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SB5815 • 2026
Modifying business and occupation tax surcharges, rates, and the advanced computing surcharge cap, clarifying the business and occupation tax deduction for certain investments, and creating a temporary business and occupation tax surcharge on large companies.
This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.
Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.
Business and occupation tax
By resolution, reintroduced and retained in present status.
Business and occupation tax
AN ACT Relating to funding public schools, including higher 1 education, health care, social services, and other programs and 2 services to benefit Washingtonians by modifying business and 3 occupation tax surcharges, rates, and the advanced computing 4 surcharge cap, clarifying the business and occupation tax deduction 5 for certain investments, and creating a temporary business and 6 occupation tax surcharge on large companies with annual revenues with 7 more than $250,000,000; amending RCW 82.04.230, 82.04.240, 82.04.250, 8 82.04.257, 82.04.263, 82.04.270, 82.04.280, 82.04.285, 82.04.290, 9 82.04.2905, 82.04.2906, 82.04.260, 82.04.29004, and 82.04.4281; 10 reenacting and amending RCW 82.04.260 and 82.04.299; adding a new 11 section to chapter 82.04 RCW; creating new sections; providing 12 effective dates; and providing expiration dates. 13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:14 NEW SECTION. Sec. 1. The legislature finds that, through the 15 state's general fund, the state funds public schools, health care, 16 and social services that help Washingtonians to succeed and thrive. 17 These revenues help the state meet its paramount duty to amply 18 provide every child in the state with an education, including 19 children who qualify for special education services, creating the 20 opportunity for each child to succeed in school and achieve success 21 S-3167.1 SENATE BILL 5815 State of Washington 69th Legislature 2025 Regular Session By Senators Saldaña, Robinson, Frame, Nobles, Pedersen, and Valdez Read first time 04/16/25. Referred to Committee on Ways & Means. p. 1 SB 5815 in life. Revenues generated by this act will support health care and 1 other programs that protect the safety and well-being of the public 2 including behavioral health services for those living with mental 3 illness or substance use disorder, as well as supervision of 4 individuals who have committed crimes. These revenues will also fund 5 social services that provide critical, basic needs assistance for our 6 state's most vulnerable residents including support for those with 7 developmental disabilities and long-term care for the elderly. 8 Furthermore, the legislature finds that the state's higher education 9 system ensures Washington businesses are successful in recruiting the 10 talent needed to grow their business and keep Washington's economy 11 strong. Therefore, the intent of this act is to maintain and preserve 12 essential services for Washingtonians, particularly within public 13 schools and higher education, health care, and social services, by 14 depositing revenues from this act into the general fund, with a 15 portion of the revenues deposited into the workforce education 16 investment account. Thus, to help meet the state's paramount duty of 17 amply providing every child in the state with an education, 18 supporting the health and well-being of Washingtonians, and 19 continuing to invest in Washington's higher education system, the 20 legislature intends to modify the business and occupation tax rates, 21 surcharges, and caps and creating a temporary surcharge on large 22 corporations with annual revenues more than $250,000,000.23 PART I24 BUSINESS AND OCCUPATION RATE CHANGES25 Sec. 101. RCW 82.04.230 and 2006 c 300 s 5 are each amended to 26 read as follows: 27 Upon every person engaging within this state in business as an 28 extractor, except persons taxable as an extractor under any other 29 provision in this chapter; as to such persons the amount of the tax 30 with respect to such business shall be equal to the value of the 31 products, including by-products, extracted for sale or for commercial 32 or industrial use, multiplied by the rate of ((0.484)) 0.5 percent.33 The measure of the tax is the value of the products, including 34 by-products, so extracted, regardless of the place of sale or the 35 fact that deliveries may be made to points outside the state.36 p. 2 SB 5815 Sec. 102. RCW 82.04.240 and 2004 c 24 s 4 are each amended to 1 read as follows: 2 Upon every person engaging within this state in business as a 3 manufacturer, except persons taxable as manufacturers under other 4 provisions of this chapter; as to such persons the amount of the tax 5 with respect to such business shall be equal to the value of the 6 products, including by-products, manufactured, multiplied by the rate 7 of ((0.484)) 0.5 percent. 8 The measure of the tax is the value of the products, including 9 by-products, so manufactured regardless of the place of sale or the 10 fact that deliveries may be made to points outside the state.11 Sec. 103. RCW 82.04.250 and 2014 c 97 s 402 are each amended to 12 read as follows: 13 (1) Upon every person engaging within this state in the business 14 of making sales at retail, except persons taxable as retailers under 15 other provisions of this chapter, as to such persons, the amount of 16 tax with respect to such business is equal to the gross proceeds of 17 sales of the business, multiplied by the rate of ((0.471)) 0.5 18 percent. 19 (2) Upon every person engaging within this state in the business 20 of making sales at retail that are exempt from the tax imposed under 21 chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 22 82.08.0263, except persons taxable under RCW 82.04.260(11) or 23 subsection (3) of this section, as to such persons, the amount of tax 24 with respect to such business is equal to the gross proceeds of sales 25 of the business, multiplied by the rate of ((0.484)) 0.5 percent.26 (3)(a) Until July 1, 2040, upon every person classified by the 27 federal aviation administration as a federal aviation regulation part 28 145 certificated repair station and that is engaging within this 29 state in the business of making sales at retail that are exempt from 30 the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 31 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with 32 respect to such business is equal to the gross proceeds of sales of 33 the business, multiplied by the rate of .2904 percent.34 (b) A person reporting under the tax rate provided in this 35 subsection (3) must file a complete annual report with the department 36 under RCW 82.32.534. 37 p. 3 SB 5815 Sec. 104. RCW 82.04.257 and 2017 c 323 s 515 are each amended to 1 read as follows: 2 (1) Except as provided in subsection (2) of this section, upon 3 every person engaging within this state in the business of making 4 sales at retail or wholesale of digital goods, digital codes, digital 5 automated services, or services described in RCW 82.04.050 (2)(g) or 6 (6)(c), as to such persons, the amount of tax with respect to such 7 business is equal to the gross proceeds of sales of the business, 8 multiplied by the rate of ((0.471)) 0.5 percent in the case of retail 9 sales and by the rate of ((0.484)) 0.5 percent in the case of 10 wholesale sales. 11 (2) Persons providing subscription television services or 12 subscription radio services are subject to tax under RCW 82.04.290(2) 13 on the gross income of the business received from providing such 14 services. 15 (3) For purposes of this section, a person is considered to be 16 engaging within this state in the business of making sales of digital 17 goods, digital codes, digital automated services, or services 18 described in RCW 82.04.050 (2)(g) or (6)(c), if the person makes 19 sales of digital goods, digital codes, digital automated services, or 20 services described in RCW 82.04.050 (2)(g) or (6)(c) and the sales 21 are sourced to this state under RCW 82.32.730 for sales tax purposes 22 or would have been sourced to this state under RCW 82.32.730 if the 23 sale had been taxable under chapter 82.08 RCW. 24 (4) A person subject to tax under this section is subject to the 25 mandatory electronic filing and payment requirements in RCW 26 82.32.080. 27 Sec. 105. RCW 82.04.263 and 2009 c 469 s 202 are each amended to 28 read as follows: 29 (1) Upon every person engaging within this state in the business 30 of cleaning up for the United States, or its instrumentalities, 31 radioactive waste and other by-products of weapons production and 32 nuclear research and development; as to such persons the amount of 33 the tax with respect to such business shall be equal to the gross 34 income of the business multiplied by the rate of ((0.471)) 0.5 35 percent. 36 (2) For the purposes of this chapter, "cleaning up radioactive 37 waste and other by-products of weapons production and nuclear 38 research and development" means: 39 p. 4 SB 5815 (a) The activities of handling, storing, treating, immobilizing, 1 stabilizing, or disposing of radioactive waste, radioactive tank 2 waste and capsules, nonradioactive hazardous solid and liquid wastes, 3 or spent nuclear fuel; 4 (b) Spent nuclear fuel conditioning; 5 (c) Removal of contamination in soils and groundwater;6 (d) Decontamination and decommissioning of facilities; and7 (e) Services supporting the performance of cleanup. For the 8 purposes of this subsection (2)(e), a service supports the 9 performance of cleanup if it: 10 (i) Is within the scope of work under a clean-up contract with 11 the United States department of energy; or 12 (ii) Assists in the accomplishment of a requirement of a clean-up 13 project undertaken by the United States department of energy under a 14 subcontract entered into with the prime contractor or another 15 subcontractor in furtherance of a clean-up contract between the 16 United States department of energy and a prime contractor.17 (3) A service does not assist in the accomplishment of a 18 requirement of a clean-up project undertaken by the United States 19 department of energy if the same services are routinely provided to 20 businesses not engaged in clean-up activities, except that the 21 following services are always deemed to contribute to the 22 accomplishment of a requirement of a clean-up project undertaken by 23 the United States department of energy: 24 (a) Information technology and computer support services;25 (b) Services rendered in respect to infrastructure; and26 (c) Security, safety, and health services. 27 (4) The legislature intends that the examples provided in this 28 subsection be used as a guideline when determining whether a service 29 is "routinely provided to businesses not engaged in clean-up 30 activities" as that phrase is used in subsection (3) of this section.31 (a) The radioactive waste clean-up classification does not apply 32 to general accounting services but does apply to performance audits 33 performed for persons cleaning up radioactive waste.34 (b) The radioactive waste clean-up classification does not apply 35 to general legal services but does apply to those legal services that 36 assist in the accomplishment of a requirement of a clean-up project 37 undertaken by the United States department of energy. Thus, legal 38 services provided to contest any local, state, or federal tax 39 liability or to defend a company against a workers' compensation 40 p. 5 SB 5815 claim arising from a worksite injury do not qualify for the 1 radioactive waste clean-up classification. But, legal services 2 related to the resolution of a contractual dispute between the 3 parties to a clean-up contract between the United States department 4 of energy and a prime contractor do qualify. 5 (c) General office janitorial services do not qualify for the 6 radioactive waste clean-up classification, but the specialized 7 cleaning of equipment exposed to radioactive waste does qualify.8 Sec. 106. RCW 82.04.270 and 2004 c 24 s 5 are each amended to 9 read as follows: 10 Upon every person engaging within this state in the business of 11 making sales at wholesale, except persons taxable as wholesalers 12 under other provisions of this chapter; as to such persons the amount 13 of tax with respect to such business shall be equal to the gross 14 proceeds of sales of such business multiplied by the rate of 15 ((0.484)) 0.5 percent. 16 Sec. 107. RCW 82.04.280 and 2019 c 449 s 1 are each amended to 17 read as follows: 18 (1) Upon every person engaging within this state in the business 19 of: (a) Printing materials other than newspapers, and of publishing 20 periodicals or magazines; (b) building, repairing or improving any 21 street, place, road, highway, easement, right-of-way, mass public 22 transportation terminal or parking facility, bridge, tunnel, or 23 trestle which is owned by a municipal corporation or political 24 subdivision of the state or by the United States and which is used or 25 to be used, primarily for foot or vehicular traffic including mass 26 transportation vehicles of any kind and including any readjustment, 27 reconstruction or relocation of the facilities of any public, private 28 or cooperatively owned utility or railroad in the course of such 29 building, repairing or improving, the cost of which readjustment, 30 reconstruction, or relocation, is the responsibility of the public 31 authority whose street, place, road, highway, easement, right-of-way, 32 mass public transportation terminal or parking facility, bridge, 33 tunnel, or trestle is being built, repaired or improved; (c) 34 extracting for hire or processing for hire, except persons taxable as 35 extractors for hire or processors for hire under another section of 36 this chapter; (d) operating a cold storage warehouse or storage 37 warehouse, but not including the rental of cold storage lockers; (e) 38 p. 6 SB 5815 representing and performing services for fire or casualty insurance 1 companies as an independent resident managing general agent licensed 2 under the provisions of chapter 48.17 RCW; (f) radio and television 3 broadcasting, but excluding revenues from network, national, and 4 regional advertising computed either: (i) As a standard deduction 5 that the department must publish by rule by September 30, 2020, and 6 by September 30th of every fifth year thereafter, based on the 7 national average thereof as reported by the United States census 8 bureau's economic census; or (ii) in lieu thereof by itemization by 9 the individual broadcasting station, and excluding that portion of 10 revenue represented by the out-of-state audience computed as a ratio 11 to the broadcasting station's total audience as measured by the .5 12 millivolt/meter signal strength contour for AM radio, the one 13 millivolt/meter or sixty dBu signal strength contour for FM radio, 14 the twenty-eight dBu signal strength contour for television channels 15 two through six, the thirty-six dBu signal strength contour for 16 television channels seven through thirteen, and the forty-one dBu 17 signal strength contour for television channels fourteen through 18 sixty-nine with delivery by wire, satellite, or any other means, if 19 any; (g) engaging in activities which bring a person within the 20 definition of consumer contained in RCW 82.04.190(6); as to such 21 persons, the amount of tax on such business is equal to the gross 22 income of the business multiplied by the rate of ((0.484)) 0.5 23 percent. 24 (2) For the purposes of this section, the following definitions 25 apply unless the context clearly requires otherwise.26 (a) "Cold storage warehouse" means a storage warehouse used to 27 store fresh and/or frozen perishable fruits or vegetables, meat, 28 seafood, dairy products, or fowl, or any combination thereof, at a 29 desired temperature to maintain the quality of the product for 30 orderly marketing. 31 (b) "Storage warehouse" means a building or structure, or any 32 part thereof, in which goods, wares, or merchandise are received for 33 storage for compensation, except field warehouses, fruit warehouses, 34 fruit packing plants, warehouses licensed under chapter 22.09 RCW, 35 public garages storing automobiles, railroad freight sheds, docks and 36 wharves, and "self-storage" or "mini storage" facilities whereby 37 customers have direct access to individual storage areas by separate 38 entrance. "Storage warehouse" does not include a building or 39 p. 7 SB 5815 structure, or that part of such building or structure, in which an 1 activity taxable under RCW 82.04.272 is conducted. 2 (c) "Periodical or magazine" means a printed publication, other 3 than a newspaper, issued regularly at stated intervals at least once 4 every three months, including any supplement or special edition of 5 the publication. 6 Sec. 108. RCW 82.04.285 and 2023 c 284 s 4 are each amended to 7 read as follows: 8 (1) Upon every person engaging within this state in the business 9 of operating contests of chance; as to such persons, the amount of 10 tax with respect to the business of operating contests of chance is 11 equal to the gross income of the business derived from contests of 12 chance multiplied by the rate of ((1.5)) 1.8 percent.13 (2) An additional tax is imposed on those persons subject to tax 14 in subsection (1) of this section. The amount of the additional tax 15 with respect to the business of operating contests of chance is equal 16 to the gross income of the business derived from contests of chance 17 multiplied by the rate of 0.2 percent through June 30, 2024, and 0.26 18 percent thereafter. The money collected under this subsection (2) 19 shall be deposited in the problem gambling account created in RCW 20 41.05.751. This subsection does not apply to businesses operating 21 contests of chance when the gross income from the operation of 22 contests of chance is less than $50,000 per year. 23 (3)(a) For the purpose of this section, "contests of chance" 24 means any contests, games, gaming schemes, or gaming devices, other 25 than the state lottery as defined in RCW 67.70.010, in which the 26 outcome depends in a material degree upon an element of chance, 27 notwithstanding that skill of the contestants may also be a factor in 28 the outcome. The term includes social card games, bingo, raffle, and 29 punchboard games, and pull-tabs as defined in chapter 9.46 RCW.30 (b) The term does not include: (i) Race meet for the conduct of 31 which a license must be secured from the Washington horse racing 32 commission, (ii) "amusement game" as defined in RCW 9.46.0201, or 33 (iii) any activity that is not subject to regulation by the gambling 34 commission. 35 (4) "Gross income of the business" does not include the monetary 36 value or actual cost of any prizes that are awarded, amounts paid to 37 players for winning wagers, accrual of prizes for progressive jackpot 38 p. 8 SB 5815 contests, or repayment of amounts used to seed guaranteed progressive 1 jackpot prizes. 2 Sec. 109. RCW 82.04.290 and 2020 c 2 s 3 are each amended to 3 read as follows: 4 (1) Upon every person engaging within this state in the business 5 of providing qualifying international investment management services, 6 as to such persons, the amount of tax with respect to such business 7 is equal to the gross income or gross proceeds of sales of the 8 business multiplied by a rate of 0.275 percent. 9 (2)(a) Upon every person engaging within this state in any 10 business activity other than or in addition to an activity taxed 11 explicitly under another section in this chapter or subsection (1) or 12 (3) of this section; as to such persons the amount of tax on account 13 of such activities is equal to the gross income of the business 14 multiplied by the rate of: 15 (i) ((1.75)) 2.1 percent; or 16 (ii) 1.5 percent for: 17 (A) Any person subject to the surcharge imposed under RCW 18 82.04.299; 19 (B) Any person whose gross income of the business subject to the 20 tax imposed under this subsection (2), for the immediately preceding 21 calendar year, was less than one million dollars, unless (I) the 22 person is affiliated with one or more other persons, and (II) the 23 aggregate gross income of the business subject to the tax imposed 24 under this subsection (2) for all affiliated persons was greater than 25 or equal to one million dollars for the immediately preceding 26 calendar year; and 27 (C) Hospitals as defined in RCW 70.41.020, including any hospital 28 that comes within the scope of chapter 71.12 RCW if the hospital is 29 also licensed under chapter 70.41 RCW. This subsection (2)(a)(ii)(C) 30 must not be construed as modifying RCW 82.04.260(10).31 (b) This subsection (2) includes, among others, and without 32 limiting the scope hereof (whether or not title to materials used in 33 the performance of such business passes to another by accession, 34 confusion or other than by outright sale), persons engaged in the 35 business of rendering any type of service which does not constitute a 36 "sale at retail" or a "sale at wholesale." The value of advertising, 37 demonstration, and promotional supplies and materials furnished to an 38 agent by his or her principal or supplier to be used for 39 p. 9 SB 5815 informational, educational, and promotional purposes is not 1 considered a part of the agent's remuneration or commission and is 2 not subject to taxation under this section. 3 (c) 14.3 percent of the revenues collected under (a)(i) of this 4 subsection (2) must be deposited into the workforce education 5 investment account created in RCW 43.79.195. 6 (d)(i) To aid in the effective administration of this subsection 7 (2), the department may require a person claiming to be subject to 8 the ((1.5 percent)) tax rate under (a)(ii)(B) of this subsection (2) 9 to identify all of the person's affiliates, including their 10 department tax registration number or unified business identifier 11 number, as may be applicable, or to certify that the person is not 12 affiliated with any other person. Requests under this subsection 13 (2)(d)(i) must be in writing and may be made electronically.14 (ii) If the department establishes, by clear, cogent, and 15 convincing evidence, that a person, with intent to evade the 16 additional taxes due under the ((1.75 percent)) tax rate in (a)(i) of 17 this subsection (2), failed to provide the department with complete 18 and accurate information in response to a written request under 19 (d)(i) of this subsection (2) within thirty days of such request, the 20 person is ineligible for the ((1.5 percent)) tax rate in (a)(ii) of 21 this subsection (2) for the entire current calendar year and the 22 following four calendar years. However, the department must waive the 23 provisions of this subsection (2)(d)(ii) for any tax reporting period 24 that the person is otherwise eligible for the ((1.5 percent)) tax 25 rate in (a)(ii) of this subsection (2) if (A) the department has not 26 previously determined that the person failed to fully comply with 27 (d)(i) of this subsection (2), and (B) within thirty days of the 28 notice of additional tax due as a result of the person's failure to 29 fully comply with (d)(i) of this subsection (2) the department 30 determines that the person has come into full compliance with (d)(i) 31 of this subsection (2). This subsection (2)(d) applies only with 32 respect to persons claiming entitlement to the ((1.5 percent)) tax 33 rate solely by reason of (a)(ii)(B) of this subsection (2).34 (e) For the purposes of (a)(ii)(B) of this subsection (2), if a 35 taxpayer is subject to the reconciliation provisions of RCW 36 82.04.462(4), and calculates gross income of the business subject to 37 the tax imposed under this subsection (2) for the immediately 38 preceding calendar year, or aggregate gross income of the business 39 subject to the tax imposed under this subsection (2) for the 40 p. 10 SB 5815 immediately preceding calendar year for all affiliated persons, based 1 on incomplete information, the taxpayer must correct the reporting 2 for the current calendar year when complete information for the 3 immediately preceding calendar year is available. 4 (f) For purposes of this subsection (2), the definitions in this 5 subsection (2)(f) apply: 6 (i) "Affiliate" means a person that directly or indirectly, 7 through one or more intermediaries, controls, is controlled by, or is 8 under common control with another person; and 9 (ii) "Control" means the possession, directly or indirectly, of 10 more than eighty percent of the power to direct or cause the 11 direction of the management and policies of a person, whether through 12 the ownership of voting shares, by contract, or otherwise.13 (3)(a) Until July 1, 2040, upon every person engaging within this 14 state in the business of performing aerospace product development for 15 others, as to such persons, the amount of tax with respect to such 16 business is equal to the gross income of the business multiplied by a 17 rate of 0.9 percent. 18 (b) A person reporting under the tax rate provided in this 19 subsection (3) must file a complete annual report with the department 20 under RCW 82.32.534. 21 (c) "Aerospace product development" has the meaning as provided 22 in RCW 82.04.4461. 23 Sec. 110. RCW 82.04.2905 and 2024 c 195 s 2 are each amended to 24 read as follows: 25 (1) Except as provided in subsection (2) of this section, upon 26 every person engaging within this state in the business of providing 27 child care for periods of less than twenty-four hours, the amount of 28 tax with respect to such business is equal to the gross proceeds 29 derived from such sales multiplied by the rate of ((0.484)) 0.5 30 percent. 31 (2) Until January 1, 2035, this chapter does not apply to amounts 32 received by a child care provider for the care and supervision for 33 periods of less than 24 hours of children: 34 (a) Under 13 years of age; or 35 (b) Under 19 years of age who have a verified special need or are 36 under court supervision as determined by the department of children, 37 youth, and families under chapter 43.216 RCW. 38 p. 11 SB 5815 (3) The exemption under subsection (2) of this section applies 1 only to persons primarily engaged in the business of providing child 2 care. 3 Sec. 111. RCW 82.04.2906 and 2003 c 343 s 1 are each amended to 4 read as follows: 5 (1) Upon every person engaging within this state in the business 6 of providing intensive inpatient or recovery house residential 7 treatment services for chemical dependency, certified by the 8 department of social and health services, for which payment from the 9 United States or any instrumentality thereof or from the state of 10 Washington or any municipal corporation or political subdivision 11 thereof is received as compensation for or to support those services; 12 as to such persons the amount of tax with respect to such business 13 shall be equal to the gross income from such services multiplied by 14 the rate of ((0.484)) 0.5 percent. 15 (2) If the persons described in subsection (1) of this section 16 receive income from sources other than those described in subsection 17 (1) of this section or provide services other than those named in 18 subsection (1) of this section, that income and those services are 19 subject to tax as otherwise provided in this chapter.20 Sec. 112. RCW 82.04.260 and 2023 c 422 s 5 and 2023 c 286 s 3 21 are each reenacted and amended to read as follows:22 (1) Upon every person engaging within this state in the business 23 of manufacturing: 24 (a) Wheat into flour, barley into pearl barley, soybeans into 25 soybean oil, canola into canola oil, canola meal, or canola by-26 products, or sunflower seeds into sunflower oil; as to such persons 27 the amount of tax with respect to such business is equal to the value 28 of the flour, pearl barley, oil, canola meal, or canola by-product 29 manufactured, multiplied by the rate of 0.138 percent;30 (b) Beginning July 1, 2035, seafood products that remain in a 31 raw, raw frozen, or raw salted state at the completion of the 32 manufacturing by that person; or selling manufactured seafood 33 products that remain in a raw, raw frozen, or raw salted state at the 34 completion of the manufacturing, to purchasers who transport in the 35 ordinary course of business the goods out of this state; as to such 36 persons the amount of tax with respect to such business is equal to 37 the value of the products manufactured or the gross proceeds derived 38 p. 12 SB 5815 from such sales, multiplied by the rate of 0.138 percent. Sellers 1 must keep and preserve records for the period required by RCW 2 82.32.070 establishing that the goods were transported by the 3 purchaser in the ordinary course of business out of this state;4 (c)(i) Except as provided otherwise in (c)(iii) of this 5 subsection, beginning July 1, 2035, until January 1, 2046, dairy 6 products; or selling dairy products that the person has manufactured 7 to purchasers who either transport in the ordinary course of business 8 the goods out of state or purchasers who use such dairy products as 9 an ingredient or component in the manufacturing of a dairy product; 10 as to such persons the tax imposed is equal to the value of the 11 products manufactured or the gross proceeds derived from such sales 12 multiplied by the rate of 0.138 percent. Sellers must keep and 13 preserve records for the period required by RCW 82.32.070 14 establishing that the goods were transported by the purchaser in the 15 ordinary course of business out of this state or sold to a 16 manufacturer for use as an ingredient or component in the 17 manufacturing of a dairy product. 18 (ii) For the purposes of this subsection (1)(c), "dairy products" 19 means: 20 (A) Products, not including any cannabis-infused product, that as 21 of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 22 131, 133, and 135, including by-products from the manufacturing of 23 the dairy products, such as whey and casein; and 24 (B) Products comprised of not less than 70 percent dairy products 25 that qualify under (c)(ii)(A) of this subsection, measured by weight 26 or volume. 27 (iii) The preferential tax rate provided to taxpayers under this 28 subsection (1)(c) does not apply to sales of dairy products on or 29 after July 1, 2023, where a dairy product is used by the purchaser as 30 an ingredient or component in the manufacturing in Washington of a 31 dairy product; 32 (d)(i) Beginning July 1, 2035, fruits or vegetables by canning, 33 preserving, freezing, processing, or dehydrating fresh fruits or 34 vegetables, or selling at wholesale fruits or vegetables manufactured 35 by the seller by canning, preserving, freezing, processing, or 36 dehydrating fresh fruits or vegetables and sold to purchasers who 37 transport in the ordinary course of business the goods out of this 38 state; as to such persons the amount of tax with respect to such 39 business is equal to the value of the products manufactured or the 40 p. 13 SB 5815 gross proceeds derived from such sales multiplied by the rate of 1 0.138 percent. Sellers must keep and preserve records for the period 2 required by RCW 82.32.070 establishing that the goods were 3 transported by the purchaser in the ordinary course of business out 4 of this state. 5 (ii) For purposes of this subsection (1)(d), "fruits" and 6 "vegetables" do not include cannabis, useable cannabis, or cannabis-7 infused products; and 8 (e) Wood biomass fuel; as to such persons the amount of tax with 9 respect to the business is equal to the value of wood biomass fuel 10 manufactured, multiplied by the rate of 0.138 percent. For the 11 purposes of this section, "wood biomass fuel" means a liquid or 12 gaseous fuel that is produced from lignocellulosic feedstocks, 13 including wood, forest, or field residue and dedicated energy crops, 14 and that does not include wood treated with chemical preservations 15 such as creosote, pentachlorophenol, or copper-chrome-arsenic.16 (2) Upon every person engaging within this state in the business 17 of splitting or processing dried peas; as to such persons the amount 18 of tax with respect to such business is equal to the value of the 19 peas split or processed, multiplied by the rate of 0.138 percent.20 (3) Upon every nonprofit corporation and nonprofit association 21 engaging within this state in research and development, as to such 22 corporations and associations, the amount of tax with respect to such 23 activities is equal to the gross income derived from such activities 24 multiplied by the rate of ((0.484)) 0.5 percent. 25 (4) Upon every person engaging within this state in the business 26 of slaughtering, breaking and/or processing perishable meat products 27 and/or selling the same at wholesale only and not at retail; as to 28 such persons the tax imposed is equal to the gross proceeds derived 29 from such sales multiplied by the rate of 0.138 percent.30 (5)(a) Upon every person engaging within this state in the 31 business of acting as a travel agent or tour operator and whose 32 annual taxable amount for the prior calendar year from such business 33 was $250,000 or less; as to such persons the amount of the tax with 34 respect to such activities is equal to the gross income derived from 35 such activities multiplied by the rate of 0.275 percent.36 (b) Upon every person engaging within this state in the business 37 of acting as a travel agent or tour operator and whose annual taxable 38 amount for the prior calendar year from such business was more than 39 $250,000; as to such persons the amount of the tax with respect to 40 p. 14 SB 5815 such activities is equal to the gross income derived from such 1 activities multiplied by the rate of 0.275 percent through June 30, 2 2019, and 0.9 percent beginning July 1, 2019. 3 (6) Upon every person engaging within this state in business as 4 an international steamship agent, international customs house broker, 5 international freight forwarder, vessel and/or cargo charter broker 6 in foreign commerce, and/or international air cargo agent; as to such 7 persons the amount of the tax with respect to only international 8 activities is equal to the gross income derived from such activities 9 multiplied by the rate of 0.275 percent. 10 (7) Upon every person engaging within this state in the business 11 of stevedoring and associated activities pertinent to the movement of 12 goods and commodities in waterborne interstate or foreign commerce; 13 as to such persons the amount of tax with respect to such business is 14 equal to the gross proceeds derived from such activities multiplied 15 by the rate of 0.275 percent. Persons subject to taxation under this 16 subsection are exempt from payment of taxes imposed by chapter 82.16 17 RCW for that portion of their business subject to taxation under this 18 subsection. Stevedoring and associated activities pertinent to the 19 conduct of goods and commodities in waterborne interstate or foreign 20 commerce are defined as all activities of a labor, service or 21 transportation nature whereby cargo may be loaded or unloaded to or 22 from vessels or barges, passing over, onto or under a wharf, pier, or 23 similar structure; cargo may be moved to a warehouse or similar 24 holding or storage yard or area to await further movement in import 25 or export or may move to a consolidation freight station and be 26 stuffed, unstuffed, containerized, separated or otherwise segregated 27 or aggregated for delivery or loaded on any mode of transportation 28 for delivery to its consignee. Specific activities included in this 29 definition are: Wharfage, handling, loading, unloading, moving of 30 cargo to a convenient place of delivery to the consignee or a 31 convenient place for further movement to export mode; documentation 32 services in connection with the receipt, delivery, checking, care, 33 custody and control of cargo required in the transfer of cargo; 34 imported automobile handling prior to delivery to consignee; terminal 35 stevedoring and incidental vessel services, including but not limited 36 to plugging and unplugging refrigerator service to containers, 37 trailers, and other refrigerated cargo receptacles, and securing ship 38 hatch covers. 39 p. 15 SB 5815 (8)(a) Upon every person engaging within this state in the 1 business of disposing of low-level waste, as defined in RCW 2 70A.380.010; as to such persons the amount of the tax with respect to 3 such business is equal to the gross income of the business, excluding 4 any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 5 3.3 percent. 6 (b) If the gross income of the taxpayer is attributable to 7 activities both within and without this state, the gross income 8 attributable to this state must be determined in accordance with the 9 methods of apportionment required under RCW 82.04.460.10 (9) Upon every person engaging within this state as an insurance 11 producer or title insurance agent licensed under chapter 48.17 RCW or 12 a surplus line broker licensed under chapter 48.15 RCW; as to such 13 persons, the amount of the tax with respect to such licensed 14 activities is equal to the gross income of such business multiplied 15 by the rate of ((0.484)) 0.5 percent. 16 (10) Upon every person engaging within this state in business as 17 a hospital, as defined in chapter 70.41 RCW, that is operated as a 18 nonprofit corporation or by the state or any of its political 19 subdivisions, as to such persons, the amount of tax with respect to 20 such activities is equal to the gross income of the business 21 multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 22 percent thereafter. 23 (11)(a) Beginning October 1, 2005, upon every person engaging 24 within this state in the business of manufacturing commercial 25 airplanes, or components of such airplanes, or making sales, at 26 retail or wholesale, of commercial airplanes or components of such 27 airplanes, manufactured by the seller, as to such persons the amount 28 of tax with respect to such business is, in the case of 29 manufacturers, equal to the value of the product manufactured and the 30 gross proceeds of sales of the product manufactured, or in the case 31 of processors for hire, equal to the gross income of the business, 32 multiplied by the rate of: 33 (i) 0.4235 percent from October 1, 2005, through June 30, 2007;34 (ii) 0.2904 percent beginning July 1, 2007, through March 31, 35 2020; and 36 (iii)(A) Beginning April 1, 2020, through December 31, 2026, 37 0.484 percent, subject to any reduction required under (e) of this 38 subsection (11). The tax rate in this subsection (11)(a)(iii) applies 39 to all business activities described in this subsection (11)(a).40 p. 16 SB 5815 (B) Beginning January 1, 2027, 0.5 percent, subject to any 1 reduction required under (e) of this subsection (11). The tax rate in 2 this subsection (11)(a)(iii) applies to all business activities 3 described in this subsection (11)(a).4 (b) Beginning July 1, 2008, upon every person who is not eligible 5 to report under the provisions of (a) of this subsection (11) and is 6 engaging within this state in the business of manufacturing tooling 7 specifically designed for use in manufacturing commercial airplanes 8 or components of such airplanes, or making sales, at retail or 9 wholesale, of such tooling manufactured by the seller, as to such 10 persons the amount of tax with respect to such business is, in the 11 case of manufacturers, equal to the value of the product manufactured 12 and the gross proceeds of sales of the product manufactured, or in 13 the case of processors for hire, be equal to the gross income of the 14 business, multiplied by the rate of: 15 (i) 0.2904 percent through March 31, 2020; ((and))16 (ii) Beginning April 1, 2020, through December 31, 2026, the 17 following rates, which are subject to any reduction required under 18 (e) of this subsection (11): 19 (A) The rate under RCW 82.04.250(1) on the business of making 20 retail sales of tooling specifically designed for use in 21 manufacturing commercial airplanes or components of such airplanes; 22 and 23 (B) 0.484 percent on all other business activities described in 24 this subsection (11)(b); and25 (iii) Beginning January 1, 2027, the following rates, which are 26 subject to any reduction required under (e) of this subsection (11):27 (A) The rate under RCW 82.04.250(1) on the business of making 28 retail sales of tooling specifically designed for use in 29 manufacturing commercial airplanes or components of such airplanes; 30 and31 (B) 0.5 percent on all other business activities described in 32 this subsection (11)(b). 33 (c) For the purposes of this subsection (11), "commercial 34 airplane" and "component" have the same meanings as provided in RCW 35 82.32.550. 36 (d)(i) In addition to all other requirements under this title, a 37 person reporting under the tax rate provided in this subsection (11) 38 must file a complete annual tax performance report with the 39 department under RCW 82.32.534. However, this requirement does not 40 p. 17 SB 5815 apply to persons reporting under the tax rate in (a)(iii) of this 1 subsection (11), so long as that rate remains ((0.484)) 0.5 percent, 2 or under any of the tax rates in (b)(ii)(A) and (B) of this 3 subsection (11), so long as those tax rates remain the rate imposed 4 pursuant to RCW 82.04.250(1) and ((0.484)) 0.5 percent, respectively.5 (ii) Nothing in (d)(i) of this subsection (11) may be construed 6 as affecting the obligation of a person reporting under a tax rate 7 provided in this subsection (11) to file a complete annual tax 8 performance report with the department under RCW 82.32.534: (A) 9 Pursuant to another provision of this title as a result of claiming a 10 tax credit or exemption; or (B) pursuant to (d)(i) of this subsection 11 (11) as a result of claiming the tax rates in (a)(ii) or (b)(i) of 12 this subsection (11) for periods ending before April 1, 2020.13 (e)(i) After March 31, 2021, the tax rates under (a)(iii) and 14 (b)(ii) of this subsection (11) must be reduced to 0.357 percent 15 provided the conditions in RCW 82.04.2602 are met. The effective date 16 of the rates authorized under this subsection (11)(e) must occur on 17 the first day of the next calendar quarter that is at least 60 days 18 after the department receives the last of the two written notices 19 pursuant to RCW 82.04.2602 (3) and (4). 20 (ii) Both a significant commercial airplane manufacturer 21 separately and the rest of the aerospace industry as a whole, 22 receiving the rate of 0.357 percent under this subsection (11)(e) are 23 subject to the aerospace apprenticeship utilization rates required 24 under RCW 49.04.220 by April 1, 2026, or five years after the 25 effective date of the 0.357 percent rate authorized under this 26 subsection (11)(e), whichever is later, as determined by the 27 department of labor and industries. 28 (iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 29 to this subsection (11)(e). 30 (f)(i) Except as provided in (f)(ii) of this subsection (11), 31 this subsection (11) does not apply on and after July 1, 2040.32 (ii) With respect to the manufacturing of commercial airplanes or 33 making sales, at retail or wholesale, of commercial airplanes, this 34 subsection (11) does not apply on and after July 1st of the year in 35 which the department makes a determination that any final assembly or 36 wing assembly of any version or variant of a commercial airplane that 37 is the basis of a siting of a significant commercial airplane 38 manufacturing program in the state under RCW 82.32.850 has been sited 39 outside the state of Washington. This subsection (11)(f)(ii) only 40 p. 18 SB 5815 applies to the manufacturing or sale of commercial airplanes that are 1 the basis of a siting of a significant commercial airplane 2 manufacturing program in the state under RCW 82.32.850. This 3 subsection (11)(f)(ii) continues to apply during the time that a 4 person is subject to the tax rate in (a)(iii) of this subsection 5 (11). 6 (g) For the purposes of this subsection, "a significant 7 commercial airplane manufacturer" means a manufacturer of commercial 8 airplanes with at least 50,000 full-time employees in Washington as 9 of January 1, 2021. 10 (12)(a) Until July 1, 2045, upon every person engaging within 11 this state in the business of extracting timber or extracting for 12 hire timber; as to such persons the amount of tax with respect to the 13 business is, in the case of extractors, equal to the value of 14 products, including by-products, extracted, or in the case of 15 extractors for hire, equal to the gross income of the business, 16 multiplied by the rate of 0.4235 percent from July 1, 2006, through 17 June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 18 2045. 19 (b) Until July 1, 2045, upon every person engaging within this 20 state in the business of manufacturing or processing for hire: (i) 21 Timber into timber products or wood products; (ii) timber products 22 into other timber products or wood products; or (iii) products 23 defined in RCW 19.27.570(1); as to such persons the amount of the tax 24 with respect to the business is, in the case of manufacturers, equal 25 to the value of products, including by-products, manufactured, or in 26 the case of processors for hire, equal to the gross income of the 27 business, multiplied by the rate of 0.4235 percent from July 1, 2006, 28 through June 30, 2007, and 0.2904 percent from July 1, 2007, through 29 June 30, 2045. 30 (c) Until July 1, 2045, upon every person engaging within this 31 state in the business of selling at wholesale: (i) Timber extracted 32 by that person; (ii) timber products manufactured by that person from 33 timber or other timber products; (iii) wood products manufactured by 34 that person from timber or timber products; or (iv) products defined 35 in RCW 19.27.570(1) manufactured by that person; as to such persons 36 the amount of the tax with respect to the business is equal to the 37 gross proceeds of sales of the timber, timber products, wood 38 products, or products defined in RCW 19.27.570(1) multiplied by the 39 p. 19 SB 5815 rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 1 0.2904 percent from July 1, 2007, through June 30, 2045.2 (d) Until July 1, 2045, upon every person engaging within this 3 state in the business of selling standing timber; as to such persons 4 the amount of the tax with respect to the business is equal to the 5 gross income of the business multiplied by the rate of 0.2904 6 percent. For purposes of this subsection (12)(d), "selling standing 7 timber" means the sale of timber apart from the land, where the buyer 8 is required to sever the timber within 30 months from the date of the 9 original contract, regardless of the method of payment for the timber 10 and whether title to the timber transfers before, upon, or after 11 severance. 12 (e) For purposes of this subsection, the following definitions 13 apply: 14 (i) "Biocomposite surface products" means surface material 15 products containing, by weight or volume, more than 50 percent 16 recycled paper and that also use nonpetroleum -based phenolic resin as 17 a bonding agent. 18 (ii) "Paper and paper products" means products made of interwoven 19 cellulosic fibers held together largely by hydrogen bonding. "Paper 20 and paper products" includes newsprint; office, printing, fine, and 21 pressure-sensitive papers; paper napkins, towels, and toilet tissue; 22 kraft bag, construction, and other kraft industrial papers; 23 paperboard, liquid packaging containers, containerboard, corrugated, 24 and solid-fiber containers including linerboard and corrugated 25 medium; and related types of cellulosic products containing 26 primarily, by weight or volume, cellulosic materials. "Paper and 27 paper products" does not include books, newspapers, magazines, 28 periodicals, and other printed publications, advertising materials, 29 calendars, and similar types of printed materials.30 (iii) "Recycled paper" means paper and paper products having 50 31 percent or more of their fiber content that comes from postconsumer 32 waste. For purposes of this subsection (12)(e)(iii), "postconsumer 33 waste" means a finished material that would normally be disposed of 34 as solid waste, having completed its life cycle as a consumer item.35 (iv) "Timber" means forest trees, standing or down, on privately 36 or publicly owned land. "Timber" does not include Christmas trees 37 that are cultivated by agricultural methods or short-rotation 38 hardwoods as defined in RCW 84.33.035. 39 (v) "Timber products" means: 40 p. 20 SB 5815 (A) Logs, wood chips, sawdust, wood waste, and similar products 1 obtained wholly from the processing of timber, short-rotation 2 hardwoods as defined in RCW 84.33.035, or both; 3 (B) Pulp, including market pulp and pulp derived from recovered 4 paper or paper products; and 5 (C) Recycled paper, but only when used in the manufacture of 6 biocomposite surface products. 7 (vi) "Wood products" means paper and paper products; dimensional 8 lumber; engineered wood products such as particleboard, oriented 9 strand board, medium density fiberboard, and plywood; wood doors; 10 wood windows; and biocomposite surface products. 11 (f) Except for small harvesters as defined in RCW 84.33.035, a 12 person reporting under the tax rate provided in this subsection (12) 13 must file a complete annual tax performance report with the 14 department under RCW 82.32.534. 15 (g) Nothing in this subsection (12) may be construed to affect 16 the taxation of any activity defined as a retail sale in RCW 17 82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 18 82.04.060(2), or taxed under RCW 82.04.280(1)(g). 19 (13) Upon every person engaging within this state in inspecting, 20 testing, labeling, and storing canned salmon owned by another person, 21 as to such persons, the amount of tax with respect to such activities 22 is equal to the gross income derived from such activities multiplied 23 by the rate of ((0.484)) 0.5 percent. 24 Sec. 113. RCW 82.04.260 and 2023 c 422 s 5 are each amended to 25 read as follows: 26 (1) Upon every person engaging within this state in the business 27 of manufacturing: 28 (a) Wheat into flour, barley into pearl barley, soybeans into 29 soybean oil, canola into canola oil, canola meal, or canola by-30 products, or sunflower seeds into sunflower oil; as to such persons 31 the amount of tax with respect to such business is equal to the value 32 of the flour, pearl barley, oil, canola meal, or canola by-product 33 manufactured, multiplied by the rate of 0.138 percent;34 (b) Beginning July 1, 2035, seafood products that remain in a 35 raw, raw frozen, or raw salted state at the completion of the 36 manufacturing by that person; or selling manufactured seafood 37 products that remain in a raw, raw frozen, or raw salted state at the 38 completion of the manufacturing, to purchasers who transport in the 39 p. 21 SB 5815 ordinary course of business the goods out of this state; as to such 1 persons the amount of tax with respect to such business is equal to 2 the value of the products manufactured or the gross proceeds derived 3 from such sales, multiplied by the rate of 0.138 percent. Sellers 4 must keep and preserve records for the period required by RCW 5 82.32.070 establishing that the goods were transported by the 6 purchaser in the ordinary course of business out of this state;7 (c)(i) Except as provided otherwise in (c)(iii) of this 8 subsection, beginning July 1, 2035, until January 1, 2046, dairy 9 products; or selling dairy products that the person has manufactured 10 to purchasers who either transport in the ordinary course of business 11 the goods out of state or purchasers who use such dairy products as 12 an ingredient or component in the manufacturing of a dairy product; 13 as to such persons the tax imposed is equal to the value of the 14 products manufactured or the gross proceeds derived from such sales 15 multiplied by the rate of 0.138 percent. Sellers must keep and 16 preserve records for the period required by RCW 82.32.070 17 establishing that the goods were transported by the purchaser in the 18 ordinary course of business out of this state or sold to a 19 manufacturer for use as an ingredient or component in the 20 manufacturing of a dairy product. 21 (ii) For the purposes of this subsection (1)(c), "dairy products" 22 means: 23 (A) Products, not including any cannabis-infused product, that as 24 of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 25 131, 133, and 135, including by-products from the manufacturing of 26 the dairy products, such as whey and casein; and 27 (B) Products comprised of not less than 70 percent dairy products 28 that qualify under (c)(ii)(A) of this subsection, measured by weight 29 or volume. 30 (iii) The preferential tax rate provided to taxpayers under this 31 subsection (1)(c) does not apply to sales of dairy products on or 32 after July 1, 2023, where a dairy product is used by the purchaser as 33 an ingredient or component in the manufacturing in Washington of a 34 dairy product; 35 (d)(i) Beginning July 1, 2035, fruits or vegetables by canning, 36 preserving, freezing, processing, or dehydrating fresh fruits or 37 vegetables, or selling at wholesale fruits or vegetables manufactured 38 by the seller by canning, preserving, freezing, processing, or 39 dehydrating fresh fruits or vegetables and sold to purchasers who 40 p. 22 SB 5815 transport in the ordinary course of business the goods out of this 1 state; as to such persons the amount of tax with respect to such 2 business is equal to the value of the products manufactured or the 3 gross proceeds derived from such sales multiplied by the rate of 4 0.138 percent. Sellers must keep and preserve records for the period 5 required by RCW 82.32.070 establishing that the goods were 6 transported by the purchaser in the ordinary course of business out 7 of this state. 8 (ii) For purposes of this subsection (1)(d), "fruits" and 9 "vegetables" do not include cannabis, useable cannabis, or cannabis-10 infused products; and 11 (e) Wood biomass fuel; as to such persons the amount of tax with 12 respect to the business is equal to the value of wood biomass fuel 13 manufactured, multiplied by the rate of 0.138 percent. For the 14 purposes of this section, "wood biomass fuel" means a liquid or 15 gaseous fuel that is produced from lignocellulosic feedstocks, 16 including wood, forest, or field residue and dedicated energy crops, 17 and that does not include wood treated with chemical preservations 18 such as creosote, pentachlorophenol, or copper-chrome-arsenic.19 (2) Upon every person engaging within this state in the business 20 of splitting or processing dried peas; as to such persons the amount 21 of tax with respect to such business is equal to the value of the 22 peas split or processed, multiplied by the rate of 0.138 percent.23 (3) Upon every nonprofit corporation and nonprofit association 24 engaging within this state in research and development, as to such 25 corporations and associations, the amount of tax with respect to such 26 activities is equal to the gross income derived from such activities 27 multiplied by the rate of ((0.484)) 0.5 percent. 28 (4) Upon every person engaging within this state in the business 29 of slaughtering, breaking and/or processing perishable meat products 30 and/or selling the same at wholesale only and not at retail; as to 31 such persons the tax imposed is equal to the gross proceeds derived 32 from such sales multiplied by the rate of 0.138 percent.33 (5)(a) Upon every person engaging within this state in the 34 business of acting as a travel agent or tour operator and whose 35 annual taxable amount for the prior calendar year from such business 36 was $250,000 or less; as to such persons the amount of the tax with 37 respect to such activities is equal to the gross income derived from 38 such activities multiplied by the rate of 0.275 percent.39 p. 23 SB 5815 (b) Upon every person engaging within this state in the business 1 of acting as a travel agent or tour operator and whose annual taxable 2 amount for the prior calendar year from such business was more than 3 $250,000; as to such persons the amount of the tax with respect to 4 such activities is equal to the gross income derived from such 5 activities multiplied by the rate of 0.275 percent through June 30, 6 2019, and 0.9 percent beginning July 1, 2019. 7 (6) Upon every person engaging within this state in business as 8 an international steamship agent, international customs house broker, 9 international freight forwarder, vessel and/or cargo charter broker 10 in foreign commerce, and/or international air cargo agent; as to such 11 persons the amount of the tax with respect to only international 12 activities is equal to the gross income derived from such activities 13 multiplied by the rate of 0.275 percent. 14 (7) Upon every person engaging within this state in the business 15 of stevedoring and associated activities pertinent to the movement of 16 goods and commodities in waterborne interstate or foreign commerce; 17 as to such persons the amount of tax with respect to such business is 18 equal to the gross proceeds derived from such activities multiplied 19 by the rate of 0.275 percent. Persons subject to taxation under this 20 subsection are exempt from payment of taxes imposed by chapter 82.16 21 RCW for that portion of their business subject to taxation under this 22 subsection. Stevedoring and associated activities pertinent to the 23 conduct of goods and commodities in waterborne interstate or foreign 24 commerce are defined as all activities of a labor, service or 25 transportation nature whereby cargo may be loaded or unloaded to or 26 from vessels or barges, passing over, onto or under a wharf, pier, or 27 similar structure; cargo may be moved to a warehouse or similar 28 holding or storage yard or area to await further movement in import 29 or export or may move to a consolidation freight station and be 30 stuffed, unstuffed, containerized, separated or otherwise segregated 31 or aggregated for delivery or loaded on any mode of transportation 32 for delivery to its consignee. Specific activities included in this 33 definition are: Wharfage, handling, loading, unloading, moving of 34 cargo to a convenient place of delivery to the consignee or a 35 convenient place for further movement to export mode; documentation 36 services in connection with the receipt, delivery, checking, care, 37 custody and control of cargo required in the transfer of cargo; 38 imported automobile handling prior to delivery to consignee; terminal 39 stevedoring and incidental vessel services, including but not limited 40 p. 24 SB 5815 to plugging and unplugging refrigerator service to containers, 1 trailers, and other refrigerated cargo receptacles, and securing ship 2 hatch covers. 3 (8)(a) Upon every person engaging within this state in the 4 business of disposing of low-level waste, as defined in RCW 5 70A.380.010; as to such persons the amount of the tax with respect to 6 such business is equal to the gross income of the business, excluding 7 any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 8 3.3 percent. 9 (b) If the gross income of the taxpayer is attributable to 10 activities both within and without this state, the gross income 11 attributable to this state must be determined in accordance with the 12 methods of apportionment required under RCW 82.04.460.13 (9) Upon every person engaging within this state as an insurance 14 producer or title insurance agent licensed under chapter 48.17 RCW or 15 a surplus line broker licensed under chapter 48.15 RCW; as to such 16 persons, the amount of the tax with respect to such licensed 17 activities is equal to the gross income of such business multiplied 18 by the rate of ((0.484)) 0.5 percent. 19 (10) Upon every person engaging within this state in business as 20 a hospital, as defined in chapter 70.41 RCW, that is operated as a 21 nonprofit corporation or by the state or any of its political 22 subdivisions, as to such persons, the amount of tax with respect to 23 such activities is equal to the gross income of the business 24 multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 25 percent thereafter. 26 (11)(a) Beginning October 1, 2005, upon every person engaging 27 within this state in the business of manufacturing commercial 28 airplanes, or components of such airplanes, or making sales, at 29 retail or wholesale, of commercial airplanes or components of such 30 airplanes, manufactured by the seller, as to such persons the amount 31 of tax with respect to such business is, in the case of 32 manufacturers, equal to the value of the product manufactured and the 33 gross proceeds of sales of the product manufactured, or in the case 34 of processors for hire, equal to the gross income of the business, 35 multiplied by the rate of: 36 (i) 0.4235 percent from October 1, 2005, through June 30, 2007;37 (ii) 0.2904 percent beginning July 1, 2007, through March 31, 38 2020; and 39 p. 25 SB 5815 (iii)(A) Beginning April 1, 2020, through December 31, 2026, 1 0.484 percent, subject to any reduction required under (e) of this 2 subsection (11). The tax rate in this subsection (11)(a)(iii) applies 3 to all business activities described in this subsection (11)(a).4 (B) Beginning January 1, 2027, 0.5 percent, subject to any 5 reduction required under (e) of this subsection (11). The tax rate in 6 this subsection (11)(a)(iii) applies to all business activities 7 described in this subsection (11)(a).8 (b) Beginning July 1, 2008, upon every person who is not eligible 9 to report under the provisions of (a) of this subsection (11) and is 10 engaging within this state in the business of manufacturing tooling 11 specifically designed for use in manufacturing commercial airplanes 12 or components of such airplanes, or making sales, at retail or 13 wholesale, of such tooling manufactured by the seller, as to such 14 persons the amount of tax with respect to such business is, in the 15 case of manufacturers, equal to the value of the product manufactured 16 and the gross proceeds of sales of the product manufactured, or in 17 the case of processors for hire, be equal to the gross income of the 18 business, multiplied by the rate of: 19 (i) 0.2904 percent through March 31, 2020; ((and))20 (ii) Beginning April 1, 2020, the following rates, which are 21 subject to any reduction required under (e) of this subsection (11):22 (A) The rate under RCW 82.04.250(1) on the business of making 23 retail sales of tooling specifically designed for use in 24 manufacturing commercial airplanes or components of such airplanes; 25 and 26 (B) 0.484 percent on all other business activities described in 27 this subsection (11)(b); and28 (iii) Beginning January 1, 2027, the following rates, which are 29 subject to any reduction required under (e) of this subsection (11):30 (A) The rate under RCW 82.04.250(1) on the business of making 31 retail sales of tooling specifically designed for use in 32 manufacturing commercial airplanes or components of such airplanes; 33 and34 (B) 0.5 percent on all other business activities described in 35 this subsection (11)(b). 36 (c) For the purposes of this subsection (11), "commercial 37 airplane" and "component" have the same meanings as provided in RCW 38 82.32.550. 39 p. 26 SB 5815 (d)(i) In addition to all other requirements under this title, a 1 person reporting under the tax rate provided in this subsection (11) 2 must file a complete annual tax performance report with the 3 department under RCW 82.32.534. However, this requirement does not 4 apply to persons reporting under the tax rate in (a)(iii) of this 5 subsection (11), so long as that rate remains ((0.484)) 0.5 percent, 6 or under any of the tax rates in (b)(ii)(A) and (B) of this 7 subsection (11), so long as those tax rates remain the rate imposed 8 pursuant to RCW 82.04.250(1) and 0.484 percent, respectively.9 (ii) Nothing in (d)(i) of this subsection (11) may be construed 10 as affecting the obligation of a person reporting under a tax rate 11 provided in this subsection (11) to file a complete annual tax 12 performance report with the department under RCW 82.32.534: (A) 13 Pursuant to another provision of this title as a result of claiming a 14 tax credit or exemption; or (B) pursuant to (d)(i) of this subsection 15 (11) as a result of claiming the tax rates in (a)(ii) or (b)(i) of 16 this subsection (11) for periods ending before April 1, 2020.17 (e)(i) After March 31, 2021, the tax rates under (a)(iii) and 18 (b)(ii) of this subsection (11) must be reduced to 0.357 percent 19 provided the conditions in RCW 82.04.2602 are met. The effective date 20 of the rates authorized under this subsection (11)(e) must occur on 21 the first day of the next calendar quarter that is at least 60 days 22 after the department receives the last of the two written notices 23 pursuant to RCW 82.04.2602 (3) and (4). 24 (ii) Both a significant commercial airplane manufacturer 25 separately and the rest of the aerospace industry as a whole, 26 receiving the rate of 0.357 percent under this subsection (11)(e) are 27 subject to the aerospace apprenticeship utilization rates required 28 under RCW 49.04.220 by April 1, 2026, or five years after the 29 effective date of the 0.357 percent rate authorized under this 30 subsection (11)(e), whichever is later, as determined by the 31 department of labor and industries. 32 (iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 33 to this subsection (11)(e). 34 (f)(i) Except as provided in (f)(ii) of this subsection (11), 35 this subsection (11) does not apply on and after July 1, 2040.36 (ii) With respect to the manufacturing of commercial airplanes or 37 making sales, at retail or wholesale, of commercial airplanes, this 38 subsection (11) does not apply on and after July 1st of the year in 39 which the department makes a determination that any final assembly or 40 p. 27 SB 5815 wing assembly of any version or variant of a commercial airplane that 1 is the basis of a siting of a significant commercial airplane 2 manufacturing program in the state under RCW 82.32.850 has been sited 3 outside the state of Washington. This subsection (11)(f)(ii) only 4 applies to the manufacturing or sale of commercial airplanes that are 5 the basis of a siting of a significant commercial airplane 6 manufacturing program in the state under RCW 82.32.850. This 7 subsection (11)(f)(ii) continues to apply during the time that a 8 person is subject to the tax rate in (a)(iii) of this subsection 9 (11). 10 (g) For the purposes of this subsection, "a significant 11 commercial airplane manufacturer" means a manufacturer of commercial 12 airplanes with at least 50,000 full-time employees in Washington as 13 of January 1, 2021. 14 (12)(a) Until July 1, 2045, upon every person engaging within 15 this state in the business of extracting timber or extracting for 16 hire timber; as to such persons the amount of tax with respect to the 17 business is, in the case of extractors, equal to the value of 18 products, including by-products, extracted, or in the case of 19 extractors for hire, equal to the gross income of the business, 20 multiplied by the rate of 0.4235 percent from July 1, 2006, through 21 June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 22 2045. 23 (b) Until July 1, 2045, upon every person engaging within this 24 state in the business of manufacturing or processing for hire: (i) 25 Timber into timber products or wood products; (ii) timber products 26 into other timber products or wood products; or (iii) products 27 defined in RCW 19.27.570(1); as to such persons the amount of the tax 28 with respect to the business is, in the case of manufacturers, equal 29 to the value of products, including by-products, manufactured, or in 30 the case of processors for hire, equal to the gross income of the 31 business, multiplied by the rate of 0.4235 percent from July 1, 2006, 32 through June 30, 2007, and 0.2904 percent from July 1, 2007, through 33 June 30, 2045. 34 (c) Until July 1, 2045, upon every person engaging within this 35 state in the business of selling at wholesale: (i) Timber extracted 36 by that person; (ii) timber products manufactured by that person from 37 timber or other timber products; (iii) wood products manufactured by 38 that person from timber or timber products; or (iv) products defined 39 in RCW 19.27.570(1) manufactured by that person; as to such persons 40 p. 28 SB 5815 the amount of the tax with respect to the business is equal to the 1 gross proceeds of sales of the timber, timber products, wood 2 products, or products defined in RCW 19.27.570(1) multiplied by the 3 rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 4 0.2904 percent from July 1, 2007, through June 30, 2045.5 (d) Until July 1, 2045, upon every person engaging within this 6 state in the business of selling standing timber; as to such persons 7 the amount of the tax with respect to the business is equal to the 8 gross income of the business multiplied by the rate of 0.2904 9 percent. For purposes of this subsection (12)(d), "selling standing 10 timber" means the sale of timber apart from the land, where the buyer 11 is required to sever the timber within 30 months from the date of the 12 original contract, regardless of the method of payment for the timber 13 and whether title to the timber transfers before, upon, or after 14 severance. 15 (e) For purposes of this subsection, the following definitions 16 apply: 17 (i) "Biocomposite surface products" means surface material 18 products containing, by weight or volume, more than 50 percent 19 recycled paper and that also use nonpetroleum -based phenolic resin as 20 a bonding agent. 21 (ii) "Paper and paper products" means products made of interwoven 22 cellulosic fibers held together largely by hydrogen bonding. "Paper 23 and paper products" includes newsprint; office, printing, fine, and 24 pressure-sensitive papers; paper napkins, towels, and toilet tissue; 25 kraft bag, construction, and other kraft industrial papers; 26 paperboard, liquid packaging containers, containerboard, corrugated, 27 and solid-fiber containers including linerboard and corrugated 28 medium; and related types of cellulosic products containing 29 primarily, by weight or volume, cellulosic materials. "Paper and 30 paper products" does not include books, newspapers, magazines, 31 periodicals, and other printed publications, advertising materials, 32 calendars, and similar types of printed materials.33 (iii) "Recycled paper" means paper and paper products having 50 34 percent or more of their fiber content that comes from postconsumer 35 waste. For purposes of this subsection (12)(e)(iii), "postconsumer 36 waste" means a finished material that would normally be disposed of 37 as solid waste, having completed its life cycle as a consumer item.38 (iv) "Timber" means forest trees, standing or down, on privately 39 or publicly owned land. "Timber" does not include Christmas trees 40 p. 29 SB 5815 that are cultivated by agricultural methods or short-rotation 1 hardwoods as defined in RCW 84.33.035. 2 (v) "Timber products" means: 3 (A) Logs, wood chips, sawdust, wood waste, and similar products 4 obtained wholly from the processing of timber, short-rotation 5 hardwoods as defined in RCW 84.33.035, or both; 6 (B) Pulp, including market pulp and pulp derived from recovered 7 paper or paper products; and 8 (C) Recycled paper, but only when used in the manufacture of 9 biocomposite surface products. 10 (vi) "Wood products" means paper and paper products; dimensional 11 lumber; engineered wood products such as particleboard, oriented 12 strand board, medium density fiberboard, and plywood; wood doors; 13 wood windows; and biocomposite surface products. 14 (f) Except for small harvesters as defined in RCW 84.33.035, a 15 person reporting under the tax rate provided in this subsection (12) 16 must file a complete annual tax performance report with the 17 department under RCW 82.32.534. 18 (g) Nothing in this subsection (12) may be construed to affect 19 the taxation of any activity defined as a retail sale in RCW 20 82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 21 82.04.060(2), or taxed under RCW 82.04.280(1)(g). 22 (13) Upon every person engaging within this state in inspecting, 23 testing, labeling, and storing canned salmon owned by another person, 24 as to such persons, the amount of tax with respect to such activities 25 is equal to the gross income derived from such activities multiplied 26 by the rate of ((0.484)) 0.5 percent. 27 (14)(a) Upon every person engaging within this state in the 28 business of printing a newspaper, publishing a newspaper, or both, 29 the amount of tax on such business is equal to the gross income of 30 the business multiplied by the rate of 0.35 percent until July 1, 31 2024, and ((0.484)) 0.5 percent thereafter. 32 (b) A person reporting under the tax rate provided in this 33 subsection (14) must file a complete annual tax performance report 34 with the department under RCW 82.32.534. 35 PART II36 SURCHARGE ON HIGH GROSSING BUSINESSES AND FINANCIAL INSTITUTIONS37 p. 30 SB 5815 NEW SECTION. Sec. 201. A new section is added to chapter 82.04 1 RCW to read as follows: 2 (1) Beginning January 1, 2026, in addition to all other taxes 3 imposed under this chapter, persons must pay a surcharge on 4 Washington taxable income over $250,000,000 in a calendar year.5 (2) The rate of the tax is 0.5 percent of the amount of 6 Washington taxable income over $250,000,000. 7 (3)(a) Any Washington taxable income subject to the tax in RCW 8 82.04.29004 is exempt from the surcharge imposed in this section.9 (b)(i) Any Washington taxable income subject to the manufacturing 10 tax rates in RCW 82.04.240, 82.04.2404, 82.04.241, 82.04.260, 11 82.04.2602, 82.04.287, 82.04.2909, or 82.04.294(1) is exempt from the 12 surcharge imposed in this section. 13 (ii) Any Washington taxable income attributable to the wholesale 14 or retail sale of products so manufactured by a person subject to the 15 manufacturing tax rates specified in (b)(i) of this subsection (3) is 16 exempt from the surcharge imposed in this section.17 (iii) Any Washington taxable income attributable to retail sales 18 that are exempt from the imposition of sales tax in RCW 82.08.0293, 19 82.08.0297, and 82.08.0281 is exempt from the surcharge imposed in 20 this section. 21 (4)(a) The surcharge imposed under this section does not apply to 22 taxable income for which a credit is allowed under RCW 82.04.440.23 (b) The surcharge imposed under this section does not apply to a 24 person engaged in business primarily as a farmer or eligible apiarist 25 as defined in RCW 82.04.213. 26 (5) Any income that is exempt from the surcharge imposed under 27 this section is not included in the calculation of Washington taxable 28 income in subsection (1) of this section. 29 (6) This section expires December 31, 2030. 30 Sec. 202. RCW 82.04.29004 and 2019 c 420 s 2 are each amended to 31 read as follows: 32 (1) ((Beginning)) (a) From January 1, 2020, through September 30, 33 2025, in addition to any other taxes imposed under this chapter, an 34 additional tax is imposed on specified financial institutions. The 35 additional tax is equal to the gross income of the business taxable 36 under RCW 82.04.290(2) multiplied by the rate of 1.2 percent.37 (b) Beginning October 1, 2025, in addition to any other taxes 38 imposed under this chapter, an additional tax is imposed on specified 39 p. 31 SB 5815 financial institutions. The additional tax is equal to the gross 1 income of the business taxable under RCW 82.04.290(2) multiplied by 2 the rate of 1.5 percent. 3 (2) The definitions in this subsection apply throughout this 4 section unless the context clearly requires otherwise.5 (a) "Affiliated" means a person that directly or indirectly, 6 through one or more intermediaries, controls, is controlled by, or is 7 under common control with another person. For purposes of this 8 subsection (2)(a), "control" means the possession, directly or 9 indirectly, of more than ((fifty)) 50 percent of the power to direct 10 or cause the direction of the management and policies of a person, 11 whether through the ownership of voting shares, by contract, or 12 otherwise. 13 (b) "Consolidated financial institution group" means all 14 financial institutions that are affiliated with each other.15 (c) "Consolidated financial statement" means a consolidated 16 financial institution group's consolidated reports of condition and 17 income filed with the federal financial institutions examination 18 council, or successor agency. 19 (d) "Financial institution" means: 20 (i) Any corporation or other business entity chartered under 21 Titles 30A, 30B, 31, 32, and 33 RCW, or registered under the federal 22 bank holding company act of 1956, as amended, or registered as a 23 savings and loan holding company under the federal national housing 24 act, as amended; 25 (ii) A national bank organized and existing as a national bank 26 association pursuant to the provisions of the national bank act, 12 27 U.S.C. Sec. 21 et seq.; 28 (iii) A savings association or federal savings bank as defined in 29 the federal deposit insurance act, 12 U.S.C. Sec. 1813(b)(1);30 (iv) Any bank or thrift institution incorporated or organized 31 under the laws of any state; 32 (v) Any corporation organized under the provisions of 12 U.S.C. 33 Sec. 611 through 631; 34 (vi) Any agency or branch of a foreign depository as defined in 35 12 U.S.C. Sec. 3101 that is not exempt under RCW 82.04.315;36 (vii) A production credit association organized under the federal 37 farm credit act of 1933, all of whose stock held by the federal 38 production credit corporation has been retired; 39 p. 32 SB 5815 (viii) Any corporation or other business entity who receives 1 gross income taxable under RCW 82.04.290, and whose voting interests 2 are more than ((fifty)) 50 percent owned, directly or indirectly, by 3 any person or business entity described in (d)(i) through (vii) of 4 this subsection other than an insurance company liable for the 5 insurance premiums tax under RCW 48.14.020 or any other company 6 taxable under chapter 48.14 RCW; 7 (ix)(A) A corporation or other business entity that receives more 8 than ((fifty)) 50 percent of its total gross income for federal 9 income tax purposes from finance leases. For purposes of this 10 subsection, a "finance lease" means a lease that meets two 11 requirements: 12 (I) It is the type of lease permitted to be made by national 13 banks (see 12 U.S.C. Sec. 24 (7) and (10), comptroller of the currency 14 regulations, part 23, leasing (added by 56 C.F.R. Sec. 28314, June 15 20, 1991, effective July 22, 1991), and regulation Y of the federal 16 reserve system 12 C.F.R. Part 225.25, as amended); and17 (II) It is the economic equivalent of an extension of credit, 18 i.e., the lease is treated by the lessor as a loan for federal income 19 tax purposes. In no event does a lease qualify as an extension of 20 credit where the lessor takes depreciation on such property for 21 federal income tax purposes. 22 (B) For this classification to apply, the average of the gross 23 income in the current tax year and immediately preceding two tax 24 years must satisfy the more than ((fifty)) 50 percent requirement;25 (x) Any other person or business entity, other than an insurance 26 general agent taxable under RCW 82.04.280(1)(e), an insurance 27 business exempt from the business and occupation tax under RCW 28 82.04.320, a real estate broker taxable under RCW 82.04.255, a 29 securities dealer or international investment management company 30 taxable under RCW 82.04.290(2), that receives more than ((fifty)) 50 31 percent of its gross receipts from activities that a person described 32 in (d)(ii) through (vii) and (ix) of this subsection is authorized to 33 transact. 34 (e)(i) "Specified financial institution" means a financial 35 institution that is a member of a consolidated financial institution 36 group that reported on its consolidated financial statement for the 37 previous calendar year annual net income of at least ((one billion 38 dollars)) $1,000,000,000, not including net income attributable to 39 noncontrolling interests, as the terms "net income" and 40 p. 33 SB 5815 "noncontrolling interest" are used in the consolidated financial 1 statement. 2 (ii) If financial institutions are no longer required to file 3 consolidated financial statements, "specified financial institution" 4 means any person that was subject to the additional tax in this 5 section in at least two of the previous four calendar years.6 (3) The department must notify the fiscal committees of the 7 legislature if financial institutions are no longer required to file 8 consolidated financial statements. 9 (4) To aid in the effective administration of the additional tax 10 imposed in this section, the department may require a person believed 11 to be a specified financial institution to disclose whether it is a 12 member of a consolidated financial institution group and, if so, to 13 identify all other members of its consolidated financial institution 14 group. A person failing to comply with this subsection is deemed to 15 have intended to evade tax payable under this section and is subject 16 to the penalty in RCW 82.32.090(7) on any tax due under this section 17 by the person and any financial institution affiliated with the 18 person. 19 (5) Taxes collected under this section must be deposited into the 20 general fund. 21 PART III22 ADVANCED COMPUTING SURCHARGE23 Sec. 301. RCW 82.04.299 and 2022 c 170 s 1 and 2022 c 56 s 4 are 24 each reenacted and amended to read as follows: 25 (1)(a) Beginning with business activities occurring on or after 26 April 1, 2020, in addition to the taxes imposed under RCW 27 82.04.290(2), a workforce education investment surcharge is imposed 28 on select advanced computing businesses. ((The))29 (i) Beginning April 1, 2020, through December 31, 2025, the 30 surcharge is equal to the gross income of the business subject to the 31 tax under RCW 82.04.290(2), multiplied by the rate of 1.22 percent.32 (ii) Beginning January 1, 2026, the surcharge is equal to the 33 gross income of the business subject to the tax under RCW 34 82.04.290(2), multiplied by the rate of five percent.35 (b) Except as provided in (e) of this subsection (1), in no case 36 will the combined surcharge imposed under this subsection (1) paid by 37 p. 34 SB 5815 all members of an affiliated group be more than nine million dollars 1 annually. 2 (c) For persons subject to the surcharge imposed under this 3 subsection (1) that report under one or more tax classifications, the 4 surcharge applies only to business activities taxed under RCW 5 82.04.290(2). 6 (d) The surcharge imposed under this subsection (1) must be 7 reported and paid on a quarterly basis in a manner as required by the 8 department. Returns and amounts payable under this subsection (1) are 9 due by the last day of the month immediately following the end of the 10 reporting period covered by the return. All other taxes must be 11 reported and paid as required under RCW 82.32.045.12 (e)(i) To aid in the effective administration of the surcharge in 13 this subsection (1), the department may require persons believed to 14 be engaging in advanced computing or affiliated with a person 15 believed to be engaging in advanced computing to disclose whether 16 they are a member of an affiliated group and, if so, to identify all 17 other members of the affiliated group subject to the surcharge.18 (ii) If the department establishes, by clear, cogent, and 19 convincing evidence, that one or more members of an affiliated group, 20 with intent to evade the surcharge under this subsection (1), failed 21 to fully comply with this subsection (1)(e), the department must 22 assess against that person, or those persons collectively, a penalty 23 equal to ((fifty)) 50 percent of the amount of the total surcharge 24 payable by all members of that affiliated group for the calendar year 25 during which the person or persons failed to fully comply with this 26 subsection (1)(e). The penalty under this subsection (1)(e) is in 27 lieu of and not in addition to the evasion penalty under RCW 28 82.32.090(7). 29 (f) For the purposes of this subsection (1) the following 30 definitions apply: 31 (i) "Advanced computing" means designing or developing computer 32 software or computer hardware, whether directly or contracting with 33 another person, including: Modifications to computer software or 34 computer hardware; cloud computing services; or operating as a 35 marketplace facilitator as defined by RCW 82.08.0531, an online 36 search engine, or online social networking platform;37 (ii) "Affiliate" and "affiliated" means a person that directly or 38 indirectly, through one or more intermediaries, controls, is 39 controlled by, or is under common control with another person;40 p. 35 SB 5815 (iii) "Affiliated group" means a group of two or more persons 1 that are affiliated with each other; 2 (iv) "Cloud computing services" means on-demand delivery of 3 computing resources, such as networks, servers, storage, 4 applications, and services, over the internet; 5 (v) "Control" means the possession, directly or indirectly, of 6 more than ((fifty)) 50 percent of the power to direct or cause the 7 direction of the management and policies of a person, whether through 8 the ownership of voting shares, by contract, or otherwise; and9 (vi) "Select advanced computing business" means a person who is a 10 member of an affiliated group with at least one member of the 11 affiliated group engaging in the business of advanced computing, and 12 the affiliated group has worldwide gross revenue of more than 13 ((twenty-five billion dollars )) $25,000,000,000 during the 14 immediately preceding calendar year. A person who is primarily 15 engaged within this state in the provision of commercial mobile 16 service, as that term is defined in 47 U.S.C. Sec. 332 (d)(1), shall 17 not be considered a select advanced computing business. A person who 18 is primarily engaged in this state in the operation and provision of 19 access to transmission facilities and infrastructure that the person 20 owns or leases for the transmission of voice, data, text, sound, and 21 video using wired telecommunications networks shall not be considered 22 a select advanced computing business. A person that is primarily 23 engaged in business as a "financial institution" as defined in RCW 24 82.04.29004, as that section existed on January 1, 2020, shall not be 25 considered a select advanced computing business. For purposes of this 26 subsection (1)(f)(vi), "primarily" is determined based on gross 27 income of the business. 28 (2)(a) The workforce education investment surcharge under this 29 section does not apply to: 30 (i) Any hospital as defined in RCW 70.41.020, including any 31 hospital that comes within the scope of chapter 71.12 RCW if the 32 hospital is also licensed under chapter 70.41 RCW; or33 (ii) A provider clinic offering primary care, multispecialty and 34 surgical services, including behavioral health services, and any 35 affiliate of the provider clinic if the affiliate is an organization 36 that offers health care services or provides administrative support 37 for a provider clinic, or is an independent practice association or 38 accountable care organization. 39 p. 36 SB 5815 (b) The exemptions under this subsection (2) do not apply to 1 amounts received by any member of an affiliated group other than the 2 businesses described in (a) of this subsection. 3 (c) For purposes of the exemption in (a)(ii) of this subsection:4 (i) "Health care services" means services offered by health care 5 providers relating to the prevention, cure, or treatment of illness, 6 injury, or disease. 7 (ii) "Primary care" means wellness and prevention services and 8 the diagnosis and treatment of health conditions. 9 (3) Revenues from the surcharge under this section must be 10 deposited directly into the workforce education investment account 11 established in RCW 43.79.195. 12 (4) The department has the authority to determine through an 13 audit or other investigation whether a person is subject to the 14 surcharge imposed in this section. 15 PART IV16 MODIFYING THE BUSINESS AND OCCUPATION TAX DEDUCTION UNDER RCW 17 82.04.428118 NEW SECTION. Sec. 401. The legislature finds that the decision 19 of the state supreme court in Antio, LLC v. Department of Revenue 20 could lead to uncertainty insofar as it affirms that the business and 21 occupation tax deduction provided in RCW 82.04.4281 for the 22 investment income of persons is only applicable if such income is 23 from investments that are incidental to the main purpose of a 24 person's business, without providing a bright line rule for what 25 constitutes incidental to the main purpose of the person's business. 26 The legislature intends, by adopting this revision of the statute, to 27 avoid uncertainty and provide clarity around what incidental to the 28 main purpose of the business means and, by extension, what income 29 qualifies for the business and occupation tax deduction provided in 30 RCW 82.04.4281 for investment income.31 The legislature also intends to make it clear that amounts 32 received by individuals from personal investments are generally not 33 considered amounts received from engaging in business and therefore 34 are not subject to the business and occupation tax. To that end, the 35 legislature directs the department of revenue to provide guidance on 36 what constitutes income from personal investments that are not 37 p. 37 SB 5815 considered engaging in business and thus not subject to the business 1 and occupation tax. 2 The legislature further intends to make it clear that 3 nondeductible investment income is subject to the service and other 4 activities business and occupation tax classification and should be 5 apportioned in accordance with RCW 82.04.462. 6 Sec. 402. RCW 82.04.4281 and 2007 c 54 s 9 are each amended to 7 read as follows: 8 (1) In computing tax ((there)) under this chapter, a person may 9 ((be deducted)) deduct the following from the measure of tax:10 (a) ((Amounts)) Except as provided in subsection (2) of this 11 section, amounts derived from investments((;)) that are incidental to 12 the main purpose of the person's business. Investments are incidental 13 to the main purpose of the person's business if the total worldwide 14 gross income derived from such investments is less than five percent 15 of the person's total worldwide gross income of the business 16 annually.17 (b) Amounts derived as dividends or distributions from the 18 capital account by a parent from its subsidiary entities((; and)).19 (c) Amounts derived from interest on loans between subsidiary 20 entities and a parent entity or between subsidiaries of a common 21 parent entity, but only if the total investment and loan income is 22 less than five percent of gross receipts of the business annually.23 (2) The following are not deductible under either subsection 24 (1)(a) or (3) of this section, or both: 25 (a) Amounts received from loans, except as provided in subsection 26 (1)(c) of this section, or the extension of credit to another, 27 revolving credit arrangements, installment sales, the acceptance of 28 payment over time for goods or services, or any of the foregoing that 29 have been transferred by the originator of the same to an affiliate 30 of the transferor; or 31 (b) Amounts received by a banking, lending, or security business.32 (3) Except as provided in subsections (2) and (4) of this 33 section, in computing tax under this chapter, the following persons 34 may deduct from the measure of the tax amounts derived from such 35 person's investments regardless of whether the investments are 36 incidental to the main purpose of the person's business:37 (a) Nonprofit organizations; and38 (b) Collective investment vehicles.39 p. 38 SB 5815 (4) The following are not deductible under subsection (3)(b) of 1 this section:2 (a) Amounts derived from investments of persons who are invested 3 in a collective investment vehicle but not themselves a collective 4 investment vehicle;5 (b) Amounts received by persons as compensation for services 6 rendered to either the collective investment vehicle or the 7 collective investment vehicle's investors, or both;8 (c) Amounts derived from sources other than investments by a 9 collective investment vehicle; or10 (d) Amounts derived from factoring.11 (5) The department must, consistent with the purpose of this 12 section, adopt rules necessary to implement this section including, 13 but not limited to, rules that provide examples of investment income 14 from personal investments that is not eligible for a deduction under 15 this section by virtue of it not being income from engaging in 16 business and thus not taxable under this chapter. Such rule making 17 must also include examples of the tax treatment of investment income 18 received by persons making certain investments through different 19 types of collective investment vehicles.20 (6) The definitions in this subsection apply only to this 21 section. 22 (a) "Banking business" means a person engaging in business as a 23 national or state-chartered bank, a mutual savings bank, a savings 24 and loan association, a trust company, an alien bank, a foreign bank, 25 a credit union, a stock savings bank, or a similar entity that is 26 chartered under Title 30, 31, 32, or 33 RCW, or organized under Title 27 12 U.S.C. 28 (b)(i) "Collective investment vehicle" means a person who meets 29 all the following criteria:30 (A) The person's total gross income derived from its investments 31 is at least 90 percent of the person's total worldwide gross income 32 of the business annually;33 (B) The person holds title to passive investment assets for the 34 benefit of the person's investors and the investment decisions are 35 made by another person who serves as the collective investment 36 vehicle's manager or advisor; and37 (C) The person accepts unrelated persons as its investors.38 (ii) A collective investment vehicle may take the form of a 39 mutual fund, collective fund, and any similar investment vehicle 40 p. 39 SB 5815 whether structured as a limited or general partnership, limited 1 liability company, corporation, trust, or otherwise.2 (c) "Investments" includes, but is not limited to, securities, 3 trading account assets, federal funds, options, futures contracts, 4 forward contracts, notional principal contracts, equities, foreign 5 currency transactions, fixed income instruments, derivative 6 instruments, and commodities.7 (d) "Lending business" means a person engaged in the business of 8 making secured or unsecured loans of money, or extending credit, and 9 (i) more than one-half of the person's gross income is earned from 10 such activities and (ii) more than one-half of the person's total 11 expenditures are incurred in support of such activities.12 (((c))) (e) The terms "loan" and "extension of credit" do not 13 include ownership of or trading in publicly traded debt instruments, 14 or substantially equivalent instruments offered in a private 15 placement. 16 (((d))) (f) "Nonprofit organization" has the same meaning as in 17 RCW 82.04.3651.18 (g) "Security business" means a person, other than an issuer, who 19 is engaged in the business of effecting transactions in securities as 20 a broker, dealer, or broker-dealer, as those terms are defined in the 21 securities act of Washington, chapter 21.20 RCW, or the federal 22 securities act of 1933. "Security business" does not include any 23 company excluded from the definition of broker or dealer under the 24 federal investment company act of 1940 or any entity that is not an 25 investment company by reason of sections 3 (c)(1) and 3(c)(3) through 26 3(c)(14) thereof. 27 PART V28 MISCELLANEOUS PROVISIONS29 NEW SECTION. Sec. 501. RCW 82.32.805 and 82.32.808 do not apply 30 to this act.31 NEW SECTION. Sec. 502. If any provision of this act or its 32 application to any person or circumstance is held invalid, the 33 remainder of the act or the application of the provision to other 34 persons or circumstances is not affected.35 p. 40 SB 5815 NEW SECTION. Sec. 503. This act is necessary for the support of 1 the state government and its existing public institutions.2 NEW SECTION. Sec. 504. Sections 101 through 108 and 110 through 3 112 of this act take effect January 1, 2027.4 NEW SECTION. Sec. 505. Section 113 of this act takes effect 5 January 1, 2034.6 NEW SECTION. Sec. 506. Section 112 of this act expires January 7 1, 2034.8 NEW SECTION. Sec. 507. Sections 201, 301, 401, and 402 of this 9 act take effect January 1, 2026.10 NEW SECTION. Sec. 508. Sections 109 and 202 of this act take 11 effect October 1, 2025.12 --- END --- p. 41 SB 5815