sec. 307. PASS-THROUGH ENTITY PAYMENTS. (1) In 18
computing a taxpayer's Washington taxable income, the taxpayer must 19
add to the taxpayer's Washington base income the taxpayer's 20
distributive share of the tax expense or loss incurred by a pass-21
through entity under section 502 of this act to the extent the 22
expense has been deducted in calculating the taxpayer's federal 23
adjusted gross income.24
(2) The taxpayer must also deduct any income derived from a pass-25
through entity that was added in calculating the taxpayer's federal 26
adjusted income. 27
(3) The taxpayer must add the taxpayer's distributions from pass-28
through entities as reported on the taxpayer's federal schedule K-1 29
form and apportioned pursuant to section 402 of this act.30
NEW SECTION. Sec. 308. In determining a taxpayer's Washington 31
taxable income, the taxpayer may deduct from the taxpayer's 32
Washington base income the amount deposited in a capital construction 33
fund under section 7518 of the internal revenue code if the amount 34
has reduced the taxpayer's federal taxable income for the taxable 35
year.36
p. 7 HB 2738
NEW SECTION. Sec. 309. ONE MILLION DOLLAR STANDARD DEDUCTION. 1
In computing a taxpayer's Washington taxable income, a taxpayer may 2
deduct from the taxpayer's Washington base income a standard 3
deduction of $1,000,000 per individual, or in the case of spouses or 4
domestic partners, their combined standard deduction is $2,000,000. 5
The amount of the standard deduction must be annually adjusted 6
pursuant to section 311 of this act. The standard deduction must be 7
adjusted for nonresidents as provided in section 310 of this act.8
NEW SECTION. Sec. 310. ADJUSTMENT OF DEDUCTIONS FOR 9
NONRESIDENTS. The deduction from Washington base income allowed under 10
section 309 of this act for individual taxpayers who are not 11
residents of this state for the entire taxable year must be reduced 12
by multiplying the amount of the deduction by a fraction. The 13
numerator of the fraction is the individual's Washington base income. 14
The denominator of the fraction is the individual's federal adjusted 15
gross income from all sources. The fraction may never be greater than 16
one.17
NEW SECTION. Sec. 311. INDEX FOR INFLATION. (1) Beginning 18
October 2029 and each October thereafter, the department must adjust 19
the standard deduction under section 309 of this act by multiplying 20
the current standard deduction amount by one plus the percentage by 21
which the most current consumer price index available on October 1st 22
of the current year exceeds the consumer price index for the prior 23
12-month period, and rounding the result to the nearest $1,000. If an 24
adjustment under this subsection (1) would reduce the standard 25
deduction amount, the department must not adjust the amounts for use 26
in the following year. The department must publish the adjusted 27
standard deduction amount on its public website by October 31st of 28
each year. The adjusted standard deduction amount calculated under 29
this subsection (1) takes effect for taxes due in the following 30
calendar year.31
(2) For purposes of this section, the following definitions 32
apply: 33
(a) "Consumer price index" means the consumer price index for all 34
urban consumers, all items, for the Seattle area as calculated by the 35
United States bureau of labor statistics or its successor agency.36
(b) "Seattle area" means the geographic area sample that includes 37
Seattle and surrounding areas. 38
p. 8 HB 2738
PART IV1
DIVISION OF INCOME2
NEW SECTION. Sec. 401. ALLOCATION AND APPORTIONMENT OF INCOME. 3
(1) For resident individuals, all income must be allocated to this 4
state.5
(2) For nonresident individuals, income derived from sources 6
within this state must be allocated to this state. Income derived 7
from sources within this state means: 8
(a) Wages and other compensation from employment within this 9
state as provided in section 403 of this act; 10
(b) Compensation attributable to professional athletics as 11
provided in section 404 of this act; 12
(c) Income of a nonresident student athlete derived from the 13
commercial use of the student athlete's name, image, or likeness as 14
provided in section 407 of this act; 15
(d) Amounts attributable to any business, trade, profession, or 16
occupation carried on within this state, including an individual's 17
distributive share of income from a pass-through entity operating 18
within this state as provided in section 402 of this act, to the 19
extent determined under section 405 of this act; 20
(e) Rents, short-term gains, and other amounts attributable to 21
the ownership or disposition of any interest in real or tangible 22
personal property in this state; and 23
(f) Income from intangible personal property, including 24
annuities, dividends, interest, and gains from the disposition of 25
intangible personal property, to the extent that the intangible 26
personal property was employed in a business, trade, profession, or 27
occupation carried on within this state. 28
(3) Deductible expenses, capital losses, and net operating losses 29
of a nonresident are based solely on income, gains, losses, and 30
deductible expenses derived from or connected with sources in this 31
state but are otherwise determined in the same manner as the 32
corresponding federal deductions except as provided in this chapter.33
(4) Compensation paid by the United States for service in the 34
armed forces of the United States performed in this state by a 35
nonresident does not constitute income derived from sources within 36
this state. 37
p. 9 HB 2738
NEW SECTION. Sec. 402. PASS-THROUGH ENTITIES — DISTRIBUTIVE 1
SHARE. (1) Income derived from sources within this state include an 2
apportioned share of the individual's distributive share of income, 3
gains, losses, and deductions from pass-through entities that operate 4
in the state, as provided in subsection (2) of this section.5
(2) The tax due under this chapter for partners, members, or 6
shareholders of a pass-through entity are computed by including a pro 7
rata share of the Washington base income and the credits allowed 8
under sections 203 through 205 of this act, if the modification or 9
credit relates to the income of the pass-through entity. Each 10
member's, partner's, or shareholder's pro rata share of a 11
modification or credit is the amount of modification or credit 12
multiplied by a fraction. The numerator of the fraction is the 13
member's, partner's, or shareholder's distributive share of pass-14
through income. The denominator of the fraction is the total income 15
of the pass-through entity. The fraction may never be greater than 16
one. 17
(3) The following definitions apply throughout this section.18
(a) "Pass-through income" includes both distributed and 19
undistributed federal taxable income of the pass-through entity.20
(b) "Pro rata share" means pro rata share as reflected on the 21
member's, partner's, or shareholder's federal schedule K-1 form.22
NEW SECTION. Sec. 403. GENERAL RULE FOR ALLOCATING NONRESIDENT 23
INCOME DERIVED FROM COMPENSATION TO WASHINGTON. (1) Unless provided 24
otherwise in this chapter, a nonresident individual is subject to tax 25
on the portion of federal adjusted gross income derived from 26
employment within the state of Washington, regardless of the location 27
of the commercial domicile of the employer.28
(2) Compensation for services performed by a nonresident as part 29
of their employment must be allocated to this state to the extent 30
such services are rendered within the state. If services are 31
performed both within and outside the state, the compensation must be 32
apportioned based on the ratio of days worked in the state to total 33
days worked, or by another reasonable method approved by the 34
department. 35
(3) For the purpose of this section, the following definitions 36
apply: 37
(a) "Compensation" means wages, salaries, commissions, and any 38
other form of remuneration paid to employees for personal services.39
p. 10 HB 2738
(b) "Employer" means any individual or type of organization, 1
including any partnership, association, trust, estate, joint stock 2
company, insurance company, limited liability company, or 3
corporation, whether domestic or foreign, or the receiver, trustee in 4
bankruptcy, trustee, or the legal representative of a deceased 5
person, having any person in employment or, having become an 6
employer, has not ceased to be an employer as provided in this 7
chapter. 8
(c) "Employment" means personal service, of whatever nature, as 9
known to the common law or any other legal relationship performed for 10
an employer by an individual for compensation or under any contract 11
calling for the performance of personal services, written or oral, 12
express or implied, where the employer is subject to tax under RCW 13
50.24.010 on any portion of compensation paid by the employer to the 14
individual for the performance of the personal services.15
NEW SECTION. Sec. 404. APPORTIONING INCOME FOR NONRESIDENT 16
MEMBERS OF A PROFESSIONAL ATHLETIC TEAM. (1) For nonresident members 17
of a professional athletic team, the portion of compensation 18
attributable to athletic performances in the state must be 19
apportioned to Washington as provided under this section.20
(2)(a) The portion of the compensation of a member of a 21
professional athletic team apportioned to Washington is that portion 22
of compensation received for the tax year that bears the same ratio 23
to total compensation received for the tax year as the number of duty 24
days within this state bears to the total number of duty days spent 25
both within and outside this state during the tax year.26
(b) Notwithstanding the description of the portion of 27
compensation subject to apportionment to the state of Washington 28
under this subsection, the department may provide by rule alternative 29
methodologies for determining the portion of compensation subject to 30
apportionment to the state of Washington that the department 31
determines to be fair and equitable. 32
(3)(a) A person who transacts business in the state of Washington 33
and who pays wages, salary, bonuses, or other taxable income to a 34
member of a professional athletic team, must submit a report to the 35
department each year indicating any member of a professional athletic 36
team who may be reasonably assumed to owe tax under this chapter for 37
the calendar year. 38
p. 11 HB 2738
(b) The report required under (a) of this subsection (3) must 1
include: 2
(i) The total amount of compensation paid during the year to the 3
members of the professional athletic team for which the report is 4
being made; 5
(ii) A roster of the members of the professional athletic team 6
for which the report is being made who were members at any time 7
during the year, that lists for each member: 8
(A) A taxpayer identification number; 9
(B) Compensation paid to the member; and 10
(C) The number of duty days in this state and the total number of 11
duty days for the year; and 12
(iii) Any other information the department may require by rule.13
(c) The report must be filed with the department on or before 14
April 15th following the year for which the report is being made or 15
at another time as the department may require by rule.16
(4) The definitions in this subsection apply throughout this 17
section unless the context clearly requires otherwise.18
(a) "Compensation" means wages, salaries, bonuses, and any other 19
income included with federal adjusted gross income and paid to a 20
member of a professional athletic team. 21
(b) "Duty days" means the days during the tax year from the 22
beginning of the official preseason training period of a professional 23
athletic team through the last game in which the professional 24
athletic team competes or is scheduled to compete during the tax 25
year. 26
(c) "Member of a professional athletic team" means a nonresident 27
athlete or other individual rendering service to a professional 28
athletic team if the total compensation of the athlete or other 29
individual exceeds $1,000,000 in a tax year. 30
NEW SECTION. Sec. 405. GENERAL RULE FOR APPORTIONING AND 31
ALLOCATING NONRESIDENT INCOME FROM BUSINESS ACTIVITY CONDUCTED IN THE 32
STATE. (1) The portion of federal adjusted gross income of a 33
nonresident derived from or connected with a business, trade, or 34
profession carried on in this state, including a sole proprietorship 35
and any distributive share of a pass-through entity of a business, 36
trade, or profession carried on in this state, must be apportioned 37
and allocated as provided in this section. This section does not 38
p. 12 HB 2738
apply to compensation received as an employee allocated under section 1
403 of this act. 2
(2) Income from a business, trade, or profession carried on in 3
this state, including any distributive share of a pass-through entity 4
of a business, trade, or profession carried on in this state, must be 5
classified as either apportionable income or nonapportionable income.6
(3) All apportionable income must be apportioned to this state by 7
multiplying the income by the receipts factor. The receipts factor is 8
a fraction the numerator of which is the total receipts of the 9
taxpayer in this state during the tax period and the denominator of 10
which is the total receipts of the taxpayer everywhere during the tax 11
period. 12
(a) Receipts from the sale of tangible personal property are in 13
this state if: 14
(i) The property is delivered or shipped to a purchaser, other 15
than the United States government, within this state regardless of 16
the free on board point or other conditions of the sale; or17
(ii) The property is shipped from an office, store, warehouse, 18
factory, or other place of storage in this state and (A) the 19
purchaser is the United States government or (B) the taxpayer is not 20
taxable in the state of the purchaser. 21
(b)(i) Receipts, other than receipts described in (a) of this 22
subsection (3), are in this state if the taxpayer's market for the 23
sales is in this state. The taxpayer's market for sales is in this 24
state: 25
(A) In the case of sale, rental, lease, or license of real 26
property, if and to the extent the property is located in this state;27
(B) In the case of rental, lease, or license of tangible personal 28
property, if and to the extent the property is located in this state;29
(C) In the case of sale of a service, if and to the extent the 30
service is delivered to a location in this state; and31
(D) In the case of intangible property: 32
(I) That is rented, leased, or licensed, if and to the extent the 33
property is used in this state, provided that intangible property 34
used in marketing a good or service to a consumer is "used in this 35
state" if that good or service is purchased by a consumer who is in 36
this state; and 37
(II) That is sold, if and to the extent the property is used in 38
this state, if: 39
p. 13 HB 2738
(1) A contract right, government license, or similar intangible 1
property that authorizes the holder to conduct a business activity in 2
a specific geographic area is "used in this state" if the geographic 3
area includes all or part of this state; 4
(2) Receipts from intangible property sales that are contingent 5
on the productivity, use, or disposition of the intangible property 6
must be treated as receipts from the rental, lease, or licensing of 7
such intangible property under subsection (4)(a)(i) of this section; 8
and 9
(3) All other receipts from a sale of intangible property must be 10
excluded from the numerator and denominator of the receipts factor.11
(c) If the state or states of assignment under (b) of this 12
subsection (3) cannot be determined, the state or states of 13
assignment must be reasonably approximated. 14
(d) If the taxpayer is not taxable in a state to which a receipt 15
is assigned under this subsection (3), or if the state of assignment 16
cannot be determined under (b) of this subsection (3) or reasonably 17
approximated under (c) of this subsection (3), the receipt must be 18
excluded from the denominator of the receipts factor.19
(4)(a) If the allocation and apportionment provisions in 20
subsection (3) of this section do not fairly represent the extent of 21
the taxpayer's business activity in this state, the taxpayer may 22
petition for or the department may require, in respect to all or any 23
part of the taxpayer's business activity, if reasonable:24
(i) Separate accounting; 25
(ii) The exclusion of any one or more of the factors;26
(iii) The inclusion of one or more additional factors that will 27
fairly represent the taxpayer's business activity in this state; or28
(iv) The employment of any other method to effectuate an 29
equitable allocation and apportionment of the taxpayer's income.30
(b) If the allocation and apportionment provisions of this 31
section do not fairly represent the extent of business activity in 32
this state for taxpayers engaged in a particular industry or in a 33
particular transaction or activity, the department may, in addition 34
to the authority provided in (a) of this subsection (4), adopt rules 35
for determining alternative allocation and apportionment methods for 36
such taxpayers. Rules adopted pursuant to this subsection (4)(b) must 37
be applied uniformly, except that with respect to any taxpayer to 38
whom such rule applies, the taxpayer may petition for, or the 39
department may require, adjustment under (a) of this subsection (4).40
p. 14 HB 2738
(c)(i) The party petitioning for, or the department requiring, 1
the use of any method to effectuate an equitable allocation and 2
apportionment of the taxpayer's income pursuant to (a) of this 3
subsection (4) must prove by clear and convincing evidence:4
(A) That the allocation and apportionment provisions of this 5
section do not fairly represent the extent of the taxpayer's business 6
activity in this state; and 7
(B) That the alternative to such provisions is reasonable.8
(ii) The same burden of proof applies whether the taxpayer is 9
petitioning for, or the department is requiring, the use of any 10
reasonable method to effectuate an equitable allocation and 11
apportionment of the taxpayer's income. However, if the department 12
can show that in any two of the prior five tax years, the taxpayer 13
had used an allocation or apportionment method at variance with its 14
allocation or apportionment method or methods used for such other tax 15
years, then the department does not bear the burden of proof in 16
imposing a different method pursuant to (a) of this subsection (4).17
(iii) If the department requires any method to effectuate an 18
equitable allocation and apportionment of the taxpayer's income, the 19
department may not impose any civil or criminal penalty with 20
reference to the tax due that is attributable to the taxpayer's 21
reasonable reliance solely on the allocation and apportionment 22
provisions of this section. 23
(iv) A taxpayer that has received written permission from the 24
department to use a reasonable method to effectuate an equitable 25
allocation and apportionment of the taxpayer's income may not have 26
that permission revoked with respect to transactions and activities 27
that have already occurred unless there has been a material change 28
in, or a material misrepresentation of, the facts provided by the 29
taxpayer upon which the department reasonably relied.30
(5) Rents and royalties from real or tangible personal property, 31
capital gains, interest, dividends, or patent or copyright royalties, 32
to the extent that they constitute nonapportionable income, must be 33
allocated as provided in subsections (6) through (9) of this section.34
(6)(a) Net rents and royalties from real property located in this 35
state are allocable to this state. 36
(b) Net rents and royalties from tangible personal property are 37
allocable to this state: (i) If and to the extent that the property 38
is utilized in this state; or (ii) in their entirety if the 39
taxpayer's commercial domicile is in this state and the taxpayer is 40
p. 15 HB 2738
not organized under the laws of or taxable in the state in which the 1
property is utilized. 2
(c) The extent of utilization of tangible personal property in a 3
state is determined by multiplying the rents and royalties by a 4
fraction the numerator of which is the number of days of physical 5
location of the property in the state during the rental or royalty 6
period in the taxable year and the denominator of which is the number 7
of days of physical location of the property everywhere during all 8
rental or royalty periods in the taxable year. If the physical 9
location of the property during the rental or royalty period is 10
unknown or unascertainable by the taxpayer, tangible personal 11
property is utilized in the state in which the property was located 12
at the time the rental or royalty payer obtained possession.13
(7)(a) Short-term capital gains and losses from sales of real 14
property located in this state are allocable to this state.15
(b) Short-term capital gains and losses from sales of tangible 16
personal property are allocable to this state if: (i) The property 17
had a situs in this state at the time of the sale; or (ii) the 18
taxpayer's commercial domicile is in this state and the taxpayer is 19
not taxable in the state in which the property had a situs.20
(c) Short-term capital gains and losses from sales of intangible 21
personal property are allocable to this state if the taxpayer's 22
commercial domicile is in this state. 23
(8) Interest and dividends are allocable to this state if the 24
taxpayer's commercial domicile is in this state. 25
(9)(a) Patent and copyright royalties are allocable to this 26
state: (i) If and to the extent that the patent or copyright is 27
utilized by the payer in this state; or (ii) if and to the extent 28
that the patent or copyright is utilized by the payer in a state in 29
which the taxpayer is not taxable and the taxpayer's commercial 30
domicile is in this state. 31
(b) A patent is utilized in a state to the extent that it is 32
employed in production, fabrication, manufacturing, or other 33
processing in the state or to the extent that a patented product is 34
produced in the state. If the basis of receipts from patent royalties 35
does not permit allocation to states or if the accounting procedures 36
do not reflect states of utilization, the patent is utilized in the 37
state in which the taxpayer's commercial domicile is located.38
(c) A copyright is utilized in a state to the extent that 39
printing or other publication originates in the state. If the basis 40
p. 16 HB 2738
of receipts from copyright royalties does not permit allocation to 1
states or if the accounting procedures do not reflect states of 2
utilization, the copyright is utilized in the state in which the 3
taxpayer's commercial domicile is located. 4
(10) The definitions in this subsection apply throughout this 5
section unless the context clearly requires otherwise.6
(a) "Apportionable income" means: 7
(i) All income that is apportionable under the Constitution of 8
the United States and is not allocated under the laws of this state, 9
including: 10
(A) Income arising from transactions and activity in the regular 11
course of the taxpayer's trade or business; and 12
(B) Income arising from tangible and intangible property if the 13
acquisition, management, employment, development, or disposition of 14
the property is or was related to the operation of the taxpayer's 15
trade or business; and 16
(ii) Any income that would be allocable to this state under the 17
Constitution of the United States, but that is apportioned rather 18
than allocated pursuant to the laws of this state.19
(b) "Commercial domicile" means the principal place from which 20
the trade or business of the taxpayer is directed or managed.21
(c) "Nonapportionable income" means all income other than 22
apportionable income. 23
(d) "Receipts" means all gross receipts of the taxpayer that are 24
not allocated under this section, and that are received from 25
transactions and activity in the regular course of the taxpayer's 26
trade or business, except that receipts of a taxpayer from hedging 27
transactions and from the maturity, redemption, sale, exchange, loan, 28
or other disposition of cash or securities, shall be excluded.29
(e) "State" means any state of the United States, the District of 30
Columbia, the Commonwealth of Puerto Rico, any territory or 31
possession of the United States, and any foreign country or political 32
subdivision thereof. 33
(f) "Taxpayer" means a pass-through entity or individual 34
conducting business activity in the state of Washington.35
NEW SECTION. Sec. 406. PRORATION OF PART-YEAR INCOME. (1) 36
Except as provided in subsection (2) of this section, the adjusted 37
gross income of a part-year resident is the sum of the following:38
p. 17 HB 2738
(a) For the portion of the year in which the taxpayer was a 1
resident of Washington, the taxpayer's entire adjusted gross income; 2
and 3
(b) For the portion of the year in which the taxpayer was a 4
nonresident, the taxpayer's adjusted gross income derived from 5
sources within this state, as provided in sections 403 through 405 of 6
this act. 7
(2) The adjusted gross income of a part-year resident with 8
federal adjusted gross income that includes an item of income, gain, 9
loss, deduction, or credit from a pass-through entity must include 10
the sum of the following: 11
(a) The total amount of the item that is taken into account in 12
federal adjusted gross income, multiplied by the ratio of the number 13
of days the taxpayer was a resident of Washington during the tax year 14
of the entity over the total number of days in the tax year of the 15
entity; and 16
(b) The total amount of the item that is taken into account in 17
federal adjusted gross income and that is derived from or connected 18
with sources within this state, as determined under sections 403 19
through 405 of this act, multiplied by the ratio of the number of 20
days the taxpayer was a nonresident of Washington during the tax year 21
of the entity over the total number of days in the tax year of the 22
entity. 23
NEW SECTION. Sec. 407. ALLOCATION AND APPORTIONMENT OF 24
NONRESIDENT STUDENT ATHLETE INCOME. (1) The portion of adjusted gross 25
income of a nonresident student athlete derived from the commercial 26
use of the student athlete's name, image, or likeness is allocated to 27
this state if the publicity services provided by the student athlete 28
related to such commercial use of the student athlete's name, image, 29
or likeness primarily occur in Washington.30
(2) The portion of adjusted gross income of a nonresident student 31
athlete derived from payments by an institution of higher education 32
representing a percentage of institutional athletic revenues shall be 33
apportioned to Washington in a form and manner consistent with a 34
duty-day methodology. By January 1, 2028, the department shall submit 35
proposed legislation to the legislature that would implement an 36
apportionment methodology as specified under this subsection (2).37
(3) The definitions in this subsection apply throughout this 38
section unless the context clearly requires otherwise.39
p. 18 HB 2738
(a) "Commercial use" means the use of an individual's name, 1
image, or likeness for advertising, selling, or soliciting purchases 2
of products, goods, or services. 3
(b) "Name, image, or likeness" means an individual's readily 4
identifiable name, voice, signature, photograph, or likeness.5
(c) "Publicity services" includes, but is not limited to, the 6
following activities: Appearing in photoshoots; filming commercials; 7
recording audio endorsements; posting sponsored content on social 8
media platforms; attending promotional events; either wearing or 9
using, or both, branded products; and granting rights by the student 10
athlete to use the student athlete's name, image, or likeness in 11
either advertisements or online campaigns, or both.12
(d) "Student athlete" means an individual who is enrolled at an 13
institution of higher education and eligible to engage in any varsity 14
intercollegiate athletics program at the institution.15
PART V16
ESTIMATED TAX PAYMENTS AND PASS-THROUGH ENTITY TAX ELECTION17
NEW SECTION. Sec. 501. ESTIMATED TAX IMPOSED — DUE DATE OF 18
ESTIMATED TAXES — AMOUNT OF ESTIMATED TAX — UNDERPAYMENT PENALTY. (1) 19
Each individual subject to taxation by this chapter that is required 20
by the internal revenue code to make payment of estimated taxes must 21
pay to the department on forms prescribed by the department the 22
estimated taxes due under this chapter.23
(2) The provisions of the internal revenue code relating to the 24
determination of reporting periods and due dates of payments of 25
estimated tax applies to the estimated tax payments due under this 26
section. 27
(3) The amount of the estimated tax is the annualized tax divided 28
by the number of months in the reporting period. No estimated tax is 29
due if the annualized tax is less than $5,000. RCW 82.32.050 and 30
82.32.090 apply to underpayments of estimated tax unless the 31
estimated tax remitted to the department is either at least 90 32
percent of the tax shown on the return required under section 702 (1) 33
of this act or 100 percent of the tax shown on the previous year's 34
tax return. 35
(4) For purposes of this section, the annualized tax is the 36
taxpayer's projected tax liability for the tax year as computed 37
p. 19 HB 2738
pursuant to internal revenue code section 6654 and the regulations 1
thereunder. 2
(5) The department shall adopt rules for making estimated tax 3
payments under this section on wages, salaries, and other 4
compensation subject to federal income tax withholding.5
(6) Estimated payments are not required under this section before 6
July 1, 2029. 7
NEW SECTION. Sec. 502. PASS-THROUGH ENTITY TAX ELECTION. (1)(a) 8
Beginning January 1, 2028, a tax is imposed at a rate of 9.90 percent 9
of the taxable income of an electing entity for each taxable year in 10
which an election under this section is in effect.11
(b) The tax is paid by the electing entity. 12
(2)(a) A pass-through entity may elect to be subject to the tax 13
imposed under this section by filing an election with the department 14
on or before the due date prescribed by the department for making 15
such election, but no later than April 15th. 16
(b) The election is made annually and is irrevocable for the 17
taxable year once filed. 18
(c) The election must be made by: (i) In the case of a 19
partnership or limited liability company, any person authorized to 20
sign the entity's return; and (ii) in the case of an S corporation, 21
an officer authorized to sign the return. 22
(3)(a) The taxable income of an electing entity consists of:23
(i) The entire distributive share of income, gain, loss, and 24
deduction attributable to resident owners, regardless of source; and25
(ii) The state source distributive share of income, gain, loss, 26
and deduction attributable to nonresident owners. 27
(b) Taxable income is determined by applying all state specific 28
additions, subtractions, and modifications that would apply to the 29
owners individually. 30
(c) Guaranteed payments, separately stated items, and investment 31
income is included in taxable income to the same extent these items 32
would be included in an owner's individual Washington taxable income 33
under this chapter. 34
(4)(a) An electing entity shall make estimated tax payments in 35
the same manner and at the same times as required for individual 36
estimated tax payments under section 501 of this act.37
(b) Estimated tax payments are based on the electing entity's 38
reasonable estimate of taxable income for the taxable year.39
p. 20 HB 2738
(c) Estimated tax payments paid by the electing entity under this 1
section are in lieu of the estimated tax payments imposed on owners 2
under section 501 of this act with respect to the income included in 3
the electing entity's taxable income. 4
(d) Estimated tax payments are not required under this subsection 5
before July 1, 2029. 6
(5)(a) Each owner of an electing entity is allowed a credit 7
against the tax imposed under this section equal to the owner's 8
proportionate share of the tax paid by the electing entity under this 9
chapter as provided in section 206 of this act. 10
(b) Resident owners shall include in their Washington taxable 11
income their full distributive share of the electing entity's income, 12
gains, losses, and deductions and shall claim the credit allowed 13
under section 206 of this act. 14
(c) Nonresident owners shall include in their Washington taxable 15
income their distributive share of the electing entity's income, 16
gains, losses, and deductions as allocated and apportioned under 17
section 405 of this act and shall claim the credit allowed under 18
section 206 of this act. 19
(6)(a) The electing entity shall file an annual return reporting 20
taxable income, tax due, estimated payments, and any other 21
information required by the department in a form and manner required 22
by the department. 23
(b) The department may adopt rules necessary to administer this 24
section, which to the extent possible, must be consistent with the 25
requirements under this chapter for individuals. The department may 26
adopt rules to streamline and simplify the process and procedures for 27
making an election under this section. 28
(7) The definitions in this subsection apply throughout this 29
section unless the context clearly requires otherwise.30
(a) "Distributive share" means the owner's share of income, gain, 31
loss, or deduction as determined under the entity's governing 32
documents and federal income tax law. 33
(b) "Electing entity" means a pass-through entity that has made a 34
valid election under subsection (2)(c) of this section.35
(c) "Nonresident owner" means an owner who is not a resident of 36
this state for individual income tax purposes. 37
(d) "Owner" means a partner, member, or shareholder of a pass-38
through entity. 39
p. 21 HB 2738
(e) "Resident owner" means an owner who is a resident of this 1
state for individual income tax purposes. 2
(f) "State source income" means income, gain, or loss derived 3
from sources within this state, determined under the allocation and 4
apportionment provisions of section 405 of this act.5
PART VI6
CRIMES7
NEW SECTION. Sec. 601. CRIMES. (1) Any person who knowingly 8
attempts to evade the tax imposed under this chapter or payment 9
thereof is guilty of a class C felony as provided in chapter 9A.20 10
RCW.11
(2) Any person required to collect tax imposed under this chapter 12
who knowingly fails to truthfully account for or pay over the tax is 13
guilty of a class C felony as provided in chapter 9A.20 RCW.14
(3) Any person who knowingly fails to pay tax, pay estimated tax, 15
make returns, or supply information, as required under this chapter, 16
is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.17
PART VII18
ADMINISTRATIVE PROVISIONS19
NEW SECTION. Sec. 701. METHOD OF ACCOUNTING. (1) A taxpayer's 20
method of accounting for purposes of the tax imposed under this 21
chapter is the same as the taxpayer's method of accounting for 22
federal income tax purposes. If no method of accounting has been 23
regularly used by a taxpayer for federal income tax purposes or if 24
the method used does not clearly reflect income, tax due under this 25
chapter is computed by the cash method of accounting.26
(2) If a person's method of accounting is changed for federal 27
income tax purposes, it must be similarly changed for purposes of 28
this chapter. 29
NEW SECTION. Sec. 702. FILING TAX RETURNS. (1)(a) Except as 30
otherwise provided in this section or RCW 82.32.080, taxpayers owing 31
tax under this chapter must file, on forms prescribed by the 32
department, a return with the department on or before the date the 33
taxpayer's federal income tax return for the taxable year is required 34
p. 22 HB 2738
to be filed. Individuals not owing tax under this chapter are not 1
required to file a return under this section. 2
(b)(i) Except as provided in (b)(ii) of this subsection (1), 3
returns and all supporting documents must be filed electronically 4
using the department's online tax filing service or other method of 5
electronic reporting as the department may authorize.6
(ii) The department may waive the electronic filing requirement 7
in this subsection for good cause as provided in RCW 82.32.080.8
(2)(a) Every taxpayer owing tax under this chapter must include 9
with the Washington return described in subsection (1) of this 10
section a copy of the taxpayer's federal income tax return filed with 11
the internal revenue service of the United States, including:12
(i) All federal income tax forms, schedules, and other 13
attachments that directly relate to the taxpayer's federal adjusted 14
gross income; and 15
(ii) Any information, returns, and federal tax documents received 16
by the taxpayer that directly relate to the taxpayer's federal 17
adjusted gross income including, but not limited to, form W-2, form 18
1099-INT, form 1099-DIV, form 1099-NEC, form 1099-MISC, form 1099-B, 19
schedule K-1 (form 1065), and schedule K-1 (form 1120-S).20
(b) A taxpayer must provide to the department, upon request, 21
other federal tax return information needed to verify the tax owed 22
under this chapter. 23
(c) The department may prescribe by rule additional reporting or 24
verification requirements under this subsection (2) to substantiate 25
an individual's federal adjusted gross income. 26
(3) Each taxpayer required to file a return under this section 27
must, without assessment, notice, or demand, pay any tax due thereon 28
to the department on or before the date fixed for the filing of the 29
return, regardless of any filing extension. The tax must be paid by 30
electronic funds transfer as defined in RCW 82.32.085 or by other 31
forms of electronic payment as may be authorized by the department. 32
The department may waive the electronic payment requirement for good 33
cause as provided in RCW 82.32.080. If any tax due under this chapter 34
is not paid by the due date, interest and penalties as provided in 35
chapter 82.32 RCW apply to the deficiency. 36
(4) If a taxpayer has obtained an extension of time for filing 37
the federal income tax return for the taxable year and the taxpayer 38
provides the department, on or before the date fixed for the filing 39
of the return, regardless of any filing extension, evidence 40
p. 23 HB 2738
satisfactory to the department confirming the federal extension, the 1
taxpayer is entitled to the same extension of time for filing the 2
return required under this section. An extension under this 3
subsection for the filing of a return under this chapter is not an 4
extension of time to pay the tax due under this chapter.5
(5)(a) If any return due under subsection (1) of this section, 6
along with a copy of the federal income tax return, is not filed with 7
the department by the due date or any extension granted by the 8
department, the department must assess a penalty in the amount of 9
five percent of the tax due for the taxable year covered by the 10
return for each month or portion of a month that the return remains 11
unfiled. The total penalty assessed under this subsection may not 12
exceed 25 percent of the tax due for the taxable year covered by the 13
delinquent return. The penalty under this subsection is in addition 14
to any penalties assessed for the late payment of any tax due on the 15
return. 16
(b) The department must waive or cancel the penalty imposed under 17
this subsection if: 18
(i) The department is persuaded that the taxpayer's failure to 19
file the return by the due date was due to circumstances beyond the 20
taxpayer's control; or 21
(ii) The taxpayer has not been delinquent in filing any return 22
due under this section during the preceding five calendar years and 23
the taxpayer has not been contacted by the department for enforcement 24
purposes regarding the reporting period covered by the waiver 25
request. 26
(6) The department must waive or cancel the penalty imposed under 27
RCW 82.32.090(1) on a payment required under this section when the 28
circumstances under which the delinquency occurred do not qualify for 29
waiver or cancellation under RCW 82.32.105(1) if all of the following 30
apply: 31
(a) A taxpayer requests a waiver of penalty for a payment 32
required under this section; 33
(b) The taxpayer has not been contacted by the department for 34
enforcement purposes regarding the reporting period covered by the 35
waiver request; and 36
(c) The taxpayer has timely remitted payment on all tax returns 37
due under this section during the preceding five calendar years.38
(7)(a) In the event a taxpayer's federal income tax return is 39
changed in a manner that is final after their return required under 40
p. 24 HB 2738
subsection (1) of this section is filed with the department and the 1
taxpayer's federal income tax return is changed in a manner that 2
impacts either the calculation of their Washington adjusted gross 3
income or their tax liability under this chapter, or both, the 4
taxpayer must amend the taxpayer's return due under subsection (1) of 5
this section for the same tax year in which their federal income tax 6
return is changed. For the purposes of this subsection (7), a federal 7
income tax return is changed in a manner that is final when such 8
change is not subject to either administrative review by the United 9
States internal revenue service or judicial review in a court of 10
competent jurisdiction, or both. A change is also final in the case 11
of an audit finding in the following circumstances:12
(i) The taxpayer has received audit findings from the internal 13
revenue service for the tax period and the taxpayer does not timely 14
file an administrative appeal with the internal revenue service.15
(ii) The taxpayer consented to any of the audit findings for the 16
tax period through a form or other written agreement with the United 17
States internal revenue service. 18
(b) If the return is not amended, as required under this 19
subsection (7), with the department within 90 days of the federal 20
income tax return change becoming final, the department must assess 21
on the 91st day a penalty in the amount of five percent of any 22
additional tax due for the taxable year covered by the return for 23
each month or portion of a month that the return is not timely 24
amended as required by this subsection. The total penalty assessed 25
under this subsection (7)(b) may not exceed 25 percent of the 26
additional tax due for the taxable year covered by the delinquent 27
return amendment. The penalty under this subsection (7)(b) is in 28
addition to any penalties assessed under this section.29
(8)(a) No assessment or correction of an assessment for 30
additional taxes, penalties, or interest due may be made by the 31
department more than four years after the year in which a return is 32
filed under subsection (1) of this section except:33
(i) When the taxpayer's federal income tax return is changed in a 34
manner that requires an amended return under subsection (7) of this 35
section; or 36
(ii) As provided in RCW 82.32.050(4). 37
(b) In the event the statute of limitations is extended under 38
(a)(i) of this subsection, no assessment or correction of an 39
assessment for additional taxes, penalties, or interest due may be 40
p. 25 HB 2738
made by the department more than four years after the year in which 1
an amended return is filed with the department as required under 2
subsection (7) of this section. Any assessment or correction of an 3
assessment for additional taxes, penalties, or interest due under 4
this subsection (8)(b) but made by the department more than four 5
years after the year in which a return is filed under subsection (1) 6
of this section must be directly related to the federal income tax 7
return change described in subsection (7) of this section.8
NEW SECTION. Sec. 703. REQUIREMENT FOR SEPARATE OR JOINT 9
RETURNS. (1) If the federal income tax liabilities of both spouses 10
are determined on a joint federal return for the taxable year, they 11
must file a joint return under this chapter.12
(2) Except as otherwise provided in this subsection (2), if the 13
federal income tax liability of any individual, including either 14
spouse of a marital community, is determined on a separate federal 15
return for the taxable year, they must file separate returns under 16
this chapter. State registered domestic partners may file a joint 17
return under this chapter even if they filed separate federal returns 18
for the taxable year. 19
(3) The liability for tax due under this chapter of each spouse 20
or state registered domestic partner is joint and several, unless:21
(a) The spouse is relieved of liability for federal tax purposes 22
as provided under 26 U.S.C. Sec. 6015 of the internal revenue code; 23
or 24
(b) The department determines that the state registered domestic 25
partner qualifies for relief as provided by rule of the department. 26
Such rule, to the extent possible without being inconsistent with 27
this chapter, must follow 26 U.S.C. Sec. 6015. 28
(4)(a) Unless the context clearly indicates otherwise, 29
individuals who are spouses or state registered domestic partners are 30
not considered separate taxpayers for the purposes of this chapter 31
regardless of whether they file a joint or separate return for the 32
tax imposed under this chapter. The activities and assets of each 33
spouse or state registered domestic partner are combined as if they 34
were one individual for the purposes of determining the applicability 35
of any threshold amounts, caps, deductions, credits, or any other 36
amounts related to the activities or assets of an individual 37
throughout this chapter. 38
p. 26 HB 2738
(b)(i) Except as provided in (b)(ii) of this subsection (4), when 1
an individual does not file a joint return for the tax imposed under 2
this chapter, both spouses or state registered domestic partners must 3
allocate between themselves their respective share of the marital 4
community's or domestic partnership's assets and activity. The 5
allocation must be reported to the department on any returns required 6
to be filed pursuant to this chapter in a manner prescribed by the 7
department. 8
(ii) If both spouses or state registered domestic partners cannot 9
agree on an allocation of assets and activity as authorized under 10
(b)(i) of this subsection (4), each spouse is limited to one-half of 11
the total assets and activities of their marital community or 12
domestic partnership. 13
NEW SECTION. Sec. 704. ADMINISTRATION OF CHAPTER CONSISTENT 14
WITH CHAPTER 82.32 RCW. Except as otherwise provided by law and to 15
the extent not inconsistent with the provisions of this chapter, 16
chapter 82.32 RCW applies to the administration of taxes imposed 17
under this chapter.18
Sec. 705. RCW 82.32.050 and 2025 c 409 s 12 are each amended to 19
read as follows: 20
(1) If upon examination of any returns or from other information 21
obtained by the department it appears that a tax or penalty has been 22
paid less than that properly due, the department shall assess against 23
the taxpayer such additional amount found to be due and shall add 24
thereto interest on the tax only. The department shall notify the 25
taxpayer by mail, or electronically as provided in RCW 82.32.135, of 26
the additional amount and the additional amount shall become due and 27
shall be paid within 30 days from the date of the notice, or within 28
such further time as the department may provide. 29
(a) For tax liabilities arising before January 1, 1992, interest 30
shall be computed at the rate of nine percent per annum from the last 31
day of the year in which the deficiency is incurred until the earlier 32
of December 31, 1998, or the date of payment. After December 31, 33
1998, the rate of interest shall be variable and computed as provided 34
in subsection (2) of this section. The rate so computed shall be 35
adjusted on the first day of January of each year for use in 36
computing interest for that calendar year. 37
p. 27 HB 2738
(b) For tax liabilities arising after December 31, 1991, the rate 1
of interest shall be variable and computed as provided in subsection 2
(2) of this section from the last day of the year in which the 3
deficiency is incurred until the date of payment. The rate so 4
computed shall be adjusted on the first day of January of each year 5
for use in computing interest for that calendar year.6
(c)(i) Except as otherwise provided in this subsection (1)(c), 7
interest imposed after December 31, 1998, shall be computed from the 8
last day of the month following each calendar year included in a 9
notice, and the last day of the month following the final month 10
included in a notice if not the end of a calendar year, until the due 11
date of the notice. 12
(ii) For interest associated with annual tax reporting periods 13
having a due date as prescribed in RCW 82.32.045(3) ((and)), 14
82.87.110, and section 702 of this act, interest must be computed 15
from the last day of April immediately following each such annual 16
reporting period included in the notice, until the due date of the 17
notice. 18
(iii) For purposes of computing interest under (c)(i) and (ii) of 19
this subsection (1): 20
(A) The same computation of interest applies regardless of 21
whether the department grants additional time for filing any return 22
under RCW 82.32.080(4)(a)(i). 23
(B) If the department extends a due date under subsection (3) of 24
this section or RCW 82.32.080(4)(b), and payment is not made in full 25
by the extended due date, interest is computed from the last day of 26
the month in which the extended due date occurs until the date of 27
payment. 28
(iv) If payment in full is not made by the due date of the 29
notice, additional interest shall be computed under this subsection 30
(1)(c) until the date of payment. The rate of interest shall be 31
variable and computed as provided in subsection (2) of this section. 32
The rate so computed shall be adjusted on the first day of January of 33
each year for use in computing interest for that calendar year.34
(2) For the purposes of this section, the rate of interest to be 35
charged to the taxpayer shall be an average of the federal short-term 36
rate as defined in 26 U.S.C. Sec. 1274 (d) plus two percentage points. 37
The rate set for each new year shall be computed by taking an 38
arithmetical average to the nearest percentage point of the federal 39
short-term rate, compounded annually. That average shall be 40
p. 28 HB 2738
calculated using the rates from four months: January, April, and July 1
of the calendar year immediately preceding the new year, and October 2
of the previous preceding year. 3
(3) During a state of emergency declared under RCW 43.06.010(12), 4
the department, on its own motion or at the request of any taxpayer 5
affected by the emergency, may extend the due date of any assessment 6
or correction of an assessment for additional taxes, penalties, or 7
interest as the department deems proper. 8
(4) No assessment or correction of an assessment for additional 9
taxes, penalties, or interest due may be made by the department more 10
than four years after the close of the tax year, except (a) against a 11
taxpayer who has not registered as required by this chapter, (b) upon 12
a showing of fraud or of misrepresentation of a material fact by the 13
taxpayer, or (c) where a taxpayer has executed a written waiver of 14
such limitation. The execution of a written waiver shall also extend 15
the period for making a refund or credit as provided in RCW 16
82.32.060(2). 17
(5) For the purposes of this section, the following definitions 18
apply: 19
(a) "Due date of the notice" means the date indicated in the 20
notice by which the amount due in the notice must be paid, or such 21
later date as provided by RCW 1.12.070(3). 22
(b) "Return" means any document a person is required by the state 23
of Washington to file to satisfy or establish a tax or fee obligation 24
that is administered or collected by the department and that has a 25
statutorily defined due date. "Return" also means an application for 26
refund under RCW 82.08.0206. 27
Sec. 706. RCW 82.32.060 and 2025 c 409 s 13 are each amended to 28
read as follows: 29
(1) If, upon receipt of an application by a taxpayer for a refund 30
or for an audit of the taxpayer's records, or upon an examination of 31
the returns or records of any taxpayer, it is determined by the 32
department that within the statutory period for assessment of taxes, 33
penalties, or interest prescribed by RCW 82.32.050 any amount of tax, 34
penalty, or interest has been paid in excess of that properly due, 35
the excess amount paid within, or attributable to, such period must 36
be credited to the taxpayer's account or must be refunded to the 37
taxpayer, at the taxpayer's option. Except as provided in subsection 38
(2) of this section, no refund or credit may be made for taxes, 39
p. 29 HB 2738
penalties, or interest paid more than four years prior to the 1
beginning of the calendar year in which the refund application is 2
made or examination of records is completed. 3
(2)(a) The execution of a written waiver under RCW 82.32.050 or 4
82.32.100 will extend the time for making a refund or credit of any 5
taxes paid during, or attributable to, the years covered by the 6
waiver if, prior to the expiration of the waiver period, an 7
application for refund of such taxes is made by the taxpayer or the 8
department discovers a refund or credit is due. 9
(b) A refund or credit must be allowed for an excess payment 10
resulting from the failure to claim a bad debt deduction, credit, or 11
refund under RCW 82.04.4284, 82.08.037, 82.12.037, 82.14B.150, or 12
82.16.050(5) for debts that became bad debts under 26 U.S.C. Sec. 13
166, as amended or renumbered as of January 1, 2003, less than four 14
years prior to the beginning of the calendar year in which the refund 15
application is made or examination of records is completed.16
(3) Any such refunds must be made by means of vouchers approved 17
by the department and by the issuance of state warrants drawn upon 18
and payable from such funds as the legislature may provide. However, 19
taxpayers who are required to pay taxes by electronic funds transfer 20
under RCW 82.32.080 must have any refunds paid by electronic funds 21
transfer if the department has the necessary account information to 22
facilitate a refund by electronic funds transfer. 23
(4) Any judgment for which a recovery is granted by any court of 24
competent jurisdiction, not appealed from, for tax, penalties, and 25
interest which were paid by the taxpayer, and costs, in a suit by any 26
taxpayer must be paid in the same manner, as provided in subsection 27
(3) of this section, upon the filing with the department of a 28
certified copy of the order or judgment of the court.29
(a) Interest at the rate of three percent per annum must be 30
allowed by the department and by any court on the amount of any 31
refund, credit, or other recovery allowed to a taxpayer for taxes, 32
penalties, or interest paid by the taxpayer before January 1, 1992. 33
This rate of interest applies for all interest allowed through 34
December 31, 1998. Interest allowed after December 31, 1998, must be 35
computed at the rate as computed under RCW 82.32.050(2). The rate so 36
computed must be adjusted on the first day of January of each year 37
for use in computing interest for that calendar year.38
(b) For refunds or credits of amounts paid or other recovery 39
allowed to a taxpayer after December 31, 1991, the rate of interest 40
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must be the rate as computed for assessments under RCW 82.32.050(2) 1
less one percent. This rate of interest applies for all interest 2
allowed through December 31, 1998. Interest allowed after December 3
31, 1998, must be computed at the rate as computed under RCW 4
82.32.050(2). The rate so computed must be adjusted on the first day 5
of January of each year for use in computing interest for that 6
calendar year. 7
(5) Interest allowed on a credit notice or refund issued after 8
December 31, 2003, must be computed as follows: 9
(a) If all overpayments for each calendar year and all reporting 10
periods ending with the final month included in a notice or refund 11
were made on or before the due date of the final return for each 12
calendar year or the final reporting period included in the notice or 13
refund: 14
(i) Interest must be computed from January 31st following each 15
calendar year included in a notice or refund; 16
(ii) Interest must be computed from the last day of the month 17
following the final month included in a notice or refund; or18
(iii) For interest associated with annual tax reporting periods 19
having a due date as prescribed in RCW 82.32.045(3) ((and)), 20
82.87.110, and section 702 of this act, interest must be computed 21
from the last day of April following each such annual reporting 22
period included in a notice or refund. 23
(b) If the taxpayer has not made all overpayments for each 24
calendar year and all reporting periods ending with the final month 25
included in a notice or refund on or before the dates specified by 26
RCW 82.32.045 for the final return for each calendar year or the 27
final month included in the notice or refund, interest must be 28
computed from the last day of the month following the date on which 29
payment in full of the liabilities was made for each calendar year 30
included in a notice or refund, and the last day of the month 31
following the date on which payment in full of the liabilities was 32
made if the final month included in a notice or refund is not the end 33
of a calendar year. 34
(c) Interest included in a credit notice must accrue up to the 35
date the taxpayer could reasonably be expected to use the credit 36
notice, as defined by the department's rules. If a credit notice is 37
converted to a refund, interest must be recomputed to the date the 38
refund is issued, but not to exceed the amount of interest that would 39
have been allowed with the credit notice. 40
p. 31 HB 2738
Sec. 707. RCW 82.32.090 and 2025 c 409 s 14 are each amended to 1
read as follows: 2
(1) If payment of any tax due on a return to be filed by a 3
taxpayer is not received by the department of revenue by the due 4
date, there is assessed a penalty of nine percent of the amount of 5
the tax; and if the tax is not received on or before the last day of 6
the month following the due date, there is assessed a total penalty 7
of 19 percent of the amount of the tax under this subsection; and if 8
the tax is not received on or before the last day of the second month 9
following the due date, there is assessed a total penalty of 29 10
percent of the amount of the tax under this subsection. No penalty so 11
added may be less than $5. 12
(2) If the department of revenue determines that any tax has been 13
substantially underpaid, there is assessed a penalty of five percent 14
of the amount of the tax determined by the department to be due. If 15
payment of any tax determined by the department to be due is not 16
received by the department by the due date specified in the notice, 17
or any extension thereof, there is assessed a total penalty of 15 18
percent of the amount of the tax under this subsection; and if 19
payment of any tax determined by the department to be due is not 20
received on or before the 30th day following the due date specified 21
in the notice of tax due, or any extension thereof, there is assessed 22
a total penalty of 25 percent of the amount of the tax under this 23
subsection. No penalty so added may be less than $5. As used in this 24
((section)) subsection, "substantially underpaid" means that the 25
taxpayer has paid less than 80 percent of the amount of tax 26
determined by the department to be due for all of the types of taxes 27
included in, and for the entire period of time covered by, the 28
department's examination, and the amount of underpayment is at least 29
$1,000. 30
(3) If a warrant is issued by the department of revenue for the 31
collection of taxes, increases, and penalties, there is added thereto 32
a penalty of 10 percent of the amount of the tax, but not less than 33
$10. 34
(4) If the department finds that a person has engaged in any 35
business or performed any act upon which a tax is imposed under this 36
title and that person has not obtained from the department a 37
registration certificate as required by RCW 82.32.030, the department 38
must impose a penalty of five percent of the amount of tax due from 39
that person for the period that the person was not registered as 40
p. 32 HB 2738
required by RCW 82.32.030. The department may not impose the penalty 1
under this subsection (4) if a person who has engaged in business 2
taxable under this title without first having registered as required 3
by RCW 82.32.030, prior to any notification by the department of the 4
need to register, obtains a registration certificate from the 5
department. 6
(5) If the department finds that a taxpayer has disregarded 7
specific written instructions as to reporting or tax liabilities, or 8
willfully disregarded the requirement to file returns or remit 9
payment electronically, as provided by RCW 82.32.080, the department 10
must add a penalty of 10 percent of the amount of the tax that should 11
have been reported and/or paid electronically or the additional tax 12
found due if there is a deficiency because of the failure to follow 13
the instructions. A taxpayer disregards specific written instructions 14
when the department has informed the taxpayer in writing of the 15
taxpayer's tax obligations and the taxpayer fails to act in 16
accordance with those instructions unless, in the case of a 17
deficiency, the department has not issued final instructions because 18
the matter is under appeal pursuant to this chapter or departmental 19
regulations. The department may not assess the penalty under this 20
section upon any taxpayer who has made a good faith effort to comply 21
with the specific written instructions provided by the department to 22
that taxpayer. A taxpayer will be considered to have made a good 23
faith effort to comply with specific written instructions to file 24
returns and/or remit taxes electronically only if the taxpayer can 25
show good cause, as defined in RCW 82.32.080, for the failure to 26
comply with such instructions. A taxpayer will be considered to have 27
willfully disregarded the requirement to file returns or remit 28
payment electronically if the department has mailed or otherwise 29
delivered the specific written instructions to the taxpayer on at 30
least two occasions. Specific written instructions may be given as a 31
part of a tax assessment, audit, determination, closing agreement, or 32
other written communication, provided that such specific written 33
instructions apply only to the taxpayer addressed or referenced on 34
such communication. Any specific written instructions by the 35
department must be clearly identified as such and must inform the 36
taxpayer that failure to follow the instructions may subject the 37
taxpayer to the penalties imposed by this subsection. If the 38
department determines that it is necessary to provide specific 39
written instructions to a taxpayer that does not comply with the 40
p. 33 HB 2738
requirement to file returns or remit payment electronically as 1
provided in RCW 82.32.080, the specific written instructions must 2
provide the taxpayer with a minimum of 45 days to come into 3
compliance with its electronic filing and/or payment obligations 4
before the department may impose the penalty authorized in this 5
subsection. 6
(6) If the department finds that all or any part of a deficiency 7
resulted from engaging in a disregarded transaction, as described in 8
RCW 82.32.655(3), the department must assess a penalty of 35 percent 9
of the additional tax found to be due as a result of engaging in a 10
transaction disregarded by the department under RCW 82.32.655(2). The 11
penalty provided in this subsection may be assessed together with any 12
other applicable penalties provided in this section on the same tax 13
found to be due, except for the evasion penalty provided in 14
subsection (7) of this section. The department may not assess the 15
penalty under this subsection if, before the department discovers the 16
taxpayer's use of a transaction described under RCW 82.32.655(3), the 17
taxpayer discloses its participation in the transaction to the 18
department. 19
(7) If the department finds that all or any part of the 20
deficiency resulted from an intent to evade the tax payable 21
hereunder, a further penalty of 50 percent of the additional tax 22
found to be due must be added. 23
(8) The penalties imposed under subsections (1) through (4) of 24
this section can each be imposed on the same tax found to be due. 25
This subsection does not prohibit or restrict the application of 26
other penalties authorized by law. 27
(9) The department may not impose the evasion penalty in 28
combination with the penalty for disregarding specific written 29
instructions or the penalty provided in subsection (6) of this 30
section on the same tax found to be due. 31
(10) If a taxpayer substantially underpays an estimated payment 32
of tax imposed under RCW 82.87.040 pursuant to RCW 82.87.110(3), 33
there is assessed a penalty of five percent of the amount of the 34
actual tax due for tax imposed under RCW 82.87.040. As used in this 35
((section)) subsection, "substantially underpaid" means that an 36
individual's estimated payment for taxes imposed under RCW 82.87.040 37
was less than 80 percent of the actual tax due, and at least $1,000.38
(11) If the total estimated tax payments under section 501 of 39
this act for the tax year are substantially underpaid, there is 40
p. 34 HB 2738
assessed a penalty of five percent of the amount of the underpaid 1
tax. If a pass-through entity makes an election under section 502 of 2
this act, this subsection (11) applies to the estimated tax payments 3
of the pass-through entity in lieu of the individual. As used in this 4
subsection, "substantially underpaid" means that an individual's 5
total annual estimated tax payments under section 501 of this act 6
were less than 80 percent of the actual annual tax due, and at least 7
$5,000. 8
(12) For the purposes of this section, "return" means any 9
document a person is required by the state of Washington to file to 10
satisfy or establish a tax or fee obligation that is administered or 11
collected by the department, and that has a statutorily defined due 12
date. "Return" also includes the submission of any estimated payment 13
of tax as provided in RCW 82.87.110(3) and the confirmation of an 14
extension of the filing due date required under RCW 82.87.110(5).15
NEW SECTION. Sec. 708. ESTIMATION AGREEMENTS. The department 16
may reasonably estimate the items of business or nonbusiness income 17
of a taxpayer having an office within the state and one or more other 18
states or foreign countries which may be apportioned or allocated to 19
the state and may enter into estimation agreements with such 20
taxpayers for the determination of their liability for the tax 21
imposed by this chapter.22
NEW SECTION. Sec. 709. PROVISIONS OF INTERNAL REVENUE CODE 23
CONTROL. (1) To the extent possible without being inconsistent with 24
this chapter, all of the provisions of subtitle F (procedure and 25
administration) of the internal revenue code relating to the 26
following subjects apply to the taxes imposed under this chapter:27
(a) Timing and amount of tax prepayments under section 501 of 28
this act; 29
(b) Liability of transferees; and 30
(c) Time and manner of making returns, extensions of time for 31
filing returns, verification of returns, and the time when a return 32
is deemed to be filed by the department. 33
(2) The department by rule may provide modifications and 34
exceptions to the provisions listed in subsection (1) of this 35
section, if reasonably necessary to facilitate the prompt, efficient, 36
and equitable collection of tax under this chapter.37
p. 35 HB 2738
NEW SECTION. Sec. 710. RULES. The department may adopt rules 1
under chapter 34.05 RCW for the administration and enforcement of 2
this chapter. The rules, to the extent possible without being 3
inconsistent with this chapter, must follow the internal revenue code 4
and the regulations and rulings of the United States treasury 5
department with respect to the federal income tax. The department may 6
adopt as a part of these rules any portions of the internal revenue 7
code and United States treasury department regulations and rulings, 8
in whole or in part.9
NEW SECTION. Sec. 711. LOCAL GOVERNMENT PUBLIC DEFENSE FUNDING 10
STABILIZATION ACCOUNT. (1) The local government public defense 11
funding stabilization account is hereby created in the state 12
treasury. All receipts specified under section 202 (1)(a) of this act 13
must be deposited in the account. Moneys in the account may be spent 14
only after appropriation. Expenditures from the account may be used 15
only for distributions to counties and cities for public defense 16
services consistent with chapter 10.101 RCW. Counties and cities 17
receiving funds must comply with the requirements of RCW 10.101.060.18
(2) On a quarterly basis, the state treasurer shall distribute 19
moneys deposited in the local government public defense funding 20
stabilization account as follows: 21
(a) 10 percent to cities on a pro rata basis, based upon the 22
annual number of misdemeanor criminal cases filed in courts under 23
each city's jurisdiction, as determined by the office of public 24
defense. 25
(b) The remainder to counties as follows: 26
(i) Six percent shall be distributed as a base allocation among 27
the counties. A county's base allocation is equal to the total amount 28
to be distributed under this subsection (2)(b)(i) divided by 39.29
(ii) 94 percent shall be distributed as follows:30
(A) 40 percent shall be distributed on a pro rata basis to each 31
county based on the county's personal income ratio as determined 32
under subsection (3) of this section; and 33
(B) 60 percent shall be distributed on a pro rata basis to each 34
county based upon the annual number of criminal cases filed in the 35
county superior court as a percentage of the total annual number of 36
criminal cases filed in the superior courts of all counties, as 37
determined under subsection (5) of this section. 38
p. 36 HB 2738
(3) The office of financial management shall calculate each 1
county's personal income ratio by December 31, 2028, and December 2
31st of each year thereafter, using the most recent annual county 3
personal income data published by the federal bureau of economic 4
analysis for the state of Washington and notify the state treasurer. 5
The updated county personal income ratio applies to county 6
distributions in the following calendar year. 7
(4) For the purpose of this section, "county's personal income 8
ratio" means the personal income of the county divided by the 9
personal income of the state of Washington, as determined under 10
subsection (3) of this section. 11
(5) For the purposes of this section, the annual number of 12
criminal cases filed in the county superior court is determined by 13
the most recent annual report of the courts of Washington, as 14
published by the office of the administrator for the courts.15
(6) For the purposes of this section, the annual number of 16
misdemeanor criminal cases filed in courts under the city's 17
jurisdiction is determined by the most recent annual report of the 18
courts of Washington, as published by the office of the administrator 19
for the courts. 20
PART VIII21
APPLICATION OF TAX TO PUBLIC PENSIONS22
Sec. 801. RCW 2.10.180 and 2012 c 159 s 17 are each amended to 23
read as follows: 24
(1) Except as provided in subsections (2), (3), ((and)) (4), and 25
(5) of this section, the right of a person to a retirement allowance, 26
disability allowance, or death benefit, the retirement, disability or 27
death allowance itself, any optional benefit, any other right accrued 28
or accruing to any person under the provisions of this chapter, and 29
the moneys in the fund created under this chapter, are hereby exempt 30
from any state, county, municipal, or other local tax and shall not 31
be subject to execution, garnishment, or any other process of law 32
whatsoever whether the same be in actual possession of the person or 33
be deposited or loaned. 34
(2) Subsection (1) of this section shall not be deemed to 35
prohibit a beneficiary of a retirement allowance from authorizing 36
deductions therefrom for payment of premiums due on any group 37
p. 37 HB 2738
insurance policy or plan issued for the benefit of a group comprised 1
of public employees of the state of Washington. 2
(3) Deductions made in the past from retirement benefits are 3
hereby expressly recognized, ratified, and affirmed. Future 4
deductions may only be made in accordance with this section.5
(4) Subsection (1) of this section shall not prohibit the 6
department of retirement systems from complying with (a) a wage 7
assignment order for child support issued pursuant to chapter 26.18 8
RCW, (b) a notice of payroll deduction issued under chapter 26.23 9
RCW, (c) an order to withhold and deliver issued pursuant to chapter 10
74.20A RCW, (d) a mandatory benefits assignment order issued pursuant 11
to chapter 41.50 RCW, (e) a court order directing the department of 12
retirement systems to pay benefits directly to an obligee under a 13
dissolution order as defined in RCW 41.50.500(3) which fully complies 14
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 15
order expressly authorized by federal law. 16
(5) Subsection (1) of this section does not exempt any pension or 17
other benefit received under this chapter from tax under Title 82A 18
RCW (the new title created in section 1003 of this act).19
Sec. 802. RCW 2.12.090 and 2012 c 159 s 18 are each amended to 20
read as follows: 21
(1) Except as provided in subsections (2), (3), ((and)) (4), and 22
(5) of this section, the right of any person to a retirement 23
allowance or optional retirement allowance under the provisions of 24
this chapter and all moneys and investments and income thereof are 25
exempt from any state, county, municipal, or other local tax and 26
shall not be subject to execution, garnishment, attachment, the 27
operation of bankruptcy or the insolvency laws, or other processes of 28
law whatsoever whether the same be in actual possession of the person 29
or be deposited or loaned and shall be unassignable except as herein 30
specifically provided. 31
(2) Subsection (1) of this section shall not prohibit the 32
department of retirement systems from complying with (a) a wage 33
assignment order for child support issued pursuant to chapter 26.18 34
RCW, (b) a notice of payroll deduction issued under chapter 26.23 35
RCW, (c) an order to withhold and deliver issued pursuant to chapter 36
74.20A RCW, (d) a mandatory benefits assignment order issued pursuant 37
to chapter 41.50 RCW, (e) a court order directing the department of 38
retirement systems to pay benefits directly to an obligee under a 39
p. 38 HB 2738
dissolution order as defined in RCW 41.50.500(3) which fully complies 1
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 2
order expressly authorized by federal law. 3
(3) Subsection (1) of this section shall not be deemed to 4
prohibit a beneficiary of a retirement allowance from authorizing 5
deductions therefrom for payment of premiums due on any group 6
insurance policy or plan issued for the benefit of a group comprised 7
of public employees of the state of Washington. 8
(4) Deductions made in the past from retirement benefits are 9
hereby expressly recognized, ratified, and affirmed. Future 10
deductions may only be made in accordance with this section.11
(5) Subsection (1) of this section does not exempt any pension or 12
other benefit received under this chapter from tax under Title 82A 13
RCW (the new title created in section 1003 of this act).14
Sec. 803. RCW 6.15.020 and 2011 c 162 s 3 are each amended to 15
read as follows: 16
(1) It is the policy of the state of Washington to ensure the 17
well-being of its citizens by protecting retirement income to which 18
they are or may become entitled. For that purpose generally and 19
pursuant to the authority granted to the state of Washington under 11 20
U.S.C. Sec. 522 (b)(2), the exemptions in this section relating to 21
retirement benefits are provided. 22
(2) Unless otherwise provided by federal law, any money received 23
by any citizen of the state of Washington as a pension from the 24
government of the United States, whether the same be in the actual 25
possession of such person or be deposited or loaned, shall be exempt 26
from execution, attachment, garnishment, or seizure by or under any 27
legal process whatever, and when a debtor dies, or absconds, and 28
leaves his or her family any money exempted by this subsection, the 29
same shall be exempt to the family as provided in this subsection. 30
This subsection shall not apply to child support collection actions 31
issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise 32
permitted by federal law , or to collection actions for taxes imposed 33
under Title 82A RCW (the new title created in section 1003 of this 34
act). 35
(3) The right of a person to a pension, annuity, or retirement 36
allowance or disability allowance, or death benefits, or any optional 37
benefit, or any other right accrued or accruing to any citizen of the 38
state of Washington under any employee benefit plan, and any fund 39
p. 39 HB 2738
created by such a plan or arrangement, shall be exempt from 1
execution, attachment, garnishment, or seizure by or under any legal 2
process whatever. This subsection shall not apply to child support 3
collection actions issued under chapter 26.18, 26.23, or 74.20A RCW 4
if otherwise permitted by federal law , or to collection actions for 5
taxes imposed under Title 82A RCW (the new title created in section 6
1003 of this act) . This subsection shall permit benefits under any 7
such plan or arrangement to be payable to a spouse, former spouse, 8
child, or other dependent of a participant in such plan to the extent 9
expressly provided for in a qualified domestic relations order that 10
meets the requirements for such orders under the plan, or, in the 11
case of benefits payable under a plan described in 26 U.S.C. Sec. 12
403(b) or 408 of the internal revenue code of 1986, as amended, or 13
section 409 of such code as in effect before January 1, 1984, to the 14
extent provided in any order issued by a court of competent 15
jurisdiction that provides for maintenance or support. This 16
subsection does not prohibit actions against an employee benefit 17
plan, or fund for valid obligations incurred by the plan or fund for 18
the benefit of the plan or fund. 19
(4) For the purposes of this section, the term "employee benefit 20
plan" means any plan or arrangement that is described in RCW 21
49.64.020, including any Keogh plan, whether funded by a trust or by 22
an annuity contract, and in 26 U.S.C. Sec. 401 (a) or 403 (a) of the 23
internal revenue code of 1986, as amended; or that is a tax-sheltered 24
annuity or a custodial account described in section 403 (b) of such 25
code or an individual retirement account or an individual retirement 26
annuity described in section 408 of such code; or a Roth individual 27
retirement account described in section 408A of such code; or a 28
medical savings account or a health savings account described in 29
sections 220 and 223, respectively, of such code; or a retirement 30
bond described in section 409 of such code as in effect before 31
January 1, 1984. The term "employee benefit plan" shall not include 32
any employee benefit plan that is established or maintained for its 33
employees by the government of the United States, by the state of 34
Washington under chapter 2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 35
41.37, 41.40, or 43.43 RCW or RCW 41.50.770, or by any agency or 36
instrumentality of the government of the United States.37
(5) An employee benefit plan shall be deemed to be a spendthrift 38
trust, regardless of the source of funds, the relationship between 39
the trustee or custodian of the plan and the beneficiary, or the 40
p. 40 HB 2738
ability of the debtor to withdraw or borrow or otherwise become 1
entitled to benefits from the plan before retirement. This subsection 2
shall not apply to child support collection actions issued under 3
chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by 4
federal law , or to collection actions for taxes imposed under Title 5
82A RCW (the new title created in section 1003 of this act) . This 6
subsection shall permit benefits under any such plan or arrangement 7
to be payable to a spouse, former spouse, child, or other dependent 8
of a participant in such plan to the extent expressly provided for in 9
a qualified domestic relations order that meets the requirements for 10
such orders under the plan, or, in the case of benefits payable under 11
a plan described in 26 U.S.C. Sec. 403 (b) or 408 of the internal 12
revenue code of 1986, as amended, or section 409 of such code as in 13
effect before January 1, 1984, to the extent provided in any order 14
issued by a court of competent jurisdiction that provides for 15
maintenance or support. 16
(6) Unless prohibited by federal law, nothing contained in 17
subsection (3), (4), or (5) of this section shall be construed as a 18
termination or limitation of a spouse's community property interest 19
in an employee benefit plan held in the name of or on account of the 20
other spouse, who is the participant or the account holder spouse. 21
Unless prohibited by applicable federal law, at the death of the 22
nonparticipant, nonaccount holder spouse, the nonparticipant, 23
nonaccount holder spouse may transfer or distribute the community 24
property interest of the nonparticipant, nonaccount holder spouse in 25
the participant or account holder spouse's employee benefit plan to 26
the nonparticipant, nonaccount holder spouse's estate, testamentary 27
trust, inter vivos trust, or other successor or successors pursuant 28
to the last will of the nonparticipant, nonaccount holder spouse or 29
the law of intestate succession, and that distributee may, but shall 30
not be required to, obtain an order of a court of competent 31
jurisdiction, including a nonjudicial binding agreement or order 32
entered under chapter 11.96A RCW, to confirm the distribution. For 33
purposes of subsection (3) of this section, the distributee of the 34
nonparticipant, nonaccount holder spouse's community property 35
interest in an employee benefit plan shall be considered a person 36
entitled to the full protection of subsection (3) of this section. 37
The nonparticipant, nonaccount holder spouse's consent to a 38
beneficiary designation by the participant or account holder spouse 39
with respect to an employee benefit plan shall not, absent clear and 40
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convincing evidence to the contrary, be deemed a release, gift, 1
relinquishment, termination, limitation, or transfer of the 2
nonparticipant, nonaccount holder spouse's community property 3
interest in an employee benefit plan. For purposes of this 4
subsection, the term "nonparticipant, nonaccount holder spouse" means 5
the spouse of the person who is a participant in an employee benefit 6
plan or in whose name an individual retirement account is maintained. 7
As used in this subsection, an order of a court of competent 8
jurisdiction entered under chapter 11.96A RCW includes an agreement, 9
as that term is used under RCW 11.96A.220. 10
Sec. 804. RCW 41.24.240 and 1995 c 11 s 13 are each amended to 11
read as follows: 12
(1) The right of any person to any future payment under the 13
provisions of this chapter shall not be transferable or assignable at 14
law or in equity, and none of the moneys paid or payable or the 15
rights existing under this chapter, shall be subject to execution, 16
levy, attachment, garnishment, or other legal process, or to the 17
operation of any bankruptcy or insolvency law. This section shall not 18
be applicable to any child support collection action taken under 19
chapter 26.18, 26.23, or 74.20A RCW. Benefits under this chapter 20
shall be payable to a spouse or ex-spouse to the extent expressly 21
provided for in any court decree of dissolution or legal separation 22
or in any court order or court-approved property settlement agreement 23
incident to any court decree of dissolution or legal separation.24
(2) Nothing in this chapter shall be construed to deprive any 25
participant, eligible to receive a pension hereunder, from receiving 26
a pension under any other act to which that participant may become 27
eligible by reason of services other than or in addition to his or 28
her services under this chapter. 29
(3) Subsection (1) of this section does not exempt any pension or 30
other benefit received under this chapter from tax under Title 82A 31
RCW (the new title created in section 1003 of this act).32
Sec. 805. RCW 41.32.052 and 2012 c 159 s 20 are each amended to 33
read as follows: 34
(1) Subject to subsections (2) ((and)), (3), and (4) of this 35
section, the right of a person to a pension, an annuity, a retirement 36
allowance, or disability allowance, to the return of contributions, 37
any optional benefit or death benefit, any other right accrued or 38
p. 42 HB 2738
accruing to any person under the provisions of this chapter and the 1
moneys in the various funds created by this chapter shall be 2
unassignable, and are hereby exempt from any state, county, municipal 3
or other local tax, and shall not be subject to execution, 4
garnishment, attachment, the operation of bankruptcy or insolvency 5
laws, or other process of law whatsoever whether the same be in 6
actual possession of the person or be deposited or loaned.7
(2) This section shall not be deemed to prohibit a beneficiary of 8
a retirement allowance who is eligible: 9
(a) Under RCW 41.05.080 from authorizing monthly deductions 10
therefrom for payment of premiums due on any group insurance policy 11
or plan issued for the benefit of a group comprised of public 12
employees of the state of Washington or its political subdivisions;13
(b) Under a group health care benefit plan approved pursuant to 14
RCW 28A.400.350 or 41.05.065 from authorizing monthly deductions 15
therefrom, of the amount or amounts of subscription payments, 16
premiums, or contributions to any person, firm, or corporation 17
furnishing or providing medical, surgical, and hospital care or other 18
health care insurance; or 19
(c) Under this system from authorizing monthly deductions 20
therefrom for payment of dues and other membership fees to any 21
retirement association composed of retired teachers and/or public 22
employees pursuant to a written agreement between the director and 23
the retirement association. 24
Deductions under (a) and (b) of this subsection shall be made in 25
accordance with rules that may be adopted by the director.26
(3) Subsection (1) of this section shall not prohibit the 27
department from complying with (a) a wage assignment order for child 28
support issued pursuant to chapter 26.18 RCW, (b) an order to 29
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 30
notice of payroll deduction )) an income withholding order issued 31
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 32
issued by the department, (e) a court order directing the department 33
of retirement systems to pay benefits directly to an obligee under a 34
dissolution order as defined in RCW 41.50.500(3) which fully complies 35
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 36
order expressly authorized by federal law. 37
(4) Subsection (1) of this section does not exempt any pension or 38
other benefit received under this chapter from tax under Title 82A 39
RCW (the new title created in section 1003 of this act).40
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Sec. 806. RCW 41.34.080 and 2012 c 159 s 23 are each amended to 1
read as follows: 2
(1) Subject to subsections (2) ((and)), (3), and (4) of this 3
section, the right of a person to a pension, an annuity, a retirement 4
allowance, any optional benefit, any other right accrued or accruing 5
to any person under the provisions of this chapter, and the various 6
funds created by chapter 239, Laws of 1995; chapter 341, Laws of 7
1998; and chapter 247, Laws of 2000 and all moneys and investments 8
and income thereof, is hereby exempt from any state, county, 9
municipal, or other local tax, and shall not be subject to execution, 10
garnishment, attachment, the operation of bankruptcy or insolvency 11
laws, or other process of law whatsoever, whether the same be in 12
actual possession of the person or be deposited or loaned and shall 13
be unassignable. 14
(2) This section shall not be deemed to prohibit a beneficiary of 15
a retirement allowance from authorizing deductions therefrom for 16
payment of premiums due on any group insurance policy or plan issued 17
for the benefit of a group comprised of public employees of the state 18
of Washington or its political subdivisions and that has been 19
approved for deduction in accordance with rules that may be adopted 20
by the state health care authority and/or the department. This 21
section shall not be deemed to prohibit a beneficiary of a retirement 22
allowance from authorizing deductions therefrom for payment of dues 23
and other membership fees to any retirement association or 24
organization the membership of which is composed of retired public 25
employees, if a total of three hundred or more of such retired 26
employees have authorized such deduction for payment to the same 27
retirement association or organization. 28
(3) Subsection (1) of this section shall not prohibit the 29
department from complying with (a) a wage assignment order for child 30
support issued pursuant to chapter 26.18 RCW, (b) an order to 31
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a 32
((notice of payroll deduction )) income withholding order issued 33
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 34
issued by the department, (e) a court order directing the department 35
to pay benefits directly to an obligee under a dissolution order as 36
defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 37
and 41.50.700, or (f) any administrative or court order expressly 38
authorized by federal law. 39
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(4) Subsection (1) of this section does not exempt any pension or 1
other benefit received under this chapter from tax under Title 82A 2
RCW (the new title created in section 1003 of this act).3
Sec. 807. RCW 41.35.100 and 2012 c 159 s 24 are each amended to 4
read as follows: 5
(1) Subject to subsections (2) ((and)), (3), and (4) of this 6
section, the right of a person to a pension, an annuity, or 7
retirement allowance, any optional benefit, any other right accrued 8
or accruing to any person under the provisions of this chapter, the 9
various funds created by this chapter, and all moneys and investments 10
and income thereof, are hereby exempt from any state, county, 11
municipal, or other local tax, and shall not be subject to execution, 12
garnishment, attachment, the operation of bankruptcy or insolvency 13
laws, or other process of law whatsoever, whether the same be in 14
actual possession of the person or be deposited or loaned and shall 15
be unassignable. 16
(2) This section does not prohibit a beneficiary of a retirement 17
allowance from authorizing deductions therefrom for payment of 18
premiums due on any group insurance policy or plan issued for the 19
benefit of a group comprised of public employees of the state of 20
Washington or its political subdivisions and which has been approved 21
for deduction in accordance with rules that may be adopted by the 22
state health care authority and/or the department. This section also 23
does not prohibit a beneficiary of a retirement allowance from 24
authorizing deductions therefrom for payment of dues and other 25
membership fees to any retirement association or organization the 26
membership of which is composed of retired public employees, if a 27
total of three hundred or more of such retired employees have 28
authorized such deduction for payment to the same retirement 29
association or organization. 30
(3) Subsection (1) of this section does not prohibit the 31
department from complying with (a) a wage assignment order for child 32
support issued pursuant to chapter 26.18 RCW, (b) an order to 33
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 34
notice of payroll deduction )) an income withholding order issued 35
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 36
issued by the department, (e) a court order directing the department 37
of retirement systems to pay benefits directly to an obligee under a 38
dissolution order as defined in RCW 41.50.500(3) which fully complies 39
p. 45 HB 2738
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 1
order expressly authorized by federal law. 2
(4) Subsection (1) of this section does not exempt any pension or 3
other benefit received under this chapter from tax under Title 82A 4
RCW (the new title created in section 1003 of this act).5
Sec. 808. RCW 41.40.052 and 2012 c 159 s 26 are each amended to 6
read as follows: 7
(1) Subject to subsections (2) ((and)), (3), and (4) of this 8
section, the right of a person to a pension, an annuity, or 9
retirement allowance, any optional benefit, any other right accrued 10
or accruing to any person under the provisions of this chapter, the 11
various funds created by this chapter, and all moneys and investments 12
and income thereof, are hereby exempt from any state, county, 13
municipal, or other local tax, and shall not be subject to execution, 14
garnishment, attachment, the operation of bankruptcy or insolvency 15
laws, or other process of law whatsoever, whether the same be in 16
actual possession of the person or be deposited or loaned and shall 17
be unassignable. 18
(2)(a) This section shall not be deemed to prohibit a beneficiary 19
of a retirement allowance from authorizing deductions therefrom for 20
payment of premiums due on any group insurance policy or plan issued 21
for the benefit of a group comprised of public employees of the state 22
of Washington or its political subdivisions and which has been 23
approved for deduction in accordance with rules that may be adopted 24
by the state health care authority and/or the department, and this 25
section shall not be deemed to prohibit a beneficiary of a retirement 26
allowance from authorizing deductions therefrom for payment of dues 27
and other membership fees to any retirement association or 28
organization the membership of which is composed of retired public 29
employees, if a total of three hundred or more of such retired 30
employees have authorized such deduction for payment to the same 31
retirement association or organization. 32
(b) This section does not prohibit a beneficiary of a retirement 33
allowance from authorizing deductions from that allowance for 34
charitable purposes on the same terms as employees and public 35
officers under RCW 41.04.035 and 41.04.036. 36
(3) Subsection (1) of this section shall not prohibit the 37
department from complying with (a) a wage assignment order for child 38
support issued pursuant to chapter 26.18 RCW, (b) an order to 39
p. 46 HB 2738
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 1
notice of payroll deduction )) an income withholding order issued 2
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 3
issued by the department, (e) a court order directing the department 4
of retirement systems to pay benefits directly to an obligee under a 5
dissolution order as defined in RCW 41.50.500(3) which fully complies 6
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 7
order expressly authorized by federal law. 8
(4) Subsection (1) of this section does not exempt any pension or 9
other benefit received under this chapter from tax under Title 82A 10
RCW (the new title created in section 1003 of this act).11
Sec. 809. RCW 41.44.240 and 2012 c 159 s 27 are each amended to 12
read as follows: 13
(1) The right of a person to a pension, annuity or a retirement 14
allowance, to the return of contribution, the pension, annuity or 15
retirement allowance itself, any optional benefit, any other right 16
accrued or accruing to any person under the provisions of this 17
chapter, and the moneys in the fund created under this chapter shall 18
not be subject to execution, garnishment, or any other process 19
whatsoever whether the same be in actual possession of the person or 20
be deposited or loaned. 21
(2) This section shall not apply to child support collection 22
actions taken under chapter 26.18, 26.23, or 74.20A RCW against 23
benefits payable under any such plan or arrangement. Benefits under 24
this chapter shall be payable to a spouse or ex-spouse to the extent 25
expressly provided for in any court decree of dissolution or legal 26
separation or in any court order or court-approved property 27
settlement agreement incident to any court decree of dissolution or 28
legal separation. 29
(3) Subsection (1) of this section does not exempt any pension or 30
other benefit received under this chapter from tax under Title 82A 31
RCW (the new title created in section 1003 of this act).32
Sec. 810. RCW 41.26.053 and 2012 c 159 s 21 are each amended to 33
read as follows: 34
(1) Subject to subsections (2) ((and)), (3), and (4) of this 35
section, the right of a person to a retirement allowance, disability 36
allowance, or death benefit, to the return of accumulated 37
contributions, the retirement, disability or death allowance itself, 38
p. 47 HB 2738
any optional benefit, any other right accrued or accruing to any 1
person under the provisions of this chapter, and the moneys in the 2
fund created under this chapter, are hereby exempt from any state, 3
county, municipal, or other local tax and shall not be subject to 4
execution, garnishment, attachment, the operation of bankruptcy or 5
insolvency laws, or any other process of law whatsoever, whether the 6
same be in actual possession of the person or be deposited or loaned 7
and shall be unassignable. 8
(2) On the written request of any person eligible to receive 9
benefits under this section, the department may deduct from such 10
payments the premiums for life, health, or other insurance. The 11
request on behalf of any child or children shall be made by the legal 12
guardian of such child or children. The department may provide for 13
such persons one or more plans of group insurance, through contracts 14
with regularly constituted insurance carriers or health care service 15
contractors. 16
(3) Subsection (1) of this section shall not prohibit the 17
department from complying with (a) a wage assignment order for child 18
support issued pursuant to chapter 26.18 RCW, (b) an order to 19
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 20
notice of payroll deduction )) an income withholding order issued 21
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 22
issued by the department, (e) a court order directing the department 23
of retirement systems to pay benefits directly to an obligee under a 24
dissolution order as defined in RCW 41.50.500(3) which fully complies 25
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 26
order expressly authorized by federal law. 27
(4) Subsection (1) of this section does not exempt any pension or 28
other benefit received under this chapter from tax under Title 82A 29
RCW (the new title created in section 1003 of this act).30
Sec. 811. RCW 43.43.310 and 2012 c 159 s 28 are each amended to 31
read as follows: 32
(1) Except as provided in subsections (2) ((and)), (3), and (4) 33
of this section, the right of any person to a retirement allowance or 34
optional retirement allowance under the provisions hereof and all 35
moneys and investments and income thereof are exempt from any state, 36
county, municipal, or other local tax and shall not be subject to 37
execution, garnishment, attachment, the operation of bankruptcy or 38
the insolvency laws, or other processes of law whatsoever, whether 39
p. 48 HB 2738
the same be in actual possession of the person or be deposited or 1
loaned and shall be unassignable except as herein specifically 2
provided. 3
(2) Subsection (1) of this section shall not prohibit the 4
department of retirement systems from complying with (a) a wage 5
assignment order for child support issued pursuant to chapter 26.18 6
RCW, (b) an order to withhold and deliver issued pursuant to chapter 7
74.20A RCW, (c) ((a notice of payroll deduction )) an income 8
withholding order issued pursuant to RCW 26.23.060, (d) a mandatory 9
benefits assignment order issued pursuant to chapter 41.50 RCW, (e) a 10
court order directing the department of retirement systems to pay 11
benefits directly to an obligee under a dissolution order as defined 12
in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 13
41.50.700, or (f) any administrative or court order expressly 14
authorized by federal law. 15
(3) Subsection (1) of this section shall not be deemed to 16
prohibit a beneficiary of a retirement allowance from authorizing 17
deductions therefrom for payment of premiums due on any group 18
insurance policy or plan issued for the benefit of a group comprised 19
of members of the Washington state patrol or other public employees 20
of the state of Washington, or for contributions to the Washington 21
state patrol memorial foundation. 22
(4) Subsection (1) of this section does not exempt any pension or 23
other benefit received under this chapter from tax under Title 82A 24
RCW (the new title created in section 1003 of this act).25
PART IX26
TAX RELIEF27
Sec. 901. RCW 82.08.0206 and 2024 c 3 s 1 are each amended to 28
read as follows: 29
(1) A working families' tax credit, funded by sales and use tax 30
imposed, is provided to eligible low-income persons for calendar 31
years beginning on or after January 1, 2022. The credit is refundable 32
and is calculated as provided in this section. 33
(2) For purposes of the credit in this section, the following 34
definitions apply: 35
(a)(i) "Eligible low-income person" means an individual who:36
(A) Is eligible for the credit provided in Title 26 U.S.C. Sec. 37
32 of the internal revenue code; 38
p. 49 HB 2738
(B) Properly files a federal income tax return for the prior 1
federal tax year, and was a Washington resident during the year for 2
which the credit is claimed; and 3
(C) Has paid either retail sales tax under this chapter or use 4
tax under chapter 82.12 RCW, or both. There is a rebuttable 5
presumption that a person paid either retail sales tax under this 6
chapter or use tax under chapter 82.12 RCW, or both, if they were a 7
Washington resident during the year for which the credit is claimed.8
(ii) "Eligible low-income person" also means an individual who 9
meets the requirements provided in (a)(i)(B) of this subsection and 10
would otherwise qualify for the credit provided in Title 26 U.S.C. 11
Sec. 32 of the internal revenue code except that one or any 12
combination of the following conditions apply: 13
(A) The individual filed a federal income tax return for the 14
prior federal tax year using a valid individual taxpayer 15
identification number in lieu of a social security number, and the 16
individual's spouse, if any, and all qualifying children, if any, 17
have a valid individual taxpayer identification number or a social 18
security number; ((or))19
(B) The individual filed their federal income tax return for the 20
prior federal tax year under the married filing separately status. 21
For purposes of the refund provided in this section, the special rule 22
for separated spouse under Title 26 U.S.C. Sec. 32 (d)(2)(B) of the 23
internal revenue code does not apply; or24
(C) The individual does not meet the age requirement under Title 25
26 U.S.C. Sec. 32 (c)(1)(A)(ii)(II) of the internal revenue code, but 26
is at least age 18 by the end of the prior federal tax year.27
(b) "Income" means earned income as defined by Title 26 U.S.C. 28
Sec. 32 of the internal revenue code. 29
(c) "Individual" means an individual or an individual and that 30
individual's spouse if they file a federal joint income tax return.31
(d) "Internal revenue code" means the United States internal 32
revenue code of 1986, as amended, as of June 9, 2022, or such 33
subsequent date as the department may provide by rule consistent with 34
the purpose of this section. 35
(e) "Maximum qualifying income" means the maximum federally 36
adjusted gross income for the prior federal tax year.37
(f) "Qualifying child" means a qualifying child as defined by 38
Title 26 U.S.C. Sec. 32 of the internal revenue code, except the 39
p. 50 HB 2738
child may have a valid individual taxpayer identification number in 1
lieu of a social security number. 2
(g) "Washington resident" means an individual who is physically 3
present and residing in this state for at least 183 days. "Washington 4
resident" also includes an individual who is not physically present 5
and residing in this state for at least 183 days but is the spouse of 6
a Washington resident. For purposes of this subsection, "day" means a 7
calendar day or any portion of a calendar day. 8
(3)(a) Except as provided in (b) and (c) of this subsection, for 9
calendar year 2023 and thereafter, the working families' tax credit 10
refund amount for the prior calendar year is: 11
(i) $300 for eligible persons with no qualifying children;12
(ii) $600 for eligible persons with one qualifying child;13
(iii) $900 for eligible persons with two qualifying children; or14
(iv) $1,200 for eligible persons with three or more qualifying 15
children. 16
(b) Except as provided in (f) of this subsection, the refund 17
amounts provided in (a) of this subsection will be reduced, rounded 18
to the nearest dollar, as follows: 19
(i) For eligible persons with no qualifying children, beginning 20
at $2,500 of income below the federal phase-out income for the prior 21
federal tax year, by 18 percent per additional dollar of income until 22
the minimum credit amount as specified in (c) of this subsection is 23
reached. 24
(ii) For eligible persons with one qualifying child, beginning at 25
$5,000 of income below the federal phase-out income for the prior 26
federal tax year, by 12 percent per additional dollar of income until 27
the minimum credit amount as specified in (c) of this subsection is 28
reached. 29
(iii) For eligible persons with two qualifying children, 30
beginning at $5,000 of income below the federal phase-out income for 31
the prior federal tax year, by 15 percent per additional dollar of 32
income until the minimum credit amount as specified in (c) of this 33
subsection is reached. 34
(iv) For eligible persons with three or more qualifying children, 35
beginning at $5,000 of income below the federal phase-out income for 36
the prior federal tax year, by 18 percent per additional dollar of 37
income until the minimum credit amount as specified in (c) of this 38
subsection is reached. 39
p. 51 HB 2738
(c) If the refund for an eligible person as calculated in this 1
section is greater than zero cents, but less than $50, the refund 2
amount is $50. 3
(d) The refund amounts in this section shall be adjusted for 4
inflation every year beginning January 1, 2024, based upon changes in 5
the consumer price index that are published by November 15th of the 6
previous year for the most recent 12-month period. The adjusted 7
refund amounts must be rounded to the nearest $5. 8
(e) For purposes of this section, "consumer price index" means, 9
for any 12-month period, the average consumer price index for that 10
12-month period for the Seattle, Washington area for urban wage 11
earners and clerical workers, all items, compiled by the bureau of 12
labor statistics, United States department of labor.13
(f) The percentage rate of remittance reductions in (b) of this 14
subsection must be adjusted every year beginning January 1, 2023, 15
based on calculations by the department that result in the minimum 16
credit being received at the maximum qualifying income level.17
(4) The working families' tax credit shall be administered as 18
provided in this subsection. 19
(a) The refund paid under this section will be paid to eligible 20
filers who apply pursuant to this subsection. 21
(i) Application must be made to the department in a form and 22
manner determined by the department. If the application process is 23
initially done electronically, the department must provide a paper 24
application upon request. The application must include any 25
information and documentation as required by the department. The 26
department may use the information provided by the individual to 27
calculate the refund amount. Income reported on the application may 28
be rounded to the nearest dollar. 29
(ii) An individual applying for the credit under this section 30
must keep records necessary for the department to verify eligibility 31
under this section. Any information provided by the individual is 32
subject to audit verification by the department. 33
(iii) In addition to information provided on the application, the 34
department may verify that an individual qualifies as a Washington 35
resident through the use of automated verification tools or other 36
reasonable means. 37
(iv)(A) Except as provided in (a)(iv)(B) of this subsection (4), 38
application for a refund under this section must be made in the year 39
following the year for which the federal tax return was filed, but in 40
p. 52 HB 2738
no case may any refund be provided for any period before January 1, 1
2022. 2
(B)(I) A person may apply for any refund for which they were 3
eligible but did not claim under (a)(iv)(A) of this subsection (4) 4
for up to three additional years. A person must complete an 5
application to claim this refund within the three calendar years 6
after the end of the calendar year in which the federal income tax 7
return for that tax year was legally due for federal income tax 8
purposes, without regard to any federal extension. 9
(II) If a person seeks to increase the amount of a refund that 10
has been made under this subsection (4), the person must apply for 11
the amended refund within the nonclaims period established under RCW 12
82.32.060(1). 13
(v) A person may not claim a credit on behalf of a deceased 14
individual. No individual may claim a credit under this section for 15
any year in a disallowance period under Title 26 U.S.C. Sec. 32 (k)(1) 16
of the internal revenue code or for any year for which the individual 17
is ineligible to claim the credit in Title 26 U.S.C. Sec. 32 of the 18
internal revenue code by reason of Title 26 U.S.C. Sec. 32 (k)(2) of 19
the internal revenue code. 20
(b) The department shall protect the privacy and confidentiality 21
of personal data of refund recipients in accordance with chapter 22
82.32 RCW. 23
(c) The department shall, in conjunction with other agencies or 24
organizations, design and implement a public information campaign to 25
inform potentially eligible persons of the existence of, and 26
requirements for, the credit provided in this section.27
(d) The department must work with the internal revenue service of 28
the United States to administer the credit on an automatic basis as 29
soon as practicable. 30
(5) Receipt of a refund under this section may not be used in 31
eligibility determinations for any state income support programs or 32
in making public charge determinations. 33
(6) The department may adopt rules necessary to implement this 34
section. This includes establishing a date by which applications will 35
be accepted, with the aim of accepting applications as soon as 36
possible. 37
(7) The department must review the application and determine 38
eligibility for the working families' tax credit based on information 39
provided by the applicant and through audit and other administrative 40
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records, including, when it deems it necessary, verification through 1
information from the internal revenue service of the United States, 2
other federal agencies, Washington state agencies, third-party 3
entities, or other persons. The department may accept a signed 4
attestation in a form and manner determined by the department from an 5
individual to presumptively validate that an individual meets all the 6
eligibility requirements as provided in this section. The signed 7
attestation is subject to audit verification by the department to 8
validate an individual's eligibility for the working families' tax 9
credit. 10
(8) If, upon review of internal revenue service data or other 11
information obtained by the department, it appears that an individual 12
received a refund that the individual was not entitled to, or 13
received a larger refund than the individual was entitled to, the 14
department may assess against the individual the overpaid amount. The 15
department may also assess such overpaid amount against the 16
individual's spouse if the refund in question was based on both 17
spouses filing a joint federal income tax return for the year for 18
which the refund was claimed. 19
(a) Interest as provided under RCW 82.32.050 applies to 20
assessments authorized under this subsection (8) starting six months 21
after the date the department issued the assessment until the amount 22
due under this subsection (8) is paid in full to the department. 23
Except as otherwise provided in this subsection, penalties may not be 24
assessed on amounts due under this subsection. 25
(b) If an amount due under this subsection is not paid in full by 26
the date due, or the department issues a warrant for the collection 27
of amounts due under this subsection, the department may assess the 28
applicable penalties under RCW 82.32.090. Penalties under this 29
subsection (8)(b) may not be made due until six months after the 30
department's issuance of the assessment. 31
(c) If the department finds by clear, cogent, and convincing 32
evidence that an individual knowingly submitted, caused to be 33
submitted, or consented to the submission of, a fraudulent claim for 34
refund under this section, the department must assess a penalty of 50 35
percent of the overpaid amount. This penalty is in addition to any 36
other applicable penalties assessed in accordance with (b) of this 37
subsection (8). 38
(9) If, within the period allowed for refunds under RCW 39
82.32.060, the department finds that an individual received a lesser 40
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refund than the individual was entitled to, the department must remit 1
the additional amount due under this section to the individual.2
(10) Interest does not apply to refunds provided under this 3
section. 4
(11) Chapter 82.32 RCW applies to the administration of this 5
section. 6
Sec. 902. 2023 c 456 s 3 (uncodified) is amended to read as 7
follows: 8
(1) This section is the tax preference performance statement for 9
the tax preference contained in section 2, chapter 195, Laws of 2021 10
((and)), section 1, chapter 456, Laws of 2023 , and section 901, 11
chapter . . ., Laws of 2026 (section 901 of this act) . This 12
performance statement is only intended to be used for subsequent 13
evaluation of the tax preference. It is not intended to create a 14
private right of action by any party or be used to determine 15
eligibility for the preferential tax treatment. 16
(2) The legislature categorizes this tax preference as one 17
intended to provide tax relief for certain individuals as indicated 18
in RCW 82.32.808(2)(e). 19
(3) It is the legislature's specific public policy objective to 20
allow low-income and middle-income workers to recover some or all of 21
the sales tax they pay to support state and local government as a way 22
to increase their economic security and to decrease the regressivity 23
of our state tax code. It is the legislature's intent to provide a 24
sales and use tax credit, in the form of a remittance, to low-income 25
and middle-income working families. 26
(4) The joint legislative audit and review committee shall review 27
this preference in 2028 and every 10 years thereafter. If a review 28
finds that the working families' tax credit does not provide 29
meaningful financial relief to low-income and middle-income 30
households, RCW 82.08.0206 expires at the end of the calendar year 31
two years after the adoption of the final report containing that 32
finding. The joint legislative audit and review committee shall 33
provide written notice of the expiration date of RCW 82.08.0206 to 34
the department of revenue, the chief clerk of the house of 35
representatives, the secretary of the senate, the office of the code 36
reviser, and others as deemed appropriate by the joint legislative 37
audit and review committee. In its review of the program, the joint 38
legislative audit and review committee should use at least the 39
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following metrics: Size of the benefit per household, number of 1
household beneficiaries statewide, and demographic information of 2
beneficiaries to include family size, income level, race and 3
ethnicity, and geographic location. (5) In order to obtain the data 4
necessary to perform the review in subsection (4) of this section, 5
the joint legislative audit and review committee may refer to the 6
remittance data prepared by the department of revenue.7
NEW SECTION. Sec. 903. A new section is added to chapter 82.08 8
RCW to read as follows: 9
(1) Beginning January 1, 2029, the tax levied by RCW 82.08.020 10
does not apply to the sales of grooming and hygiene products.11
(2) For the purpose of this section, "grooming and hygiene 12
products" means soaps and cleaning solutions, shampoo, toothpaste, 13
mouthwash, antiperspirants, and sun tan lotions and screens, 14
regardless of whether the item meets the definition of "over-the-15
counter drug," as defined in RCW 82.08.0281. 16
NEW SECTION. Sec. 904. A new section is added to chapter 82.12 17
RCW to read as follows: 18
(1) Beginning January 1, 2029, the tax levied by RCW 82.12.020 19
does not apply to the use of grooming and hygiene products.20
(2) For purposes of this section, "grooming and hygiene products" 21
has the same meaning as provided in section 903 of this act.22
Sec. 905. RCW 82.04.4451 and 2022 c 295 s 1 are each amended to 23
read as follows: 24
(1) In computing the tax imposed under this chapter, a credit is 25
allowed against the amount of tax otherwise due under this chapter, 26
as provided in this section. Except for taxpayers that report at 27
least 50 percent of their taxable amount under RCW 82.04.255, 28
82.04.290(2)(a), and 82.04.285, the maximum credit for a taxpayer for 29
a reporting period is (($55)) $125 multiplied by the number of months 30
in the reporting period, as determined under RCW 82.32.045. For a 31
taxpayer that reports at least 50 percent of its taxable amount under 32
RCW 82.04.255, 82.04.290(2)(a), and 82.04.285, the maximum credit for 33
a reporting period is (($160)) $375 multiplied by the number of 34
months in the reporting period, as determined under RCW 82.32.045.35
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(2) When the amount of tax otherwise due under this chapter is 1
equal to or less than the maximum credit, a credit is allowed equal 2
to the amount of tax otherwise due under this chapter.3
(3) When the amount of tax otherwise due under this chapter 4
exceeds the maximum credit, a reduced credit is allowed equal to 5
twice the maximum credit, minus the tax otherwise due under this 6
chapter, but not less than zero. 7
(4) The department may prepare a tax credit table consisting of 8
tax ranges using increments of no more than five dollars and a 9
corresponding tax credit to be applied to those tax ranges. The table 10
shall be prepared in such a manner that no taxpayer will owe a 11
greater amount of tax by using the table than would be owed by 12
performing the calculation under subsections (1) through (3) of this 13
section. A table prepared by the department under this subsection 14
must be used by all taxpayers in taking the credit provided in this 15
section. 16
Sec. 906. RCW 82.32.045 and 2023 c 374 s 12 are each amended to 17
read as follows: 18
(1) Except as otherwise provided in this chapter and subsection 19
(6) of this section, payments of the taxes imposed under chapters 20
82.04, 82.08, 82.12, 82.14, 82.16, and 82.27 RCW, along with reports 21
and returns on forms prescribed by the department, are due monthly 22
within 25 days after the end of the month in which the taxable 23
activities occur. 24
(2) The department of revenue may relieve any taxpayer or class 25
of taxpayers from the obligation of remitting monthly and may require 26
the return to cover other longer reporting periods, but in no event 27
may returns be filed for a period greater than one year. Except as 28
provided in subsection (3) of this section, for these taxpayers, tax 29
payments are due on or before the last day of the month next 30
succeeding the end of the period covered by the return.31
(3) For annual filers, tax payments, along with reports and 32
returns on forms prescribed by the department, are due on or before 33
April 15th of the year immediately following the end of the period 34
covered by the return. 35
(4) The department of revenue may also require verified annual 36
returns from any taxpayer, setting forth such additional information 37
as it may deem necessary to correctly determine tax liability.38
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(5) Notwithstanding subsections (1) and (2) of this section, the 1
department may relieve any person of the requirement to file returns 2
if the following conditions are met: 3
(a) The person's value of products, gross proceeds of sales, or 4
gross income of the business, from all business activities taxable 5
under chapter 82.04 RCW, is less than (($125,000)) $250,000 per year;6
(b) The person's gross income of the business from all activities 7
taxable under chapter 82.16 RCW is less than $24,000 per year; and8
(c) The person is not required to collect or pay to the 9
department of revenue any other tax or fee which the department is 10
authorized to collect. 11
(6)(a) Taxes imposed under chapter 82.08 or 82.12 RCW on taxable 12
events that occur beginning January 1, 2019, through June 30, 2019, 13
and payable by a consumer directly to the department are due, on 14
returns prescribed by the department, by July 25, 2019.15
(b) This subsection (6) does not apply to the reporting and 16
payment of taxes imposed under chapters 82.08 and 82.12 RCW:17
(i) On the retail sale or use of motor vehicles, vessels, or 18
aircraft; or 19
(ii) By consumers who are engaged in business, unless the 20
department has relieved the consumer of the requirement to file 21
returns pursuant to subsection (5) of this section.22
Sec. 907. RCW 82.04.288 and 2025 c 420 s 201 are each amended to 23
read as follows: 24
(1) Beginning January 1, 2026, in addition to all other taxes 25
imposed under this chapter, persons must pay a surcharge on 26
Washington taxable income over $250,000,000 in a calendar year.27
(2) The rate of the tax is 0.5 percent of the amount of 28
Washington taxable income over $250,000,000. 29
(3)(a) Any Washington taxable income subject to the tax in RCW 30
82.04.29004 is exempt from the surcharge imposed in this section.31
(b)(i) Any Washington taxable income subject to the manufacturing 32
tax rates in RCW 82.04.240, 82.04.2404, 82.04.241, 82.04.260, 33
82.04.2602, 82.04.287, 82.04.2909, or 82.04.294(1) is exempt from the 34
surcharge imposed in this section. 35
(ii) Any Washington taxable income attributable to the wholesale 36
or retail sale of products so manufactured by a person subject to the 37
manufacturing tax rates specified in (b)(i) of this subsection (3) is 38
exempt from the surcharge imposed in this section.39
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(iii) Any Washington taxable income attributable to retail sales 1
that are exempt from the imposition of sales tax in RCW 82.08.0293, 2
82.08.0297, and 82.08.0281 is exempt from the surcharge imposed in 3
this section. 4
(iv) Any Washington taxable income subject to the tax rates in 5
RCW 82.04.260(12) is exempt from the surcharge imposed in this 6
section. 7
(v) Any Washington taxable income attributable to the wholesale 8
or retail sale of petroleum products by a person who is both located 9
in a state other than Washington and the owner of such materials 10
processed for it in Washington by an affiliated processor for hire 11
subject to the rate in RCW 82.04.280(1)(c), is exempt from the 12
surcharge imposed in this section. For the purposes of this 13
subsection (3)(b)(v), the following definitions apply:14
(A) "Affiliated" means a person that directly or indirectly, 15
through one or more intermediaries, controls, is controlled by, or is 16
under common control with another person; 17
(B) "Control" means the possession, directly or indirectly, of 18
more than 50 percent of the power to direct or cause the direction of 19
the management and policies of a person, whether through the 20
ownership of voting shares, by contract, or otherwise; and21
(C) "Petroleum product" has the same meaning as in RCW 82.21.020.22
(4)(a) The surcharge imposed under this section does not apply to 23
taxable income for which a credit is allowed under RCW 82.04.440.24
(b) The surcharge imposed under this section does not apply to a 25
person engaged in business primarily as a farmer or eligible apiarist 26
as defined in RCW 82.04.213. 27
(c) The surcharge imposed under this section does not apply to a 28
person subject to the tax imposed pursuant to RCW 82.04.299.29
(d) The surcharge imposed under this section does not apply to 30
taxable income for wholesale and retail transactions of fuel as 31
defined in RCW 82.38.020. 32
(5) Any income that is exempt from the surcharge imposed under 33
this section is not included in the calculation of Washington taxable 34
income in subsection (1) of this section. 35
(6) This section expires December 31, ((2029)) 2028.36
NEW SECTION. Sec. 908. Sections 905 and 906 of this act apply 37
to taxes initially due and payable on or after January 1, 2029.38
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Sec. 909. RCW 82.08.020 and 2025 c 418 s 3 and 2025 c 417 s 201 1
are each reenacted and amended to read as follows: 2
(1) There is levied and collected a tax equal to ((six and five-3
tenths)) 5.75 percent of the selling price on each retail sale in 4
this state of: 5
(a) Tangible personal property, unless the sale is specifically 6
excluded from the RCW 82.04.050 definition of retail sale;7
(b) Digital goods, digital codes, and digital automated services, 8
if the sale is included within the RCW 82.04.050 definition of retail 9
sale; 10
(c) Services, other than digital automated services, included 11
within the RCW 82.04.050 definition of retail sale;12
(d) Extended warranties to consumers; and 13
(e) Anything else, the sale of which is included within the RCW 14
82.04.050 definition of retail sale. 15
(2)(a) There is levied and collected an additional tax on each 16
retail car rental, regardless of whether the vehicle is licensed in 17
this state, equal to: 18
(i) Eleven and nine-tenths percent of the selling price from 19
January 1, 2026, through December 31, 2026; and 20
(ii)(A) Nine and nine-tenths percent of the selling price 21
beginning January 1, 2027. 22
(B) The revenue collected under (a) of this subsection must be 23
deposited in the multimodal transportation account created in RCW 24
47.66.070. 25
(b)(i) Beginning January 1, 2027, there is levied and collected 26
an additional tax on peer-to-peer car sharing transactions equal to 27
the selling price multiplied by the rate of tax imposed under (a) of 28
this subsection. This subsection (2)(b) applies only to peer-to-peer 29
car sharing transactions where the vehicle owner obtained the shared 30
vehicle as a vehicle for resale using a reseller permit or an 31
approved exemption certificate under RCW 82.04.470. The revenue 32
collected under this subsection (2)(b) must be deposited in the 33
multimodal transportation account created in RCW 47.66.070.34
(ii) For purposes of this subsection (2)(b), "peer-to-peer car 35
sharing" has the same meaning as in RCW 46.74A.010. "Peer-to-peer car 36
sharing" does not mean: 37
(A) "Retail car rental" as defined in RCW 82.08.011; or38
(B) "Rental car" as defined in RCW 46.04.465 or 48.115.005.39
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(3) There is levied and collected an additional tax of five-1
tenths of one percent of the selling price on each retail sale of a 2
motor vehicle in this state, other than retail car rentals taxed 3
under subsection (2) of this section. The revenue collected under 4
this subsection must be deposited in the multimodal transportation 5
account created in RCW 47.66.070. 6
(4)(a) Beginning July 1, 2026, in addition to taxes required 7
under this chapter and chapters 82.12 and 82.49 RCW, there is levied 8
and collected an additional tax of five-tenths of one percent on the 9
selling price, plus trade-in property of like kind, for purchased 10
recreational vessels. 11
(b) In the case of a lease requiring periodic payments, the tax 12
is imposed on the fair market value of the recreational vessel at the 13
inception of the lease. 14
(c) The revenue collected under this subsection must be deposited 15
in the multimodal transportation account created in RCW 47.66.070.16
(d) For purposes of this subsection, "recreational vessel" means 17
a vessel as defined in RCW 88.02.310 that is subject to watercraft 18
excise tax under chapter 82.49 RCW. 19
(5) For purposes of subsection (3) of this section, "motor 20
vehicle" has the meaning provided in RCW 46.04.320, but does not 21
include: 22
(a) Farm tractors or farm vehicles as defined in RCW 46.04.180 23
and 46.04.181, unless the farm tractor or farm vehicle is for use in 24
the production of cannabis; 25
(b) Off-road vehicles as defined in RCW 46.04.365;26
(c) Nonhighway vehicles as defined in RCW 46.09.310; and27
(d) Snowmobiles as defined in RCW 46.04.546. 28
(6) Beginning on December 8, 2005, 0.16 percent of the taxes 29
collected under subsection (1) of this section must be dedicated to 30
funding comprehensive performance audits required under RCW 31
43.09.470. The revenue identified in this subsection must be 32
deposited in the performance audits of government account created in 33
RCW 43.09.475. 34
(7) Beginning July 1, 2027, the portion of taxes collected by the 35
state under subsection (1) of this section equal to 0.1 percent of 36
the selling price on each retail sale in this state must be deposited 37
in the multimodal transportation account created in RCW 47.66.070.38
(8) The taxes imposed under this chapter apply to successive 39
retail sales of the same property. 40
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(9) The rates provided in this section apply to taxes imposed 1
under chapter 82.12 RCW as provided in RCW 82.12.020.2
PART X3
MISCELLANEOUS4
Sec. 1001. RCW 1.90.100 and 2024 c 5 s 1 (Initiative Measure No. 5
2111) are each amended to read as follows: 6
(1) Neither the state nor any county, city, or other local 7
jurisdiction in the state of Washington may tax any individual person 8
on any form of personal income. For the purposes of this chapter, 9
"income" has the same meaning as "gross income" in 26 U.S.C. Sec. 61.10
(2) Subsection (1) of this section does not apply to the tax 11
authorized in chapter 82A.--- RCW (the new chapter created in section 12
1003 of this act).13
NEW SECTION. Sec. 1002. NULL AND VOID. If a court of final 14
jurisdiction invalidates section 201 of this act, this act is null 15
and void in its entirety.16
NEW SECTION. Sec. 1003. CODIFICATION. Sections 101 through 704 17
and 708 through 711 of this act constitute a new chapter in a new 18
title in the Revised Code of Washington, to be codified as Title 82A 19
RCW.20
NEW SECTION. Sec. 1004. CONFORMING AMENDMENTS. If any 21
amendments in this act, or any sections enacted or affected by 22
chapter . . ., Laws of 2026 (this act), are enacted in a 2026 23
legislative session that do not take cognizance of chapter . . ., 24
Laws of 2026 (this act), the code reviser must prepare a bill for 25
introduction in the 2027 or 2028 legislative session that 26
incorporates any such amendments into the reorganization adopted by 27
chapter . . ., Laws of 2026 (this act) and corrects any incorrect 28
cross-references.29
NEW SECTION. Sec. 1005. Refunds may not be provided under 30
section 901 of this act for any period before January 1, 2028.31
NEW SECTION. Sec. 1006. Except as provided in section 902 of 32
this act, RCW 82.32.805 and 82.32.808 do not apply to this act.33
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NEW SECTION. Sec. 1007. It is the intent of the legislature for 1
the department of revenue to spend appropriated amounts to implement 2
this act regardless of litigation.3
NEW SECTION. Sec. 1008. Except for section 901 of this act, 4
which takes effect January 1, 2029, this act takes effect January 1, 5
2028, if the proposed amendment to Article VII of the state 6
Constitution (House Joint Resolution No. . . . (H-3433/26)), 7
authorizing the imposition of an income tax, is validly submitted to 8
and is approved and ratified by the voters at the next general 9
election. If the proposed amendment is not approved and ratified, 10
this act is void in its entirety.11
--- END ---
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