Tax on millionaires

AN ACT Relating to investing in Washington families and 1
businesses to fund K-12 education, health care, higher education, 2
other essential governmental services, and the working families' tax 3
credit, and to reduce certain sales and use taxes and certain 4
business and occupation taxes by establishing a tax on millionaires; 5
amending RCW 82.32.050, 82.32.060, 82.32.090, 2.10.180, 2.12.090, 6
6.15.020, 41.24.240, 41.32.052, 41.34.080, 41.35.100, 41.40.052, 7
41.44.240, 41.26.053, 43.43.310, 82.08.0206, 82.04.4451, 82.32.045, 8
82.04.288, and 1.90.100; amending 2023 c 456 s 3 (uncodified); adding 9
a new section to chapter 82.08 RCW; adding a new section to chapter 10
82.12 RCW; adding a new Title to the Revised Code of Washington to be 11
codified as Title 82A RCW; creating new sections; prescribing 12
penalties; providing an effective date; and providing an expiration 13
date. 14
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:15
NEW SECTION. Sec. 1. INTENT. (1) The legislature finds that the 16
state, through the state's general fund, invests in K-12 education, 17
health care, higher education, other essential governmental services, 18
and the working families' tax credit, all of which help 19
Washingtonians succeed and thrive.20
S-3846.8
SENATE BILL 6346
State of Washington 69th Legislature 2026 Regular Session
By Senators Pedersen, Chapman, Frame, Bateman, Orwall, Slatter,
Alvarado, Hunt, Lovelett, Riccelli, Shewmake, Valdez, Wellman,
Hasegawa, Robinson, Lovick, Conway, Trudeau, Cleveland, Kauffman, C.
Wilson, Dhingra, Stanford, Nobles, Saldaña, and Salomon
Read first time 02/04/26. Referred to Committee on Ways & Means.
p. 1 SB 6346
(2) These general fund dollars help the state meet its paramount 1
duty to make ample provision for the education of all children in the 2
state, including children who qualify for special education services, 3
creating the opportunity for each child to succeed in school and 4
achieve success in life. 5
(3) The general fund supports health care programs that deliver 6
critical, life-saving medical care, provide support for those with 7
developmental and other disabilities, offers long-term care for the 8
elderly, and protects the long-term health and well-being of the 9
public. 10
(4) Further, the general fund invests in higher education, 11
including two and four-year colleges, apprenticeships, and other 12
postsecondary education and training programs, ensuring Washington 13
students remain competitive in the workforce and broader economy.14
(5) The general fund also invests in human services that provide 15
vital basic-needs assistance to the state's lowest-income households 16
and educate the youngest learners. 17
(6) Therefore, the intent of this act is to maintain and preserve 18
essential governmental services for Washingtonians, particularly 19
within K-12 education, health care, higher education, and human 20
services, and support working families by ensuring continued 21
investment in the working families' tax credit by depositing revenues 22
from this act into the general fund. 23
(7) The legislature further recognizes that reforming our tax 24
code to be common sense, balanced, and sustainable is essential to 25
the long-term economic success of Washington. The Washington tax 26
structure, developed during the Great Depression, relies heavily on 27
excise and consumption taxes, with consequences for equity, adequacy, 28
and long-term fiscal stability that persist today. The legislature 29
recognizes that more progress is needed for the state to have a fair 30
and balanced tax system that can provide sustainable, ample funding 31
for K-12 education, health care, higher education, human services, 32
and other essential governmental services. Washington's tax system 33
remains the second most regressive in the nation as it asks those 34
with the least to pay the most as a percentage of their income. Low-35
income Washingtonians pay at least three times more in state and 36
local taxes as a percentage of their income than the state's highest 37
income households. 38
(8) Further, due to the action of the federal government through 39
the passage of HR 1, Washington's highest-income households are set 40
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to receive an average federal tax break of $90,850 while Washington's 1
lowest-income households are set to receive a mere $200. These tax 2
breaks were largely funded through cuts to federal funding in health 3
care and food security programs, negatively impacting Washington's 4
working families. 5
(9) Thus, the legislature intends to limit the tax established by 6
this act to only individuals with annual adjusted gross income of 7
$1,000,000 or more. Washingtonians with an annual adjusted gross 8
income of less than $1,000,000 will not owe this tax. As a result, 9
the millionaires' tax is estimated to affect only the wealthiest one-10
half of one percent of the households in this state, taking a 11
significant step toward reducing the disproportionate reliance on 12
working people to fund K-12 education, health care, higher education, 13
human services, the working families' tax credit, and other essential 14
governmental services to benefit Washingtonians. 15
(10) The legislature further intends to exempt certain sources of 16
income from the tax including, but not limited to, the sale of 17
qualified family owned small businesses and the sale of all 18
residential and other real property. 19
(11) It is also the intent of the legislature to rebalance the 20
tax system by reducing taxes on consumers and businesses through 21
small business and other business and occupation tax credits, as well 22
as by exempting from the retail sales tax essential household items 23
such as personal care products. 24
(12) Thus, to help meet the state's paramount duty of amply 25
providing every child in the state with an education and supporting 26
the health and well-being of Washingtonians, it is the intent of the 27
legislature, by adopting this act, insofar as possible, to:28
(a) Impose a tax on those individuals with the greatest ability 29
to pay, specifically those earning Washington adjusted gross income 30
during the taxable year of at least $1,000,000; 31
(b) Make the Washington millionaires' tax law identical in effect 32
to the provisions of the internal revenue code relating to the 33
measurement of adjusted gross income of individuals, modified as 34
necessary to achieve the goals and purpose of this act;35
(c) Achieve this result by the application of the various 36
provisions of the internal revenue code relating to the definition of 37
income, exemptions and exclusions therefrom, accounting methods, 38
basis, depreciation, and other pertinent provisions, subject to 39
additional exemptions and modifications as provided in this act, 40
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resulting in a final amount called "Washington adjusted taxable 1
income"; and 2
(d) Impose a tax on residents of this state measured by 3
Washington adjusted taxable income wherever derived and to impose a 4
tax on nonresidents measured by Washington adjusted taxable income 5
from sources within this state. 6
PART I7
DEFINITIONS8
NEW SECTION. Sec. 101. DEFINITIONS. The definitions in this 9
section apply throughout this chapter unless the context clearly 10
requires otherwise.11
(1) "Capital asset" has the same meaning as provided in chapter 12
82.87 RCW. 13
(2) "Department" means the department of revenue of the state of 14
Washington. 15
(3) "Federal adjusted gross income" means adjusted gross income 16
as determined under section 62 of the internal revenue code.17
(4) "Individual" means a natural person. 18
(5) "Internal revenue code" means the United States internal 19
revenue code of 1986, as amended and in effect on January 1, 2026, or 20
such subsequent date as the department may provide by rule consistent 21
with the purpose of this chapter. 22
(6) "Long-term capital asset," "long-term capital gain," and 23
"long-term capital loss" have the same meanings as provided in 24
chapter 82.87 RCW. 25
(7) "Pass-through entity" means a disregarded entity for federal 26
tax purposes, such as a partnership, limited liability company, or S 27
corporation. 28
(8)(a) "Resident" means an individual: 29
(i) Who is domiciled in this state during the taxable year, 30
unless the individual (A) maintained no permanent place of abode in 31
this state during the entire taxable year, (B) maintained a permanent 32
place of abode outside of this state during the entire taxable year, 33
and (C) spent in the aggregate not more than 30 days of the taxable 34
year in this state; or 35
(ii) Who is not domiciled in this state during the taxable year, 36
but maintained a place of abode and was physically present in this 37
state for more than 183 days during the taxable year.38
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(b) For purposes of this subsection, "day" means a calendar day 1
or any portion of a calendar day. 2
(c) An individual who is a resident under (a) of this subsection 3
is a resident for that portion of a taxable year in which the 4
individual was domiciled in this state or maintained a place of abode 5
in this state. 6
(9) "Taxable year" means the taxpayer's taxable year as defined 7
under section 7701(a)(23) of the internal revenue code.8
(10) "Taxpayer" means an individual receiving income subject to 9
tax under this chapter. 10
(11) "Washington base income" means federal adjusted gross income 11
as modified under sections 302 through 306 and 401 through 406 of 12
this act. 13
(12) "Washington taxable income" means Washington base income as 14
further modified by sections 307 through 309 of this act.15
NEW SECTION. Sec. 102. UNDEFINED TERMS— CONFORMITY WITH FEDERAL 16
INTERNAL REVENUE CODE. Any term used in this chapter has the same 17
meaning as when used in a comparable context in the internal revenue 18
code, unless a different meaning is clearly required or the term is 19
specifically defined in this chapter.20
PART II21
DETERMINATION OF TAX22
NEW SECTION. Sec. 201. TAX IMPOSED— RATES. (1) Beginning January 23
1, 2028, a tax is imposed on the receipt of Washington taxable 24
income. Only individuals are subject to payment of the tax, which 25
equals 9.90 percent multiplied by an individual's Washington taxable 26
income.27
(2) If an individual's Washington taxable income is less than 28
zero for a taxable year, no tax is due under this section and no 29
amount is allowed as a carryover for use in the calculation of that 30
individual's Washington taxable income, for any taxable year. To the 31
extent that a loss carryforward is included in an individual's 32
adjusted gross income and the loss carryforward is derived from or 33
connected with sources in this state, the loss carryforward is 34
included in the calculation of that individual's Washington taxable 35
income. 36
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NEW SECTION. Sec. 202. DISTRIBUTION OF TAX REVENUES. (1) Taxes 1
collected under this chapter must be deposited as follows:2
(a) Five percent to the county public defense funding 3
stabilization account created in section 711 of this act; and4
(b) The remainder to the state general fund to fund the sales and 5
use tax relief in sections 903 and 904 of this act, the working 6
families' tax credit program, including its expansion in section 901 7
of this act, and the business and occupation tax relief in sections 8
905 and 906 of this act. 9
(2) All interest and penalties collected under this chapter must 10
be deposited in the state general fund. 11
NEW SECTION. Sec. 203. CREDIT FOR INCOME TAXES DUE ANOTHER 12
JURISDICTION. (1) A resident individual is allowed a credit against 13
the tax imposed under this chapter for the amount of any income tax 14
paid to another state, or political subdivision of the state, on 15
income taxed under this chapter, subject to the following conditions, 16
which must be imposed separately with respect to each taxing 17
jurisdiction:18
(a) The credit is allowed only for taxes paid to the other 19
jurisdiction on net income from sources within that jurisdiction that 20
is included in the individual's Washington base income; and21
(b) The amount of the credit may not exceed the smaller of:22
(i) The amount of tax paid to the other jurisdiction on net 23
income from sources within the other jurisdiction; or24
(ii) The amount of tax due under this chapter before application 25
of credits allowable by this chapter, multiplied by a fraction. The 26
numerator of the fraction is the amount of the taxpayer's federal 27
adjusted gross income subject to tax in the other jurisdiction. The 28
denominator of the fraction is the taxpayer's total Washington base 29
income. The fraction may never be greater than one.30
(2) If, instead of a credit similar to the credit allowed under 31
subsection (1) of this section, the laws of the other taxing 32
jurisdiction contain a provision exempting a resident of this state 33
from liability for the payment of income taxes on income earned for 34
personal services performed in such jurisdiction, then the department 35
may enter into a reciprocal agreement with such jurisdiction 36
providing a similar tax exemption on income earned for personal 37
services performed in this state. 38
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NEW SECTION. Sec. 204. CREDIT FOR BUSINESS AND OCCUPATION AND 1
PUBLIC UTILITY TAXES. (1) Beginning in tax year 2028 with taxes due 2
in 2029, to avoid taxing the same Washington taxable income under the 3
business and occupation tax or public utility tax and the tax imposed 4
under this chapter, a nonrefundable credit is allowed against taxes 5
due under this chapter on income that is also subject to the tax 6
imposed under chapter 82.04 or 82.16 RCW. The credit is equal to the 7
amount of tax paid under chapter 82.04 or 82.16 RCW for income 8
included in both the calculation of the tax paid under chapter 82.04 9
or 82.16 RCW and the tax imposed under this chapter.10
(2) The credit under this section is earned in regard to income 11
reportable for federal income tax purposes and may be claimed against 12
taxes due under this chapter, for the tax reporting period in which 13
the income is reportable for federal income tax purposes. The credit 14
claimed for a tax reporting period may not exceed the tax otherwise 15
due under this chapter for that tax reporting period. Unused credit 16
may not be carried forward or backward to another tax reporting 17
period. No refunds may be granted for unused credit under this 18
section. 19
NEW SECTION. Sec. 205. CREDIT FOR WASHINGTON CAPITAL GAINS 20
TAXES. Beginning in tax year 2028 with taxes due in 2029, a 21
nonrefundable credit is allowed against taxes due under this chapter 22
for the amount of tax imposed on Washington capital gains for the 23
same tax year. "Washington capital gains" has the same meaning as 24
provided in RCW 82.87.020.25
NEW SECTION. Sec. 206. CREDIT FOR PASS-THROUGH ENTITY TAX 26
PAYMENTS. Beginning in tax year 2028 for taxes due in 2029, a credit 27
is allowed against taxes due under this chapter for the amount of the 28
tax expense incurred by a pass-through entity under section 502 of 29
this act attributable to the owner as provided in section 502 (3) of 30
this act. For a resident, the credit under this section must be 31
reduced by the amount of any credit claimed under section 203 of this 32
act based on the same Washington taxable income.33
NEW SECTION. Sec. 207. CARRYFORWARDS AND CARRYBACKS. The amount 34
of tax credits received by any taxpayer under sections 203 through 35
206 of this act may not exceed the total amount of tax due for that 36
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reporting period, and no carryback or carryforward of any unused 1
excess credits is allowed. 2
PART III3
ADJUSTED GROSS INCOME MODIFICATIONS4
NEW SECTION. Sec. 301. INTRODUCTORY. In computing Washington 5
base income for a taxable year, modifications must be made to the 6
taxpayer's federal adjusted gross income as required under sections 7
302 through 306 and 401 through 406 of this act, unless the 8
modification has the effect of duplicating an item of income or 9
deduction.10
NEW SECTION. Sec. 302. LONG-TERM CAPITAL GAINS AND LOSSES. (1) 11
In computing a taxpayer's Washington base income, the taxpayer must 12
deduct from the taxpayer's federal adjusted gross income any long-13
term capital gains that have been included in computing federal 14
adjusted gross income.15
(2) In computing a taxpayer's Washington base income, a taxpayer 16
must add to the taxpayer's federal adjusted gross income any long-17
term capital losses that have been included in computing federal 18
adjusted gross income. 19
(3) After making the modifications required under subsections (1) 20
and (2) of this section, in computing a taxpayer's Washington base 21
income, a taxpayer must add to the taxpayer's federal adjusted gross 22
income the amount of Washington capital gains subject to tax under 23
chapter 82.87 RCW for the same taxable year, plus the amounts 24
deducted under RCW 82.87.060 (1) and (4). This subsection (3) applies 25
only to taxpayers owing tax under chapter 82.87 RCW for that taxable 26
year. "Washington capital gains" has the same meaning as provided in 27
RCW 82.87.020. 28
NEW SECTION. Sec. 303. STATE AND LOCAL OBLIGATIONS. In 29
computing a taxpayer's Washington base income, the taxpayer must add 30
to the taxpayer's federal adjusted gross income any income that has 31
been excluded under section 103 of the internal revenue code in 32
computing federal adjusted gross income, except interest on 33
obligations of the state of Washington or political subdivisions of 34
the state of Washington.35
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NEW SECTION. Sec. 304. STATE AND LOCAL INCOME TAXES — BUSINESS 1
AND OCCUPATION AND PUBLIC UTILITY TAXES. In computing a taxpayer's 2
Washington base income, the taxpayer must add to the taxpayer's 3
federal adjusted gross income:4
(1) Taxes on or measured by net income which have been deducted 5
under the internal revenue code in computing federal adjusted gross 6
income; 7
(2) The amount of taxes paid or accrued which have been deducted 8
for federal purposes, but for which either a business and occupation 9
tax credit or public utility tax credit, or both, is allowed.10
NEW SECTION. Sec. 305. CARRYOVERS. In computing a taxpayer's 11
Washington base income, the taxpayer must add to the taxpayer's 12
federal adjusted gross income, any amounts that have been deducted in 13
computing federal adjusted gross income to the extent the amounts 14
have been carried over from taxable years ending before the effective 15
date of this section.16
NEW SECTION. Sec. 306. FEDERAL OBLIGATIONS. In computing a 17
taxpayer's Washington base income, the taxpayer must deduct, to the 18
extent included, from the taxpayer's federal adjusted gross income, 19
any income derived from obligations of the United States that this 20
state is prohibited by federal law from subjecting to a net income 21
tax. However, the amount deducted under this section must be reduced 22
by any expense, including amortizable bond premiums, incurred in the 23
production of such income to the extent the expense has been deducted 24
in calculating federal adjusted gross income.25
NEW SECTION. Sec. 307. CHARITABLE CONTRIBUTIONS. In determining 26
a taxpayer's Washington taxable income, the taxpayer may deduct from 27
their Washington base income the amount of charitable contributions 28
they claimed for the taxable year under section 170 of the internal 29
revenue code, up to a maximum deduction of $50,000 per individual, or 30
in the case of spouses or domestic partners, their combined 31
charitable deduction is limited to $50,000, regardless of whether 32
they file joint or separate returns.33
NEW SECTION. Sec. 308. PASS-THROUGH ENTITY TAX PAYMENTS. In 34
computing a taxpayer's Washington taxable income, the taxpayer must 35
add to the taxpayer's Washington base income the taxpayer's 36
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distributive share of the tax expense incurred by a pass-through 1
entity under section 502 of this act to the extent the expense has 2
been deducted in calculating the taxpayer's federal adjusted gross 3
income. 4
NEW SECTION. Sec. 309. ONE MILLION DOLLAR STANDARD DEDUCTION. 5
In computing a taxpayer's Washington taxable income, a taxpayer may 6
deduct from the taxpayer's Washington base income a standard 7
deduction of $1,000,000 per individual, or in the case of spouses or 8
domestic partners, their combined standard deduction is limited to 9
$1,000,000, regardless of whether they file joint or separate 10
returns. The amount of the standard deduction must be annually 11
adjusted pursuant to section 311 of this act. The standard deduction 12
must be adjusted for nonresidents as provided in section 310 of this 13
act.14
NEW SECTION. Sec. 310. ADJUSTMENT OF DEDUCTIONS FOR 15
NONRESIDENTS. The deduction from Washington base income allowed under 16
section 309 of this act for individual taxpayers who are not 17
residents of this state for the entire taxable year must be reduced 18
by multiplying the amount of the deduction by a fraction. The 19
numerator of the fraction is the individual's Washington base income. 20
The denominator of the fraction is the individual's federal adjusted 21
gross income from all sources. The fraction may never be greater than 22
one.23
NEW SECTION. Sec. 311. INDEX FOR INFLATION. (1) Beginning 24
October 2029 and each October thereafter, the department must adjust 25
the standard deduction under section 309 of this act by multiplying 26
the current standard deduction amount by one plus the percentage by 27
which the most current consumer price index available on October 1st 28
of the current year exceeds the consumer price index for the prior 29
12-month period, and rounding the result to the nearest $1,000. If an 30
adjustment under this subsection (1) would reduce the standard 31
deduction amount, the department must not adjust the amounts for use 32
in the following year. The department must publish the adjusted 33
standard deduction amount on its public website by October 31st of 34
each year. The adjusted standard deduction amount calculated under 35
this subsection (1) takes effect for taxes due in the following 36
calendar year.37
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(2) For purposes of this section, the following definitions 1
apply: 2
(a) "Consumer price index" means the consumer price index for all 3
urban consumers, all items, for the Seattle area as calculated by the 4
United States bureau of labor statistics or its successor agency.5
(b) "Seattle area" means the geographic area sample that includes 6
Seattle and surrounding areas. 7
PART IV8
DIVISION OF INCOME9
NEW SECTION. Sec. 401. ALLOCATION AND APPORTIONMENT OF INCOME. 10
(1) For resident individuals, all income must be allocated to this 11
state.12
(2) For nonresident individuals, income derived from sources 13
within this state must be allocated to this state. Income derived 14
from sources within this state means: 15
(a) Wages and other compensation from employment within this 16
state as provided in section 403 of this act; 17
(b) Compensation attributable to professional athletics as 18
provided in section 404 of this act; 19
(c) Income of a nonresident student athlete derived from the 20
commercial use of the student athlete's name, image, or likeness as 21
provided in section 407 of this act; 22
(d) Amounts attributable to any business, trade, profession, or 23
occupation carried on within this state to the extent determined 24
under section 405 of this act; 25
(e) The individual's distributive share of income from a pass-26
through entity operating within this state as provided in section 402 27
of this act; 28
(f) Rents, gains, and other amounts attributable to the ownership 29
or disposition of any interest in real or tangible personal property 30
in this state; and 31
(g) Income from intangible personal property, including 32
annuities, dividends, interest, and gains from the disposition of 33
intangible personal property, to the extent that the intangible 34
personal property was employed in a business, trade, profession, or 35
occupation carried on within this state. 36
(3) Deductible expenses, capital losses, and net operating losses 37
of a nonresident are based solely on income, gains, losses, and 38
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deductible expenses derived from or connected with sources in this 1
state but are otherwise determined in the same manner as the 2
corresponding federal deductions except as provided in this chapter.3
(4) Compensation paid by the United States for service in the 4
armed forces of the United States performed in this state by a 5
nonresident does not constitute income derived from sources within 6
this state. 7
NEW SECTION. Sec. 402. PASS-THROUGH ENTITIES — DISTRIBUTIVE 8
SHARE. (1) Income derived from sources within this state include an 9
apportioned share of the individual's distributive share of income, 10
gains, losses, and deductions from pass-through entities that operate 11
in the state, as provided in subsection (2) of this section.12
(2) The tax due under this chapter for partners, members, or 13
shareholders of a pass-through entity are computed by including a pro 14
rata share of the Washington base income and the credits allowed 15
under sections 203 through 205 of this act, if the modification or 16
credit relates to the income of the pass-through entity. Each 17
member's, partner's, or shareholder's pro rata share of a 18
modification or credit is the amount of modification or credit 19
multiplied by a fraction. The numerator of the fraction is the 20
member's, partner's, or shareholder's distributive share of pass-21
through income. The denominator of the fraction is the total income 22
of the pass-through entity. The fraction may never be greater than 23
one. 24
(3) The following definitions apply throughout this section.25
(a) "Pass-through income" includes both distributed and 26
undistributed federal taxable income of the pass-through entity.27
(b) "Pro rata share" means pro rata share as reflected on the 28
member's, partner's, or shareholder's federal schedule K-1 form.29
NEW SECTION. Sec. 403. GENERAL RULE FOR ALLOCATING NONRESIDENT 30
INCOME DERIVED FROM COMPENSATION TO WASHINGTON. (1) Unless provided 31
otherwise in this chapter, a nonresident individual is subject to tax 32
on the portion of federal adjusted gross income derived from 33
employment within the state of Washington, regardless of the location 34
of the commercial domicile of the employer.35
(2) Compensation for services performed by a nonresident as part 36
of their employment must be allocated to this state to the extent 37
such services are rendered within the state. If services are 38
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performed both within and outside the state, the compensation must be 1
apportioned based on the ratio of days worked in the state to total 2
days worked, or by another reasonable method approved by the 3
department. 4
(3) For the purpose of this section, the following definitions 5
apply: 6
(a) "Compensation" means wages, salaries, commissions, and any 7
other form of remuneration paid to employees for personal services.8
(b) "Employer" means any individual or type of organization, 9
including any partnership, association, trust, estate, joint stock 10
company, insurance company, limited liability company, or 11
corporation, whether domestic or foreign, or the receiver, trustee in 12
bankruptcy, trustee, or the legal representative of a deceased 13
person, having any person in employment or, having become an 14
employer, has not ceased to be an employer as provided in this 15
chapter. 16
(c) "Employment" means personal service, of whatever nature, as 17
known to the common law or any other legal relationship performed for 18
an employer by an individual for compensation or under any contract 19
calling for the performance of personal services, written or oral, 20
express or implied, where the employer is subject to tax under RCW 21
50.24.010 on any portion of compensation paid by the employer to the 22
individual for the performance of the personal services.23
NEW SECTION. Sec. 404. APPORTIONING INCOME FOR NONRESIDENT 24
MEMBERS OF A PROFESSIONAL ATHLETIC TEAM. (1) For nonresident members 25
of a professional athletic team, the portion of compensation 26
attributable to athletic performances in the state must be 27
apportioned to Washington as provided under this section.28
(2)(a) The portion of the compensation of a member of a 29
professional athletic team apportioned to Washington is that portion 30
of compensation received for the tax year that bears the same ratio 31
to total compensation received for the tax year as the number of duty 32
days within this state bears to the total number of duty days spent 33
both within and outside this state during the tax year.34
(b) Notwithstanding the description of the portion of 35
compensation subject to apportionment to the state of Washington 36
under this subsection, the department may provide by rule alternative 37
methodologies for determining the portion of compensation subject to 38
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apportionment to the state of Washington that the department 1
determines to be fair and equitable. 2
(3)(a) A person who transacts business in the state of Washington 3
and who pays wages, salary, bonuses, or other taxable income to a 4
member of a professional athletic team, must submit a report to the 5
department each year indicating any member of a professional athletic 6
team who may be reasonably assumed to owe tax under this chapter for 7
the calendar year. 8
(b) The report required under (a) of this subsection (3) must 9
include: 10
(i) The total amount of compensation paid during the year to the 11
members of the professional athletic team for which the report is 12
being made; 13
(ii) A roster of the members of the professional athletic team 14
for which the report is being made who were members at any time 15
during the year, that lists for each member: 16
(A) A taxpayer identification number; 17
(B) Compensation paid to the member; and 18
(C) The number of duty days in this state and the total number of 19
duty days for the year; and 20
(iii) Any other information the department may require by rule.21
(c) The report must be filed with the department on or before 22
April 15th following the year for which the report is being made or 23
at another time as the department may require by rule.24
(4) The definitions in this subsection apply throughout this 25
section unless the context clearly requires otherwise.26
(a) "Compensation" means wages, salaries, bonuses, and any other 27
income included with federal adjusted gross income and paid to a 28
member of a professional athletic team. 29
(b) "Duty days" means the days during the tax year from the 30
beginning of the official preseason training period of a professional 31
athletic team through the last game in which the professional 32
athletic team competes or is scheduled to compete during the tax 33
year. 34
(c) "Member of a professional athletic team" means a nonresident 35
athlete or other individual rendering service to a professional 36
athletic team if the total compensation of the athlete or other 37
individual exceeds $1,000,000 in a tax year. 38
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NEW SECTION. Sec. 405. GENERAL RULE FOR APPORTIONING AND 1
ALLOCATING NONRESIDENT INCOME FROM BUSINESS ACTIVITY CONDUCTED IN THE 2
STATE. (1) The portion of federal adjusted gross income of a 3
nonresident derived from or connected with a business, trade, or 4
profession carried on in this state, including any distributive share 5
of a pass-through entity of a business, trade, or profession carried 6
on in this state, must be apportioned and allocated as provided in 7
this section. This section does not apply to compensation received as 8
an employee allocated under section 403 of this act.9
(2) Income from a business, trade, or profession carried on in 10
this state, including any distributive share of a pass-through entity 11
of a business, trade, or profession carried on in this state, must be 12
classified as either apportionable income or nonapportionable income.13
(3) All apportionable income must be apportioned to this state by 14
multiplying the income by the receipts factor. The receipts factor is 15
a fraction the numerator of which is the total receipts of the 16
taxpayer in this state during the tax period and the denominator of 17
which is the total receipts of the taxpayer everywhere during the tax 18
period. 19
(a) Receipts from the sale of tangible personal property are in 20
this state if: 21
(i) The property is delivered or shipped to a purchaser, other 22
than the United States government, within this state regardless of 23
the free on board point or other conditions of the sale; or24
(ii) The property is shipped from an office, store, warehouse, 25
factory, or other place of storage in this state and (A) the 26
purchaser is the United States government or (B) the taxpayer is not 27
taxable in the state of the purchaser. 28
(b)(i) Receipts, other than receipts described in (a) of this 29
subsection (3), are in this state if the taxpayer's market for the 30
sales is in this state. The taxpayer's market for sales is in this 31
state: 32
(A) In the case of sale, rental, lease, or license of real 33
property, if and to the extent the property is located in this state;34
(B) In the case of rental, lease, or license of tangible personal 35
property, if and to the extent the property is located in this state;36
(C) In the case of sale of a service, if and to the extent the 37
service is delivered to a location in this state; and38
(D) In the case of intangible property: 39
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(I) That is rented, leased, or licensed, if and to the extent the 1
property is used in this state, provided that intangible property 2
used in marketing a good or service to a consumer is "used in this 3
state" if that good or service is purchased by a consumer who is in 4
this state; and 5
(II) That is sold, if and to the extent the property is used in 6
this state, if: 7
(1) A contract right, government license, or similar intangible 8
property that authorizes the holder to conduct a business activity in 9
a specific geographic area is "used in this state" if the geographic 10
area includes all or part of this state; 11
(2) Receipts from intangible property sales that are contingent 12
on the productivity, use, or disposition of the intangible property 13
must be treated as receipts from the rental, lease, or licensing of 14
such intangible property under subsection (4)(a)(i) of this section; 15
and 16
(3) All other receipts from a sale of intangible property must be 17
excluded from the numerator and denominator of the receipts factor.18
(c) If the state or states of assignment under (b) of this 19
subsection (3) cannot be determined, the state or states of 20
assignment must be reasonably approximated. 21
(d) If the taxpayer is not taxable in a state to which a receipt 22
is assigned under this subsection (3), or if the state of assignment 23
cannot be determined under (b) of this subsection (3) or reasonably 24
approximated under (c) of this subsection (3), the receipt must be 25
excluded from the denominator of the receipts factor.26
(4)(a) If the allocation and apportionment provisions in 27
subsection (3) of this section do not fairly represent the extent of 28
the taxpayer's business activity in this state, the taxpayer may 29
petition for or the department may require, in respect to all or any 30
part of the taxpayer's business activity, if reasonable:31
(i) Separate accounting; 32
(ii) The exclusion of any one or more of the factors;33
(iii) The inclusion of one or more additional factors that will 34
fairly represent the taxpayer's business activity in this state; or35
(iv) The employment of any other method to effectuate an 36
equitable allocation and apportionment of the taxpayer's income.37
(b) If the allocation and apportionment provisions of this 38
section do not fairly represent the extent of business activity in 39
this state for taxpayers engaged in a particular industry or in a 40
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particular transaction or activity, the department may, in addition 1
to the authority provided in (a) of this subsection (4), adopt rules 2
for determining alternative allocation and apportionment methods for 3
such taxpayers. Rules adopted pursuant to this subsection (4)(b) must 4
be applied uniformly, except that with respect to any taxpayer to 5
whom such rule applies, the taxpayer may petition for, or the 6
department may require, adjustment under (a) of this subsection (4).7
(c)(i) The party petitioning for, or the department requiring, 8
the use of any method to effectuate an equitable allocation and 9
apportionment of the taxpayer's income pursuant to (a) of this 10
subsection (4) must prove by clear and convincing evidence:11
(A) That the allocation and apportionment provisions of this 12
section do not fairly represent the extent of the taxpayer's business 13
activity in this state; and 14
(B) That the alternative to such provisions is reasonable.15
(ii) The same burden of proof applies whether the taxpayer is 16
petitioning for, or the department is requiring, the use of any 17
reasonable method to effectuate an equitable allocation and 18
apportionment of the taxpayer's income. However, if the department 19
can show that in any two of the prior five tax years, the taxpayer 20
had used an allocation or apportionment method at variance with its 21
allocation or apportionment method or methods used for such other tax 22
years, then the department does not bear the burden of proof in 23
imposing a different method pursuant to (a) of this subsection (4).24
(iii) If the department requires any method to effectuate an 25
equitable allocation and apportionment of the taxpayer's income, the 26
department may not impose any civil or criminal penalty with 27
reference to the tax due that is attributable to the taxpayer's 28
reasonable reliance solely on the allocation and apportionment 29
provisions of this section. 30
(iv) A taxpayer that has received written permission from the 31
department to use a reasonable method to effectuate an equitable 32
allocation and apportionment of the taxpayer's income may not have 33
that permission revoked with respect to transactions and activities 34
that have already occurred unless there has been a material change 35
in, or a material misrepresentation of, the facts provided by the 36
taxpayer upon which the department reasonably relied.37
(5) Rents and royalties from real or tangible personal property, 38
capital gains, interest, dividends, or patent or copyright royalties, 39
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to the extent that they constitute nonapportionable income, must be 1
allocated as provided in subsections (6) through (9) of this section.2
(6)(a) Net rents and royalties from real property located in this 3
state are allocable to this state. 4
(b) Net rents and royalties from tangible personal property are 5
allocable to this state: (i) If and to the extent that the property 6
is utilized in this state; or (ii) in their entirety if the 7
taxpayer's commercial domicile is in this state and the taxpayer is 8
not organized under the laws of or taxable in the state in which the 9
property is utilized. 10
(c) The extent of utilization of tangible personal property in a 11
state is determined by multiplying the rents and royalties by a 12
fraction the numerator of which is the number of days of physical 13
location of the property in the state during the rental or royalty 14
period in the taxable year and the denominator of which is the number 15
of days of physical location of the property everywhere during all 16
rental or royalty periods in the taxable year. If the physical 17
location of the property during the rental or royalty period is 18
unknown or unascertainable by the taxpayer, tangible personal 19
property is utilized in the state in which the property was located 20
at the time the rental or royalty payer obtained possession.21
(7)(a) Capital gains and losses from sales of real property 22
located in this state are allocable to this state.23
(b) Capital gains and losses from sales of tangible personal 24
property are allocable to this state if: (i) The property had a situs 25
in this state at the time of the sale; or (ii) the taxpayer's 26
commercial domicile is in this state and the taxpayer is not taxable 27
in the state in which the property had a situs. 28
(c) Capital gains and losses from sales of intangible personal 29
property are allocable to this state if the taxpayer's commercial 30
domicile is in this state. 31
(8) Interest and dividends are allocable to this state if the 32
taxpayer's commercial domicile is in this state. 33
(9)(a) Patent and copyright royalties are allocable to this 34
state: (i) If and to the extent that the patent or copyright is 35
utilized by the payer in this state; or (ii) if and to the extent 36
that the patent or copyright is utilized by the payer in a state in 37
which the taxpayer is not taxable and the taxpayer's commercial 38
domicile is in this state. 39
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(b) A patent is utilized in a state to the extent that it is 1
employed in production, fabrication, manufacturing, or other 2
processing in the state or to the extent that a patented product is 3
produced in the state. If the basis of receipts from patent royalties 4
does not permit allocation to states or if the accounting procedures 5
do not reflect states of utilization, the patent is utilized in the 6
state in which the taxpayer's commercial domicile is located.7
(c) A copyright is utilized in a state to the extent that 8
printing or other publication originates in the state. If the basis 9
of receipts from copyright royalties does not permit allocation to 10
states or if the accounting procedures do not reflect states of 11
utilization, the copyright is utilized in the state in which the 12
taxpayer's commercial domicile is located. 13
(10) The definitions in this subsection apply throughout this 14
section unless the context clearly requires otherwise.15
(a) "Apportionable income" means: 16
(i) All income that is apportionable under the Constitution of 17
the United States and is not allocated under the laws of this state, 18
including: 19
(A) Income arising from transactions and activity in the regular 20
course of the taxpayer's trade or business; and 21
(B) Income arising from tangible and intangible property if the 22
acquisition, management, employment, development, or disposition of 23
the property is or was related to the operation of the taxpayer's 24
trade or business; and 25
(ii) Any income that would be allocable to this state under the 26
Constitution of the United States, but that is apportioned rather 27
than allocated pursuant to the laws of this state.28
(b) "Commercial domicile" means the principal place from which 29
the trade or business of the taxpayer is directed or managed.30
(c) "Nonapportionable income" means all income other than 31
apportionable income. 32
(d) "Receipts" means all gross receipts of the taxpayer that are 33
not allocated under this section, and that are received from 34
transactions and activity in the regular course of the taxpayer's 35
trade or business, except that receipts of a taxpayer from hedging 36
transactions and from the maturity, redemption, sale, exchange, loan, 37
or other disposition of cash or securities, shall be excluded.38
(e) "State" means any state of the United States, the District of 39
Columbia, the Commonwealth of Puerto Rico, any territory or 40
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possession of the United States, and any foreign country or political 1
subdivision thereof. 2
(f) "Taxpayer" means a pass-through entity or individual 3
conducting business activity in the state of Washington.4
NEW SECTION. Sec. 406. PRORATION OF PART-YEAR INCOME. (1) 5
Except as provided in subsection (2) of this section, the adjusted 6
gross income of a part-year resident is the sum of the following:7
(a) For the portion of the year in which the taxpayer was a 8
resident of Washington, the taxpayer's entire adjusted gross income; 9
and 10
(b) For the portion of the year in which the taxpayer was a 11
nonresident, the taxpayer's adjusted gross income derived from 12
sources within this state, as provided in sections 403 through 405 of 13
this act. 14
(2) The adjusted gross income of a part-year resident with 15
federal adjusted gross income that includes an item of income, gain, 16
loss, deduction, or credit from a pass-through entity must include 17
the sum of the following: 18
(a) The total amount of the item that is taken into account in 19
federal adjusted gross income, multiplied by the ratio of the number 20
of days the taxpayer was a resident of Washington during the tax year 21
of the entity over the total number of days in the tax year of the 22
entity; and 23
(b) The total amount of the item that is taken into account in 24
federal adjusted gross income and that is derived from or connected 25
with sources within this state, as determined under sections 403 26
through 405 of this act, multiplied by the ratio of the number of 27
days the taxpayer was a nonresident of Washington during the tax year 28
of the entity over the total number of days in the tax year of the 29
entity. 30
NEW SECTION. Sec. 407. ALLOCATION AND APPORTIONMENT OF 31
NONRESIDENT STUDENT ATHLETE INCOME. (1) The portion of adjusted gross 32
income of a nonresident student athlete derived from the commercial 33
use of the student athlete's name, image, or likeness is allocated to 34
this state if the publicity services provided by the student athlete 35
related to such commercial use of the student athlete's name, image, 36
or likeness primarily occur in Washington.37
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(2) The portion of adjusted gross income of a nonresident student 1
athlete derived from payments by an institution of higher education 2
representing a percentage of institutional athletic revenues shall be 3
apportioned to Washington in a form and manner consistent with a 4
duty-day methodology. By January 1, 2028, the department shall submit 5
proposed legislation to the legislature that would implement an 6
apportionment methodology as specified under this subsection (2).7
(3) The definitions in this subsection apply throughout this 8
section unless the context clearly requires otherwise.9
(a) "Commercial use" means the use of an individual's name, 10
image, or likeness for advertising, selling, or soliciting purchases 11
of products, goods, or services. 12
(b) "Name, image, or likeness" means an individual's readily 13
identifiable name, voice, signature, photograph, or likeness.14
(c) "Publicity services" includes, but is not limited to, the 15
following activities: Appearing in photoshoots; filming commercials; 16
recording audio endorsements; posting sponsored content on social 17
media platforms; attending promotional events; either wearing or 18
using, or both, branded products; and granting rights by the student 19
athlete to use the student athlete's name, image, or likeness in 20
either advertisements or online campaigns, or both.21
(d) "Student athlete" means an individual who is enrolled at an 22
institution of higher education and eligible to engage in any varsity 23
intercollegiate athletics program at the institution.24
PART V25
ESTIMATED TAX PAYMENTS AND PASS-THROUGH ENTITY TAX ELECTION26
NEW SECTION. Sec. 501. ESTIMATED TAX IMPOSED — DUE DATE OF 27
ESTIMATED TAXES — AMOUNT OF ESTIMATED TAX — UNDERPAYMENT PENALTY. (1) 28
Each individual subject to taxation by this chapter that is required 29
by the internal revenue code to make payment of estimated taxes must 30
pay to the department on forms prescribed by the department the 31
estimated taxes due under this chapter.32
(2) The provisions of the internal revenue code relating to the 33
determination of reporting periods and due dates of payments of 34
estimated tax applies to the estimated tax payments due under this 35
section. 36
(3) The amount of the estimated tax is the annualized tax divided 37
by the number of months in the reporting period. No estimated tax is 38
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due if the annualized tax is less than $5,000. RCW 82.32.050 and 1
82.32.090 apply to underpayments of estimated tax unless the 2
estimated tax remitted to the department is either at least 90 3
percent of the tax shown on the return required under section 702 (1) 4
of this act or 100 percent of the tax shown on the previous year's 5
tax return. 6
(4) For purposes of this section, the annualized tax is the 7
taxpayer's projected tax liability for the tax year as computed 8
pursuant to internal revenue code section 6654 and the regulations 9
thereunder. 10
(5) The department shall adopt rules for making estimated tax 11
payments under this section on wages, salaries, and other 12
compensation subject to federal income tax withholding.13
(6) Estimated payments are not required under this section before 14
July 1, 2029. 15
NEW SECTION. Sec. 502. PASS-THROUGH ENTITY TAX ELECTION. (1)(a) 16
Beginning January 1, 2028, a tax is imposed at a rate of 9.90 percent 17
of the taxable income of an electing entity for each taxable year in 18
which an election under this section is in effect.19
(b) The tax is paid by the electing entity. 20
(2)(a) A pass-through entity may elect to be subject to the tax 21
imposed under this section by filing an election with the department 22
on or before the due date prescribed by the department for making 23
such election, but no later than April 15th. 24
(b) The election is made annually and is irrevocable for the 25
taxable year once filed. 26
(c) The election must be made by: (i) In the case of a 27
partnership or limited liability company, any person authorized to 28
sign the entity's return; and (ii) in the case of an S corporation, 29
an officer authorized to sign the return. 30
(3)(a) The taxable income of an electing entity consists of:31
(i) The entire distributive share of income, gain, loss, and 32
deduction attributable to resident owners, regardless of source; and33
(ii) The state source distributive share of income, gain, loss, 34
and deduction attributable to nonresident owners. 35
(b) Taxable income is determined by applying all state specific 36
additions, subtractions, and modifications that would apply to the 37
owners individually. 38
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(c) Guaranteed payments, separately stated items, and investment 1
income is included in taxable income to the same extent these items 2
would be included in an owner's individual Washington taxable income 3
under this chapter. 4
(4)(a) An electing entity shall make estimated tax payments in 5
the same manner and at the same times as required for individual 6
estimated tax payments under section 501 of this act.7
(b) Estimated tax payments are based on the electing entity's 8
reasonable estimate of taxable income for the taxable year.9
(c) Estimated tax payments paid by the electing entity under this 10
section are in lieu of the estimated tax payments imposed on owners 11
under section 501 of this act with respect to the income included in 12
the electing entity's taxable income. 13
(d) Estimated tax payments are not required under this subsection 14
before July 1, 2029. 15
(5)(a) Each owner of an electing entity is allowed a credit 16
against the tax imposed under this section equal to the owner's 17
proportionate share of the tax paid by the electing entity under this 18
section as provided in section 206 of this act. 19
(b) Resident owners shall include in their Washington taxable 20
income their full distributive share of the electing entity's income, 21
gains, losses, and deductions and shall claim the credit allowed 22
under section 206 of this act. 23
(c) Nonresident owners shall include in their Washington taxable 24
income their distributive share of the electing entity's income, 25
gains, losses, and deductions as allocated and apportioned under 26
section 405 of this act and shall claim the credit allowed under 27
section 206 of this act. 28
(6)(a) The electing entity shall file an annual return reporting 29
taxable income, tax due, estimated payments, and any other 30
information required by the department in a form and manner required 31
by the department. 32
(b) The department may adopt rules necessary to administer this 33
section, which to the extent possible, must be consistent with the 34
requirements under this chapter for individuals. The department may 35
adopt rules to streamline and simplify the process and procedures for 36
making an election under this section. 37
(7) The definitions in this subsection apply throughout this 38
section unless the context clearly requires otherwise.39
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(a) "Distributive share" means the owner's share of income, gain, 1
loss, or deduction as determined under the entity's governing 2
documents and federal income tax law. 3
(b) "Electing entity" means a pass-through entity that has made a 4
valid election under subsection (2)(c) of this section.5
(c) "Nonresident owner" means an owner who is not a resident of 6
this state for individual income tax purposes. 7
(d) "Owner" means a partner, member, or shareholder of a pass-8
through entity. 9
(e) "Resident owner" means an owner who is a resident of this 10
state for individual income tax purposes. 11
(f) "State source income" means income, gain, or loss derived 12
from sources within this state, determined under the allocation and 13
apportionment provisions of section 405 of this act.14
PART VI15
CRIMES16
NEW SECTION. Sec. 601. CRIMES. (1) Any person who knowingly 17
attempts to evade the tax imposed under this chapter or payment 18
thereof is guilty of a class C felony as provided in chapter 9A.20 19
RCW.20
(2) Any person required to collect tax imposed under this chapter 21
who knowingly fails to truthfully account for or pay over the tax is 22
guilty of a class C felony as provided in chapter 9A.20 RCW.23
(3) Any person who knowingly fails to pay tax, pay estimated tax, 24
make returns, or supply information, as required under this chapter, 25
is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.26
PART VII27
ADMINISTRATIVE PROVISIONS28
NEW SECTION. Sec. 701. METHOD OF ACCOUNTING. (1) A taxpayer's 29
method of accounting for purposes of the tax imposed under this 30
chapter is the same as the taxpayer's method of accounting for 31
federal income tax purposes. If no method of accounting has been 32
regularly used by a taxpayer for federal income tax purposes or if 33
the method used does not clearly reflect income, tax due under this 34
chapter is computed by the cash method of accounting.35
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(2) If a person's method of accounting is changed for federal 1
income tax purposes, it must be similarly changed for purposes of 2
this chapter. 3
NEW SECTION. Sec. 702. FILING TAX RETURNS. (1)(a) Except as 4
otherwise provided in this section or RCW 82.32.080, taxpayers owing 5
tax under this chapter must file, on forms prescribed by the 6
department, a return with the department on or before the date the 7
taxpayer's federal income tax return for the taxable year is required 8
to be filed. Individuals not owing tax under this chapter are not 9
required to file a return under this section.10
(b)(i) Except as provided in (b)(ii) of this subsection (1), 11
returns and all supporting documents must be filed electronically 12
using the department's online tax filing service or other method of 13
electronic reporting as the department may authorize.14
(ii) The department may waive the electronic filing requirement 15
in this subsection for good cause as provided in RCW 82.32.080.16
(2)(a) Every taxpayer owing tax under this chapter must include 17
with the Washington return described in subsection (1) of this 18
section a copy of the taxpayer's federal income tax return filed with 19
the internal revenue service of the United States, including:20
(i) All federal income tax forms, schedules, and other 21
attachments that directly relate to the taxpayer's federal adjusted 22
gross income; and 23
(ii) Any information, returns, and federal tax documents received 24
by the taxpayer that directly relate to the taxpayer's federal 25
adjusted gross income including, but not limited to, form W-2, form 26
1099-INT, form 1099-DIV, form 1099-NEC, form 1099-MISC, form 1099-B, 27
schedule K-1 (form 1065), and schedule K-1 (form 1120-S).28
(b) A taxpayer must provide to the department, upon request, 29
other federal tax return information needed to verify the tax owed 30
under this chapter. 31
(c) The department may prescribe by rule additional reporting or 32
verification requirements under this subsection (2) to substantiate 33
an individual's federal adjusted gross income. 34
(3) Each taxpayer required to file a return under this section 35
must, without assessment, notice, or demand, pay any tax due thereon 36
to the department on or before the date fixed for the filing of the 37
return, regardless of any filing extension. The tax must be paid by 38
electronic funds transfer as defined in RCW 82.32.085 or by other 39
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forms of electronic payment as may be authorized by the department. 1
The department may waive the electronic payment requirement for good 2
cause as provided in RCW 82.32.080. If any tax due under this chapter 3
is not paid by the due date, interest and penalties as provided in 4
chapter 82.32 RCW apply to the deficiency. 5
(4) If a taxpayer has obtained an extension of time for filing 6
the federal income tax return for the taxable year and the taxpayer 7
provides the department, on or before the date fixed for the filing 8
of the return, regardless of any filing extension, evidence 9
satisfactory to the department confirming the federal extension, the 10
taxpayer is entitled to the same extension of time for filing the 11
return required under this section. An extension under this 12
subsection for the filing of a return under this chapter is not an 13
extension of time to pay the tax due under this chapter.14
(5)(a) If any return due under subsection (1) of this section, 15
along with a copy of the federal income tax return, is not filed with 16
the department by the due date or any extension granted by the 17
department, the department must assess a penalty in the amount of 18
five percent of the tax due for the taxable year covered by the 19
return for each month or portion of a month that the return remains 20
unfiled. The total penalty assessed under this subsection may not 21
exceed 25 percent of the tax due for the taxable year covered by the 22
delinquent return. The penalty under this subsection is in addition 23
to any penalties assessed for the late payment of any tax due on the 24
return. 25
(b) The department must waive or cancel the penalty imposed under 26
this subsection if: 27
(i) The department is persuaded that the taxpayer's failure to 28
file the return by the due date was due to circumstances beyond the 29
taxpayer's control; or 30
(ii) The taxpayer has not been delinquent in filing any return 31
due under this section during the preceding five calendar years and 32
the taxpayer has not been contacted by the department for enforcement 33
purposes regarding the reporting period covered by the waiver 34
request. 35
(6) The department must waive or cancel the penalty imposed under 36
RCW 82.32.090(1) on a payment required under this section when the 37
circumstances under which the delinquency occurred do not qualify for 38
waiver or cancellation under RCW 82.32.105(1) if all of the following 39
apply: 40
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(a) A taxpayer requests a waiver of penalty for a payment 1
required under this section; 2
(b) The taxpayer has not been contacted by the department for 3
enforcement purposes regarding the reporting period covered by the 4
waiver request; and 5
(c) The taxpayer has timely remitted payment on all tax returns 6
due under this section during the preceding five calendar years.7
(7)(a) In the event a taxpayer's federal income tax return is 8
changed in a manner that is final after their return required under 9
subsection (1) of this section is filed with the department and the 10
taxpayer's federal income tax return is changed in a manner that 11
impacts either the calculation of their Washington adjusted gross 12
income or their tax liability under this chapter, or both, the 13
taxpayer must amend the taxpayer's return due under subsection (1) of 14
this section for the same tax year in which their federal income tax 15
return is changed. For the purposes of this subsection (7), a federal 16
income tax return is changed in a manner that is final when such 17
change is not subject to either administrative review by the United 18
States internal revenue service or judicial review in a court of 19
competent jurisdiction, or both. A change is also final in the case 20
of an audit finding in the following circumstances:21
(i) The taxpayer has received audit findings from the internal 22
revenue service for the tax period and the taxpayer does not timely 23
file an administrative appeal with the internal revenue service.24
(ii) The taxpayer consented to any of the audit findings for the 25
tax period through a form or other written agreement with the United 26
States internal revenue service. 27
(b) If the return is not amended, as required under this 28
subsection (7), with the department within 90 days of the federal 29
income tax return change becoming final, the department must assess 30
on the 91st day a penalty in the amount of five percent of any 31
additional tax due for the taxable year covered by the return for 32
each month or portion of a month that the return is not timely 33
amended as required by this subsection. The total penalty assessed 34
under this subsection (7)(b) may not exceed 25 percent of the 35
additional tax due for the taxable year covered by the delinquent 36
return amendment. The penalty under this subsection (7)(b) is in 37
addition to any penalties assessed under this section.38
(8)(a) No assessment or correction of an assessment for 39
additional taxes, penalties, or interest due may be made by the 40
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department more than four years after the year in which a return is 1
filed under subsection (1) of this section except: 2
(i) When the taxpayer's federal income tax return is changed in a 3
manner that requires an amended return under subsection (7) of this 4
section; or 5
(ii) As provided in RCW 82.32.050(4). 6
(b) In the event the statute of limitations is extended under 7
(a)(i) of this subsection, no assessment or correction of an 8
assessment for additional taxes, penalties, or interest due may be 9
made by the department more than four years after the year in which 10
an amended return is filed with the department as required under 11
subsection (7) of this section. Any assessment or correction of an 12
assessment for additional taxes, penalties, or interest due under 13
this subsection (8)(b) but made by the department more than four 14
years after the year in which a return is filed under subsection (1) 15
of this section must be directly related to the federal income tax 16
return change described in subsection (7) of this section.17
NEW SECTION. Sec. 703. REQUIREMENT FOR SEPARATE OR JOINT 18
RETURNS. (1) If the federal income tax liabilities of both spouses 19
are determined on a joint federal return for the taxable year, they 20
must file a joint return under this chapter.21
(2) Except as otherwise provided in this subsection (2), if the 22
federal income tax liability of any individual, including either 23
spouse of a marital community, is determined on a separate federal 24
return for the taxable year, they must file separate returns under 25
this chapter. State registered domestic partners may file a joint 26
return under this chapter even if they filed separate federal returns 27
for the taxable year. 28
(3) The liability for tax due under this chapter of each spouse 29
or state registered domestic partner is joint and several, unless:30
(a) The spouse is relieved of liability for federal tax purposes 31
as provided under 26 U.S.C. Sec. 6015 of the internal revenue code; 32
or 33
(b) The department determines that the state registered domestic 34
partner qualifies for relief as provided by rule of the department. 35
Such rule, to the extent possible without being inconsistent with 36
this chapter, must follow 26 U.S.C. Sec. 6015. 37
(4)(a) Unless the context clearly indicates otherwise, 38
individuals who are spouses or state registered domestic partners are 39
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not considered separate taxpayers for the purposes of this chapter 1
regardless of whether they file a joint or separate return for the 2
tax imposed under this chapter. The activities and assets of each 3
spouse or state registered domestic partner are combined as if they 4
were one individual for the purposes of determining the applicability 5
of any threshold amounts, caps, deductions, credits, or any other 6
amounts related to the activities or assets of an individual 7
throughout this chapter. 8
(b)(i) Except as provided in (b)(ii) of this subsection (4), when 9
an individual does not file a joint return for the tax imposed under 10
this chapter, both spouses or state registered domestic partners must 11
allocate between themselves their respective share of the marital 12
community's or domestic partnership's assets and activity. The 13
allocation must be reported to the department on any returns required 14
to be filed pursuant to this chapter in a manner prescribed by the 15
department. 16
(ii) If both spouses or state registered domestic partners cannot 17
agree on an allocation of assets and activity as authorized under 18
(b)(i) of this subsection (4), each spouse is limited to one-half of 19
the total assets and activities of their marital community or 20
domestic partnership. 21
NEW SECTION. Sec. 704. ADMINISTRATION OF CHAPTER CONSISTENT 22
WITH CHAPTER 82.32 RCW. Except as otherwise provided by law and to 23
the extent not inconsistent with the provisions of this chapter, 24
chapter 82.32 RCW applies to the administration of taxes imposed 25
under this chapter.26
Sec. 705. RCW 82.32.050 and 2025 c 409 s 12 are each amended to 27
read as follows: 28
(1) If upon examination of any returns or from other information 29
obtained by the department it appears that a tax or penalty has been 30
paid less than that properly due, the department shall assess against 31
the taxpayer such additional amount found to be due and shall add 32
thereto interest on the tax only. The department shall notify the 33
taxpayer by mail, or electronically as provided in RCW 82.32.135, of 34
the additional amount and the additional amount shall become due and 35
shall be paid within 30 days from the date of the notice, or within 36
such further time as the department may provide. 37
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(a) For tax liabilities arising before January 1, 1992, interest 1
shall be computed at the rate of nine percent per annum from the last 2
day of the year in which the deficiency is incurred until the earlier 3
of December 31, 1998, or the date of payment. After December 31, 4
1998, the rate of interest shall be variable and computed as provided 5
in subsection (2) of this section. The rate so computed shall be 6
adjusted on the first day of January of each year for use in 7
computing interest for that calendar year. 8
(b) For tax liabilities arising after December 31, 1991, the rate 9
of interest shall be variable and computed as provided in subsection 10
(2) of this section from the last day of the year in which the 11
deficiency is incurred until the date of payment. The rate so 12
computed shall be adjusted on the first day of January of each year 13
for use in computing interest for that calendar year.14
(c)(i) Except as otherwise provided in this subsection (1)(c), 15
interest imposed after December 31, 1998, shall be computed from the 16
last day of the month following each calendar year included in a 17
notice, and the last day of the month following the final month 18
included in a notice if not the end of a calendar year, until the due 19
date of the notice. 20
(ii) For interest associated with annual tax reporting periods 21
having a due date as prescribed in RCW 82.32.045(3) ((and)), 22
82.87.110, and section 702 of this act, interest must be computed 23
from the last day of April immediately following each such annual 24
reporting period included in the notice, until the due date of the 25
notice. 26
(iii) For purposes of computing interest under (c)(i) and (ii) of 27
this subsection (1): 28
(A) The same computation of interest applies regardless of 29
whether the department grants additional time for filing any return 30
under RCW 82.32.080(4)(a)(i). 31
(B) If the department extends a due date under subsection (3) of 32
this section or RCW 82.32.080(4)(b), and payment is not made in full 33
by the extended due date, interest is computed from the last day of 34
the month in which the extended due date occurs until the date of 35
payment. 36
(iv) If payment in full is not made by the due date of the 37
notice, additional interest shall be computed under this subsection 38
(1)(c) until the date of payment. The rate of interest shall be 39
variable and computed as provided in subsection (2) of this section. 40
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The rate so computed shall be adjusted on the first day of January of 1
each year for use in computing interest for that calendar year.2
(2) For the purposes of this section, the rate of interest to be 3
charged to the taxpayer shall be an average of the federal short-term 4
rate as defined in 26 U.S.C. Sec. 1274 (d) plus two percentage points. 5
The rate set for each new year shall be computed by taking an 6
arithmetical average to the nearest percentage point of the federal 7
short-term rate, compounded annually. That average shall be 8
calculated using the rates from four months: January, April, and July 9
of the calendar year immediately preceding the new year, and October 10
of the previous preceding year. 11
(3) During a state of emergency declared under RCW 43.06.010(12), 12
the department, on its own motion or at the request of any taxpayer 13
affected by the emergency, may extend the due date of any assessment 14
or correction of an assessment for additional taxes, penalties, or 15
interest as the department deems proper. 16
(4) No assessment or correction of an assessment for additional 17
taxes, penalties, or interest due may be made by the department more 18
than four years after the close of the tax year, except (a) against a 19
taxpayer who has not registered as required by this chapter, (b) upon 20
a showing of fraud or of misrepresentation of a material fact by the 21
taxpayer, or (c) where a taxpayer has executed a written waiver of 22
such limitation. The execution of a written waiver shall also extend 23
the period for making a refund or credit as provided in RCW 24
82.32.060(2). 25
(5) For the purposes of this section, the following definitions 26
apply: 27
(a) "Due date of the notice" means the date indicated in the 28
notice by which the amount due in the notice must be paid, or such 29
later date as provided by RCW 1.12.070(3). 30
(b) "Return" means any document a person is required by the state 31
of Washington to file to satisfy or establish a tax or fee obligation 32
that is administered or collected by the department and that has a 33
statutorily defined due date. "Return" also means an application for 34
refund under RCW 82.08.0206. 35
Sec. 706. RCW 82.32.060 and 2025 c 409 s 13 are each amended to 36
read as follows: 37
(1) If, upon receipt of an application by a taxpayer for a refund 38
or for an audit of the taxpayer's records, or upon an examination of 39
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the returns or records of any taxpayer, it is determined by the 1
department that within the statutory period for assessment of taxes, 2
penalties, or interest prescribed by RCW 82.32.050 any amount of tax, 3
penalty, or interest has been paid in excess of that properly due, 4
the excess amount paid within, or attributable to, such period must 5
be credited to the taxpayer's account or must be refunded to the 6
taxpayer, at the taxpayer's option. Except as provided in subsection 7
(2) of this section, no refund or credit may be made for taxes, 8
penalties, or interest paid more than four years prior to the 9
beginning of the calendar year in which the refund application is 10
made or examination of records is completed. 11
(2)(a) The execution of a written waiver under RCW 82.32.050 or 12
82.32.100 will extend the time for making a refund or credit of any 13
taxes paid during, or attributable to, the years covered by the 14
waiver if, prior to the expiration of the waiver period, an 15
application for refund of such taxes is made by the taxpayer or the 16
department discovers a refund or credit is due. 17
(b) A refund or credit must be allowed for an excess payment 18
resulting from the failure to claim a bad debt deduction, credit, or 19
refund under RCW 82.04.4284, 82.08.037, 82.12.037, 82.14B.150, or 20
82.16.050(5) for debts that became bad debts under 26 U.S.C. Sec. 21
166, as amended or renumbered as of January 1, 2003, less than four 22
years prior to the beginning of the calendar year in which the refund 23
application is made or examination of records is completed.24
(3) Any such refunds must be made by means of vouchers approved 25
by the department and by the issuance of state warrants drawn upon 26
and payable from such funds as the legislature may provide. However, 27
taxpayers who are required to pay taxes by electronic funds transfer 28
under RCW 82.32.080 must have any refunds paid by electronic funds 29
transfer if the department has the necessary account information to 30
facilitate a refund by electronic funds transfer. 31
(4) Any judgment for which a recovery is granted by any court of 32
competent jurisdiction, not appealed from, for tax, penalties, and 33
interest which were paid by the taxpayer, and costs, in a suit by any 34
taxpayer must be paid in the same manner, as provided in subsection 35
(3) of this section, upon the filing with the department of a 36
certified copy of the order or judgment of the court.37
(a) Interest at the rate of three percent per annum must be 38
allowed by the department and by any court on the amount of any 39
refund, credit, or other recovery allowed to a taxpayer for taxes, 40
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penalties, or interest paid by the taxpayer before January 1, 1992. 1
This rate of interest applies for all interest allowed through 2
December 31, 1998. Interest allowed after December 31, 1998, must be 3
computed at the rate as computed under RCW 82.32.050(2). The rate so 4
computed must be adjusted on the first day of January of each year 5
for use in computing interest for that calendar year.6
(b) For refunds or credits of amounts paid or other recovery 7
allowed to a taxpayer after December 31, 1991, the rate of interest 8
must be the rate as computed for assessments under RCW 82.32.050(2) 9
less one percent. This rate of interest applies for all interest 10
allowed through December 31, 1998. Interest allowed after December 11
31, 1998, must be computed at the rate as computed under RCW 12
82.32.050(2). The rate so computed must be adjusted on the first day 13
of January of each year for use in computing interest for that 14
calendar year. 15
(5) Interest allowed on a credit notice or refund issued after 16
December 31, 2003, must be computed as follows: 17
(a) If all overpayments for each calendar year and all reporting 18
periods ending with the final month included in a notice or refund 19
were made on or before the due date of the final return for each 20
calendar year or the final reporting period included in the notice or 21
refund: 22
(i) Interest must be computed from January 31st following each 23
calendar year included in a notice or refund; 24
(ii) Interest must be computed from the last day of the month 25
following the final month included in a notice or refund; or26
(iii) For interest associated with annual tax reporting periods 27
having a due date as prescribed in RCW 82.32.045(3) ((and)), 28
82.87.110, and section 702 of this act, interest must be computed 29
from the last day of April following each such annual reporting 30
period included in a notice or refund. 31
(b) If the taxpayer has not made all overpayments for each 32
calendar year and all reporting periods ending with the final month 33
included in a notice or refund on or before the dates specified by 34
RCW 82.32.045 for the final return for each calendar year or the 35
final month included in the notice or refund, interest must be 36
computed from the last day of the month following the date on which 37
payment in full of the liabilities was made for each calendar year 38
included in a notice or refund, and the last day of the month 39
following the date on which payment in full of the liabilities was 40
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made if the final month included in a notice or refund is not the end 1
of a calendar year. 2
(c) Interest included in a credit notice must accrue up to the 3
date the taxpayer could reasonably be expected to use the credit 4
notice, as defined by the department's rules. If a credit notice is 5
converted to a refund, interest must be recomputed to the date the 6
refund is issued, but not to exceed the amount of interest that would 7
have been allowed with the credit notice. 8
Sec. 707. RCW 82.32.090 and 2025 c 409 s 14 are each amended to 9
read as follows: 10
(1) If payment of any tax due on a return to be filed by a 11
taxpayer is not received by the department of revenue by the due 12
date, there is assessed a penalty of nine percent of the amount of 13
the tax; and if the tax is not received on or before the last day of 14
the month following the due date, there is assessed a total penalty 15
of 19 percent of the amount of the tax under this subsection; and if 16
the tax is not received on or before the last day of the second month 17
following the due date, there is assessed a total penalty of 29 18
percent of the amount of the tax under this subsection. No penalty so 19
added may be less than $5. 20
(2) If the department of revenue determines that any tax has been 21
substantially underpaid, there is assessed a penalty of five percent 22
of the amount of the tax determined by the department to be due. If 23
payment of any tax determined by the department to be due is not 24
received by the department by the due date specified in the notice, 25
or any extension thereof, there is assessed a total penalty of 15 26
percent of the amount of the tax under this subsection; and if 27
payment of any tax determined by the department to be due is not 28
received on or before the 30th day following the due date specified 29
in the notice of tax due, or any extension thereof, there is assessed 30
a total penalty of 25 percent of the amount of the tax under this 31
subsection. No penalty so added may be less than $5. As used in this 32
((section)) subsection, "substantially underpaid" means that the 33
taxpayer has paid less than 80 percent of the amount of tax 34
determined by the department to be due for all of the types of taxes 35
included in, and for the entire period of time covered by, the 36
department's examination, and the amount of underpayment is at least 37
$1,000. 38
p. 34 SB 6346
(3) If a warrant is issued by the department of revenue for the 1
collection of taxes, increases, and penalties, there is added thereto 2
a penalty of 10 percent of the amount of the tax, but not less than 3
$10. 4
(4) If the department finds that a person has engaged in any 5
business or performed any act upon which a tax is imposed under this 6
title and that person has not obtained from the department a 7
registration certificate as required by RCW 82.32.030, the department 8
must impose a penalty of five percent of the amount of tax due from 9
that person for the period that the person was not registered as 10
required by RCW 82.32.030. The department may not impose the penalty 11
under this subsection (4) if a person who has engaged in business 12
taxable under this title without first having registered as required 13
by RCW 82.32.030, prior to any notification by the department of the 14
need to register, obtains a registration certificate from the 15
department. 16
(5) If the department finds that a taxpayer has disregarded 17
specific written instructions as to reporting or tax liabilities, or 18
willfully disregarded the requirement to file returns or remit 19
payment electronically, as provided by RCW 82.32.080, the department 20
must add a penalty of 10 percent of the amount of the tax that should 21
have been reported and/or paid electronically or the additional tax 22
found due if there is a deficiency because of the failure to follow 23
the instructions. A taxpayer disregards specific written instructions 24
when the department has informed the taxpayer in writing of the 25
taxpayer's tax obligations and the taxpayer fails to act in 26
accordance with those instructions unless, in the case of a 27
deficiency, the department has not issued final instructions because 28
the matter is under appeal pursuant to this chapter or departmental 29
regulations. The department may not assess the penalty under this 30
section upon any taxpayer who has made a good faith effort to comply 31
with the specific written instructions provided by the department to 32
that taxpayer. A taxpayer will be considered to have made a good 33
faith effort to comply with specific written instructions to file 34
returns and/or remit taxes electronically only if the taxpayer can 35
show good cause, as defined in RCW 82.32.080, for the failure to 36
comply with such instructions. A taxpayer will be considered to have 37
willfully disregarded the requirement to file returns or remit 38
payment electronically if the department has mailed or otherwise 39
delivered the specific written instructions to the taxpayer on at 40
p. 35 SB 6346
least two occasions. Specific written instructions may be given as a 1
part of a tax assessment, audit, determination, closing agreement, or 2
other written communication, provided that such specific written 3
instructions apply only to the taxpayer addressed or referenced on 4
such communication. Any specific written instructions by the 5
department must be clearly identified as such and must inform the 6
taxpayer that failure to follow the instructions may subject the 7
taxpayer to the penalties imposed by this subsection. If the 8
department determines that it is necessary to provide specific 9
written instructions to a taxpayer that does not comply with the 10
requirement to file returns or remit payment electronically as 11
provided in RCW 82.32.080, the specific written instructions must 12
provide the taxpayer with a minimum of 45 days to come into 13
compliance with its electronic filing and/or payment obligations 14
before the department may impose the penalty authorized in this 15
subsection. 16
(6) If the department finds that all or any part of a deficiency 17
resulted from engaging in a disregarded transaction, as described in 18
RCW 82.32.655(3), the department must assess a penalty of 35 percent 19
of the additional tax found to be due as a result of engaging in a 20
transaction disregarded by the department under RCW 82.32.655(2). The 21
penalty provided in this subsection may be assessed together with any 22
other applicable penalties provided in this section on the same tax 23
found to be due, except for the evasion penalty provided in 24
subsection (7) of this section. The department may not assess the 25
penalty under this subsection if, before the department discovers the 26
taxpayer's use of a transaction described under RCW 82.32.655(3), the 27
taxpayer discloses its participation in the transaction to the 28
department. 29
(7) If the department finds that all or any part of the 30
deficiency resulted from an intent to evade the tax payable 31
hereunder, a further penalty of 50 percent of the additional tax 32
found to be due must be added. 33
(8) The penalties imposed under subsections (1) through (4) of 34
this section can each be imposed on the same tax found to be due. 35
This subsection does not prohibit or restrict the application of 36
other penalties authorized by law. 37
(9) The department may not impose the evasion penalty in 38
combination with the penalty for disregarding specific written 39
p. 36 SB 6346
instructions or the penalty provided in subsection (6) of this 1
section on the same tax found to be due. 2
(10) If a taxpayer substantially underpays an estimated payment 3
of tax imposed under RCW 82.87.040 pursuant to RCW 82.87.110(3), 4
there is assessed a penalty of five percent of the amount of the 5
actual tax due for tax imposed under RCW 82.87.040. As used in this 6
((section)) subsection, "substantially underpaid" means that an 7
individual's estimated payment for taxes imposed under RCW 82.87.040 8
was less than 80 percent of the actual tax due, and at least $1,000.9
(11) If the total estimated tax payments under section 501 of 10
this act for the tax year are substantially underpaid, there is 11
assessed a penalty of five percent of the amount of the underpaid 12
tax. If a pass-through entity makes an election under section 502 of 13
this act, this subsection (11) applies to the estimated tax payments 14
of the pass-through entity in lieu of the individual. As used in this 15
subsection, "substantially underpaid" means that an individual's 16
total annual estimated tax payments under section 501 of this act 17
were less than 80 percent of the actual annual tax due, and at least 18
$5,000.19
(12) For the purposes of this section, "return" means any 20
document a person is required by the state of Washington to file to 21
satisfy or establish a tax or fee obligation that is administered or 22
collected by the department, and that has a statutorily defined due 23
date. "Return" also includes the submission of any estimated payment 24
of tax as provided in RCW 82.87.110(3) and the confirmation of an 25
extension of the filing due date required under RCW 82.87.110(5).26
NEW SECTION. Sec. 708. ESTIMATION AGREEMENTS. The department 27
may reasonably estimate the items of business or nonbusiness income 28
of a taxpayer having an office within the state and one or more other 29
states or foreign countries which may be apportioned or allocated to 30
the state and may enter into estimation agreements with such 31
taxpayers for the determination of their liability for the tax 32
imposed by this chapter.33
NEW SECTION. Sec. 709. PROVISIONS OF INTERNAL REVENUE CODE 34
CONTROL. (1) To the extent possible without being inconsistent with 35
this chapter, all of the provisions of subtitle F (procedure and 36
administration) of the internal revenue code relating to the 37
following subjects apply to the taxes imposed under this chapter:38
p. 37 SB 6346
(a) Timing and amount of tax prepayments under section 501 of 1
this act; 2
(b) Liability of transferees; and 3
(c) Time and manner of making returns, extensions of time for 4
filing returns, verification of returns, and the time when a return 5
is deemed to be filed by the department. 6
(2) The department by rule may provide modifications and 7
exceptions to the provisions listed in subsection (1) of this 8
section, if reasonably necessary to facilitate the prompt, efficient, 9
and equitable collection of tax under this chapter.10
NEW SECTION. Sec. 710. RULES. The department may adopt rules 11
under chapter 34.05 RCW for the administration and enforcement of 12
this chapter. The rules, to the extent possible without being 13
inconsistent with this chapter, must follow the internal revenue code 14
and the regulations and rulings of the United States treasury 15
department with respect to the federal income tax. The department may 16
adopt as a part of these rules any portions of the internal revenue 17
code and United States treasury department regulations and rulings, 18
in whole or in part.19
NEW SECTION. Sec. 711. COUNTY PUBLIC DEFENSE FUNDING 20
STABILIZATION ACCOUNT. (1) The county public defense funding 21
stabilization account is hereby created in the state treasury. All 22
receipts specified under section 202 (1)(a) of this act must be 23
deposited in the account. Moneys in the account may be spent only 24
after appropriation. Expenditures from the account may be used only 25
for distributions to counties for public defense services consistent 26
with chapter 10.101 RCW.27
(2) On a quarterly basis, the state treasurer shall distribute 28
moneys deposited in the county public defense funding stabilization 29
account to each county based on the county's personal income ratio as 30
determined under subsection (3) of this section. 31
(3) The office of financial management shall calculate each 32
county's personal income ratio by December 31, 2028, and December 33
31st of each year thereafter, using the most recent annual county 34
personal income data published by the federal bureau of economic 35
analysis for the state of Washington and notify the state treasurer. 36
The updated county personal income ratio applies to county 37
distributions in the following calendar year. 38
p. 38 SB 6346
(4) For the purpose of this section, "county's personal income 1
ratio" means the personal income of the county divided by the 2
personal income of the state of Washington, as determined under 3
subsection (3) of this section. 4
PART VIII5
APPLICATION OF TAX TO PUBLIC PENSIONS6
Sec. 801. RCW 2.10.180 and 2012 c 159 s 17 are each amended to 7
read as follows: 8
(1) Except as provided in subsections (2), (3), ((and)) (4), and 9
(5) of this section, the right of a person to a retirement allowance, 10
disability allowance, or death benefit, the retirement, disability or 11
death allowance itself, any optional benefit, any other right accrued 12
or accruing to any person under the provisions of this chapter, and 13
the moneys in the fund created under this chapter, are hereby exempt 14
from any state, county, municipal, or other local tax and shall not 15
be subject to execution, garnishment, or any other process of law 16
whatsoever whether the same be in actual possession of the person or 17
be deposited or loaned. 18
(2) Subsection (1) of this section shall not be deemed to 19
prohibit a beneficiary of a retirement allowance from authorizing 20
deductions therefrom for payment of premiums due on any group 21
insurance policy or plan issued for the benefit of a group comprised 22
of public employees of the state of Washington. 23
(3) Deductions made in the past from retirement benefits are 24
hereby expressly recognized, ratified, and affirmed. Future 25
deductions may only be made in accordance with this section.26
(4) Subsection (1) of this section shall not prohibit the 27
department of retirement systems from complying with (a) a wage 28
assignment order for child support issued pursuant to chapter 26.18 29
RCW, (b) a notice of payroll deduction issued under chapter 26.23 30
RCW, (c) an order to withhold and deliver issued pursuant to chapter 31
74.20A RCW, (d) a mandatory benefits assignment order issued pursuant 32
to chapter 41.50 RCW, (e) a court order directing the department of 33
retirement systems to pay benefits directly to an obligee under a 34
dissolution order as defined in RCW 41.50.500(3) which fully complies 35
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 36
order expressly authorized by federal law. 37
p. 39 SB 6346
(5) Subsection (1) of this section does not exempt any pension or 1
other benefit received under this chapter from tax under Title 82A 2
RCW (the new title created in section 1003 of this act).3
Sec. 802. RCW 2.12.090 and 2012 c 159 s 18 are each amended to 4
read as follows: 5
(1) Except as provided in subsections (2), (3), ((and)) (4), and 6
(5) of this section, the right of any person to a retirement 7
allowance or optional retirement allowance under the provisions of 8
this chapter and all moneys and investments and income thereof are 9
exempt from any state, county, municipal, or other local tax and 10
shall not be subject to execution, garnishment, attachment, the 11
operation of bankruptcy or the insolvency laws, or other processes of 12
law whatsoever whether the same be in actual possession of the person 13
or be deposited or loaned and shall be unassignable except as herein 14
specifically provided. 15
(2) Subsection (1) of this section shall not prohibit the 16
department of retirement systems from complying with (a) a wage 17
assignment order for child support issued pursuant to chapter 26.18 18
RCW, (b) a notice of payroll deduction issued under chapter 26.23 19
RCW, (c) an order to withhold and deliver issued pursuant to chapter 20
74.20A RCW, (d) a mandatory benefits assignment order issued pursuant 21
to chapter 41.50 RCW, (e) a court order directing the department of 22
retirement systems to pay benefits directly to an obligee under a 23
dissolution order as defined in RCW 41.50.500(3) which fully complies 24
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 25
order expressly authorized by federal law. 26
(3) Subsection (1) of this section shall not be deemed to 27
prohibit a beneficiary of a retirement allowance from authorizing 28
deductions therefrom for payment of premiums due on any group 29
insurance policy or plan issued for the benefit of a group comprised 30
of public employees of the state of Washington. 31
(4) Deductions made in the past from retirement benefits are 32
hereby expressly recognized, ratified, and affirmed. Future 33
deductions may only be made in accordance with this section.34
(5) Subsection (1) of this section does not exempt any pension or 35
other benefit received under this chapter from tax under Title 82A 36
RCW (the new title created in section 1003 of this act).37
p. 40 SB 6346
Sec. 803. RCW 6.15.020 and 2011 c 162 s 3 are each amended to 1
read as follows: 2
(1) It is the policy of the state of Washington to ensure the 3
well-being of its citizens by protecting retirement income to which 4
they are or may become entitled. For that purpose generally and 5
pursuant to the authority granted to the state of Washington under 11 6
U.S.C. Sec. 522 (b)(2), the exemptions in this section relating to 7
retirement benefits are provided. 8
(2) Unless otherwise provided by federal law, any money received 9
by any citizen of the state of Washington as a pension from the 10
government of the United States, whether the same be in the actual 11
possession of such person or be deposited or loaned, shall be exempt 12
from execution, attachment, garnishment, or seizure by or under any 13
legal process whatever, and when a debtor dies, or absconds, and 14
leaves his or her family any money exempted by this subsection, the 15
same shall be exempt to the family as provided in this subsection. 16
This subsection shall not apply to child support collection actions 17
issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise 18
permitted by federal law , or to collection actions for taxes imposed 19
under Title 82A RCW (the new title created in section 1003 of this 20
act). 21
(3) The right of a person to a pension, annuity, or retirement 22
allowance or disability allowance, or death benefits, or any optional 23
benefit, or any other right accrued or accruing to any citizen of the 24
state of Washington under any employee benefit plan, and any fund 25
created by such a plan or arrangement, shall be exempt from 26
execution, attachment, garnishment, or seizure by or under any legal 27
process whatever. This subsection shall not apply to child support 28
collection actions issued under chapter 26.18, 26.23, or 74.20A RCW 29
if otherwise permitted by federal law , or to collection actions for 30
taxes imposed under Title 82A RCW (the new title created in section 31
1003 of this act) . This subsection shall permit benefits under any 32
such plan or arrangement to be payable to a spouse, former spouse, 33
child, or other dependent of a participant in such plan to the extent 34
expressly provided for in a qualified domestic relations order that 35
meets the requirements for such orders under the plan, or, in the 36
case of benefits payable under a plan described in 26 U.S.C. Sec. 37
403(b) or 408 of the internal revenue code of 1986, as amended, or 38
section 409 of such code as in effect before January 1, 1984, to the 39
extent provided in any order issued by a court of competent 40
p. 41 SB 6346
jurisdiction that provides for maintenance or support. This 1
subsection does not prohibit actions against an employee benefit 2
plan, or fund for valid obligations incurred by the plan or fund for 3
the benefit of the plan or fund. 4
(4) For the purposes of this section, the term "employee benefit 5
plan" means any plan or arrangement that is described in RCW 6
49.64.020, including any Keogh plan, whether funded by a trust or by 7
an annuity contract, and in 26 U.S.C. Sec. 401 (a) or 403 (a) of the 8
internal revenue code of 1986, as amended; or that is a tax-sheltered 9
annuity or a custodial account described in section 403 (b) of such 10
code or an individual retirement account or an individual retirement 11
annuity described in section 408 of such code; or a Roth individual 12
retirement account described in section 408A of such code; or a 13
medical savings account or a health savings account described in 14
sections 220 and 223, respectively, of such code; or a retirement 15
bond described in section 409 of such code as in effect before 16
January 1, 1984. The term "employee benefit plan" shall not include 17
any employee benefit plan that is established or maintained for its 18
employees by the government of the United States, by the state of 19
Washington under chapter 2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 20
41.37, 41.40, or 43.43 RCW or RCW 41.50.770, or by any agency or 21
instrumentality of the government of the United States.22
(5) An employee benefit plan shall be deemed to be a spendthrift 23
trust, regardless of the source of funds, the relationship between 24
the trustee or custodian of the plan and the beneficiary, or the 25
ability of the debtor to withdraw or borrow or otherwise become 26
entitled to benefits from the plan before retirement. This subsection 27
shall not apply to child support collection actions issued under 28
chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by 29
federal law , or to collection actions for taxes imposed under Title 30
82A RCW (the new title created in section 1003 of this act) . This 31
subsection shall permit benefits under any such plan or arrangement 32
to be payable to a spouse, former spouse, child, or other dependent 33
of a participant in such plan to the extent expressly provided for in 34
a qualified domestic relations order that meets the requirements for 35
such orders under the plan, or, in the case of benefits payable under 36
a plan described in 26 U.S.C. Sec. 403 (b) or 408 of the internal 37
revenue code of 1986, as amended, or section 409 of such code as in 38
effect before January 1, 1984, to the extent provided in any order 39
p. 42 SB 6346
issued by a court of competent jurisdiction that provides for 1
maintenance or support. 2
(6) Unless prohibited by federal law, nothing contained in 3
subsection (3), (4), or (5) of this section shall be construed as a 4
termination or limitation of a spouse's community property interest 5
in an employee benefit plan held in the name of or on account of the 6
other spouse, who is the participant or the account holder spouse. 7
Unless prohibited by applicable federal law, at the death of the 8
nonparticipant, nonaccount holder spouse, the nonparticipant, 9
nonaccount holder spouse may transfer or distribute the community 10
property interest of the nonparticipant, nonaccount holder spouse in 11
the participant or account holder spouse's employee benefit plan to 12
the nonparticipant, nonaccount holder spouse's estate, testamentary 13
trust, inter vivos trust, or other successor or successors pursuant 14
to the last will of the nonparticipant, nonaccount holder spouse or 15
the law of intestate succession, and that distributee may, but shall 16
not be required to, obtain an order of a court of competent 17
jurisdiction, including a nonjudicial binding agreement or order 18
entered under chapter 11.96A RCW, to confirm the distribution. For 19
purposes of subsection (3) of this section, the distributee of the 20
nonparticipant, nonaccount holder spouse's community property 21
interest in an employee benefit plan shall be considered a person 22
entitled to the full protection of subsection (3) of this section. 23
The nonparticipant, nonaccount holder spouse's consent to a 24
beneficiary designation by the participant or account holder spouse 25
with respect to an employee benefit plan shall not, absent clear and 26
convincing evidence to the contrary, be deemed a release, gift, 27
relinquishment, termination, limitation, or transfer of the 28
nonparticipant, nonaccount holder spouse's community property 29
interest in an employee benefit plan. For purposes of this 30
subsection, the term "nonparticipant, nonaccount holder spouse" means 31
the spouse of the person who is a participant in an employee benefit 32
plan or in whose name an individual retirement account is maintained. 33
As used in this subsection, an order of a court of competent 34
jurisdiction entered under chapter 11.96A RCW includes an agreement, 35
as that term is used under RCW 11.96A.220. 36
Sec. 804. RCW 41.24.240 and 1995 c 11 s 13 are each amended to 37
read as follows: 38
p. 43 SB 6346
(1) The right of any person to any future payment under the 1
provisions of this chapter shall not be transferable or assignable at 2
law or in equity, and none of the moneys paid or payable or the 3
rights existing under this chapter, shall be subject to execution, 4
levy, attachment, garnishment, or other legal process, or to the 5
operation of any bankruptcy or insolvency law. This section shall not 6
be applicable to any child support collection action taken under 7
chapter 26.18, 26.23, or 74.20A RCW. Benefits under this chapter 8
shall be payable to a spouse or ex-spouse to the extent expressly 9
provided for in any court decree of dissolution or legal separation 10
or in any court order or court-approved property settlement agreement 11
incident to any court decree of dissolution or legal separation.12
(2) Nothing in this chapter shall be construed to deprive any 13
participant, eligible to receive a pension hereunder, from receiving 14
a pension under any other act to which that participant may become 15
eligible by reason of services other than or in addition to his or 16
her services under this chapter. 17
(3) Subsection (1) of this section does not exempt any pension or 18
other benefit received under this chapter from tax under Title 82A 19
RCW (the new title created in section 1003 of this act).20
Sec. 805. RCW 41.32.052 and 2012 c 159 s 20 are each amended to 21
read as follows: 22
(1) Subject to subsections (2) ((and)), (3), and (4) of this 23
section, the right of a person to a pension, an annuity, a retirement 24
allowance, or disability allowance, to the return of contributions, 25
any optional benefit or death benefit, any other right accrued or 26
accruing to any person under the provisions of this chapter and the 27
moneys in the various funds created by this chapter shall be 28
unassignable, and are hereby exempt from any state, county, municipal 29
or other local tax, and shall not be subject to execution, 30
garnishment, attachment, the operation of bankruptcy or insolvency 31
laws, or other process of law whatsoever whether the same be in 32
actual possession of the person or be deposited or loaned.33
(2) This section shall not be deemed to prohibit a beneficiary of 34
a retirement allowance who is eligible: 35
(a) Under RCW 41.05.080 from authorizing monthly deductions 36
therefrom for payment of premiums due on any group insurance policy 37
or plan issued for the benefit of a group comprised of public 38
employees of the state of Washington or its political subdivisions;39
p. 44 SB 6346
(b) Under a group health care benefit plan approved pursuant to 1
RCW 28A.400.350 or 41.05.065 from authorizing monthly deductions 2
therefrom, of the amount or amounts of subscription payments, 3
premiums, or contributions to any person, firm, or corporation 4
furnishing or providing medical, surgical, and hospital care or other 5
health care insurance; or 6
(c) Under this system from authorizing monthly deductions 7
therefrom for payment of dues and other membership fees to any 8
retirement association composed of retired teachers and/or public 9
employees pursuant to a written agreement between the director and 10
the retirement association. 11
Deductions under (a) and (b) of this subsection shall be made in 12
accordance with rules that may be adopted by the director.13
(3) Subsection (1) of this section shall not prohibit the 14
department from complying with (a) a wage assignment order for child 15
support issued pursuant to chapter 26.18 RCW, (b) an order to 16
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 17
notice of payroll deduction )) an income withholding order issued 18
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 19
issued by the department, (e) a court order directing the department 20
of retirement systems to pay benefits directly to an obligee under a 21
dissolution order as defined in RCW 41.50.500(3) which fully complies 22
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 23
order expressly authorized by federal law. 24
(4) Subsection (1) of this section does not exempt any pension or 25
other benefit received under this chapter from tax under Title 82A 26
RCW (the new title created in section 1003 of this act).27
Sec. 806. RCW 41.34.080 and 2012 c 159 s 23 are each amended to 28
read as follows: 29
(1) Subject to subsections (2) ((and)), (3), and (4) of this 30
section, the right of a person to a pension, an annuity, a retirement 31
allowance, any optional benefit, any other right accrued or accruing 32
to any person under the provisions of this chapter, and the various 33
funds created by chapter 239, Laws of 1995; chapter 341, Laws of 34
1998; and chapter 247, Laws of 2000 and all moneys and investments 35
and income thereof, is hereby exempt from any state, county, 36
municipal, or other local tax, and shall not be subject to execution, 37
garnishment, attachment, the operation of bankruptcy or insolvency 38
laws, or other process of law whatsoever, whether the same be in 39
p. 45 SB 6346
actual possession of the person or be deposited or loaned and shall 1
be unassignable. 2
(2) This section shall not be deemed to prohibit a beneficiary of 3
a retirement allowance from authorizing deductions therefrom for 4
payment of premiums due on any group insurance policy or plan issued 5
for the benefit of a group comprised of public employees of the state 6
of Washington or its political subdivisions and that has been 7
approved for deduction in accordance with rules that may be adopted 8
by the state health care authority and/or the department. This 9
section shall not be deemed to prohibit a beneficiary of a retirement 10
allowance from authorizing deductions therefrom for payment of dues 11
and other membership fees to any retirement association or 12
organization the membership of which is composed of retired public 13
employees, if a total of three hundred or more of such retired 14
employees have authorized such deduction for payment to the same 15
retirement association or organization. 16
(3) Subsection (1) of this section shall not prohibit the 17
department from complying with (a) a wage assignment order for child 18
support issued pursuant to chapter 26.18 RCW, (b) an order to 19
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a 20
((notice of payroll deduction )) income withholding order issued 21
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 22
issued by the department, (e) a court order directing the department 23
to pay benefits directly to an obligee under a dissolution order as 24
defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 25
and 41.50.700, or (f) any administrative or court order expressly 26
authorized by federal law. 27
(4) Subsection (1) of this section does not exempt any pension or 28
other benefit received under this chapter from tax under Title 82A 29
RCW (the new title created in section 1003 of this act).30
Sec. 807. RCW 41.35.100 and 2012 c 159 s 24 are each amended to 31
read as follows: 32
(1) Subject to subsections (2) ((and)), (3), and (4) of this 33
section, the right of a person to a pension, an annuity, or 34
retirement allowance, any optional benefit, any other right accrued 35
or accruing to any person under the provisions of this chapter, the 36
various funds created by this chapter, and all moneys and investments 37
and income thereof, are hereby exempt from any state, county, 38
municipal, or other local tax, and shall not be subject to execution, 39
p. 46 SB 6346
garnishment, attachment, the operation of bankruptcy or insolvency 1
laws, or other process of law whatsoever, whether the same be in 2
actual possession of the person or be deposited or loaned and shall 3
be unassignable. 4
(2) This section does not prohibit a beneficiary of a retirement 5
allowance from authorizing deductions therefrom for payment of 6
premiums due on any group insurance policy or plan issued for the 7
benefit of a group comprised of public employees of the state of 8
Washington or its political subdivisions and which has been approved 9
for deduction in accordance with rules that may be adopted by the 10
state health care authority and/or the department. This section also 11
does not prohibit a beneficiary of a retirement allowance from 12
authorizing deductions therefrom for payment of dues and other 13
membership fees to any retirement association or organization the 14
membership of which is composed of retired public employees, if a 15
total of three hundred or more of such retired employees have 16
authorized such deduction for payment to the same retirement 17
association or organization. 18
(3) Subsection (1) of this section does not prohibit the 19
department from complying with (a) a wage assignment order for child 20
support issued pursuant to chapter 26.18 RCW, (b) an order to 21
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 22
notice of payroll deduction )) an income withholding order issued 23
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 24
issued by the department, (e) a court order directing the department 25
of retirement systems to pay benefits directly to an obligee under a 26
dissolution order as defined in RCW 41.50.500(3) which fully complies 27
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 28
order expressly authorized by federal law. 29
(4) Subsection (1) of this section does not exempt any pension or 30
other benefit received under this chapter from tax under Title 82A 31
RCW (the new title created in section 1003 of this act).32
Sec. 808. RCW 41.40.052 and 2012 c 159 s 26 are each amended to 33
read as follows: 34
(1) Subject to subsections (2) ((and)), (3), and (4) of this 35
section, the right of a person to a pension, an annuity, or 36
retirement allowance, any optional benefit, any other right accrued 37
or accruing to any person under the provisions of this chapter, the 38
various funds created by this chapter, and all moneys and investments 39
p. 47 SB 6346
and income thereof, are hereby exempt from any state, county, 1
municipal, or other local tax, and shall not be subject to execution, 2
garnishment, attachment, the operation of bankruptcy or insolvency 3
laws, or other process of law whatsoever, whether the same be in 4
actual possession of the person or be deposited or loaned and shall 5
be unassignable. 6
(2)(a) This section shall not be deemed to prohibit a beneficiary 7
of a retirement allowance from authorizing deductions therefrom for 8
payment of premiums due on any group insurance policy or plan issued 9
for the benefit of a group comprised of public employees of the state 10
of Washington or its political subdivisions and which has been 11
approved for deduction in accordance with rules that may be adopted 12
by the state health care authority and/or the department, and this 13
section shall not be deemed to prohibit a beneficiary of a retirement 14
allowance from authorizing deductions therefrom for payment of dues 15
and other membership fees to any retirement association or 16
organization the membership of which is composed of retired public 17
employees, if a total of three hundred or more of such retired 18
employees have authorized such deduction for payment to the same 19
retirement association or organization. 20
(b) This section does not prohibit a beneficiary of a retirement 21
allowance from authorizing deductions from that allowance for 22
charitable purposes on the same terms as employees and public 23
officers under RCW 41.04.035 and 41.04.036. 24
(3) Subsection (1) of this section shall not prohibit the 25
department from complying with (a) a wage assignment order for child 26
support issued pursuant to chapter 26.18 RCW, (b) an order to 27
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 28
notice of payroll deduction )) an income withholding order issued 29
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 30
issued by the department, (e) a court order directing the department 31
of retirement systems to pay benefits directly to an obligee under a 32
dissolution order as defined in RCW 41.50.500(3) which fully complies 33
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 34
order expressly authorized by federal law. 35
(4) Subsection (1) of this section does not exempt any pension or 36
other benefit received under this chapter from tax under Title 82A 37
RCW (the new title created in section 1003 of this act).38
p. 48 SB 6346
Sec. 809. RCW 41.44.240 and 2012 c 159 s 27 are each amended to 1
read as follows: 2
(1) The right of a person to a pension, annuity or a retirement 3
allowance, to the return of contribution, the pension, annuity or 4
retirement allowance itself, any optional benefit, any other right 5
accrued or accruing to any person under the provisions of this 6
chapter, and the moneys in the fund created under this chapter shall 7
not be subject to execution, garnishment, or any other process 8
whatsoever whether the same be in actual possession of the person or 9
be deposited or loaned. 10
(2) This section shall not apply to child support collection 11
actions taken under chapter 26.18, 26.23, or 74.20A RCW against 12
benefits payable under any such plan or arrangement. Benefits under 13
this chapter shall be payable to a spouse or ex-spouse to the extent 14
expressly provided for in any court decree of dissolution or legal 15
separation or in any court order or court-approved property 16
settlement agreement incident to any court decree of dissolution or 17
legal separation. 18
(3) Subsection (1) of this section does not exempt any pension or 19
other benefit received under this chapter from tax under Title 82A 20
RCW (the new title created in section 1003 of this act).21
Sec. 810. RCW 41.26.053 and 2012 c 159 s 21 are each amended to 22
read as follows: 23
(1) Subject to subsections (2) ((and)), (3), and (4) of this 24
section, the right of a person to a retirement allowance, disability 25
allowance, or death benefit, to the return of accumulated 26
contributions, the retirement, disability or death allowance itself, 27
any optional benefit, any other right accrued or accruing to any 28
person under the provisions of this chapter, and the moneys in the 29
fund created under this chapter, are hereby exempt from any state, 30
county, municipal, or other local tax and shall not be subject to 31
execution, garnishment, attachment, the operation of bankruptcy or 32
insolvency laws, or any other process of law whatsoever, whether the 33
same be in actual possession of the person or be deposited or loaned 34
and shall be unassignable. 35
(2) On the written request of any person eligible to receive 36
benefits under this section, the department may deduct from such 37
payments the premiums for life, health, or other insurance. The 38
request on behalf of any child or children shall be made by the legal 39
p. 49 SB 6346
guardian of such child or children. The department may provide for 1
such persons one or more plans of group insurance, through contracts 2
with regularly constituted insurance carriers or health care service 3
contractors. 4
(3) Subsection (1) of this section shall not prohibit the 5
department from complying with (a) a wage assignment order for child 6
support issued pursuant to chapter 26.18 RCW, (b) an order to 7
withhold and deliver issued pursuant to chapter 74.20A RCW, (c) ((a 8
notice of payroll deduction )) an income withholding order issued 9
pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order 10
issued by the department, (e) a court order directing the department 11
of retirement systems to pay benefits directly to an obligee under a 12
dissolution order as defined in RCW 41.50.500(3) which fully complies 13
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court 14
order expressly authorized by federal law. 15
(4) Subsection (1) of this section does not exempt any pension or 16
other benefit received under this chapter from tax under Title 82A 17
RCW (the new title created in section 1003 of this act).18
Sec. 811. RCW 43.43.310 and 2012 c 159 s 28 are each amended to 19
read as follows: 20
(1) Except as provided in subsections (2) ((and)), (3), and (4) 21
of this section, the right of any person to a retirement allowance or 22
optional retirement allowance under the provisions hereof and all 23
moneys and investments and income thereof are exempt from any state, 24
county, municipal, or other local tax and shall not be subject to 25
execution, garnishment, attachment, the operation of bankruptcy or 26
the insolvency laws, or other processes of law whatsoever, whether 27
the same be in actual possession of the person or be deposited or 28
loaned and shall be unassignable except as herein specifically 29
provided. 30
(2) Subsection (1) of this section shall not prohibit the 31
department of retirement systems from complying with (a) a wage 32
assignment order for child support issued pursuant to chapter 26.18 33
RCW, (b) an order to withhold and deliver issued pursuant to chapter 34
74.20A RCW, (c) ((a notice of payroll deduction )) an income 35
withholding order issued pursuant to RCW 26.23.060, (d) a mandatory 36
benefits assignment order issued pursuant to chapter 41.50 RCW, (e) a 37
court order directing the department of retirement systems to pay 38
benefits directly to an obligee under a dissolution order as defined 39
p. 50 SB 6346
in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 1
41.50.700, or (f) any administrative or court order expressly 2
authorized by federal law. 3
(3) Subsection (1) of this section shall not be deemed to 4
prohibit a beneficiary of a retirement allowance from authorizing 5
deductions therefrom for payment of premiums due on any group 6
insurance policy or plan issued for the benefit of a group comprised 7
of members of the Washington state patrol or other public employees 8
of the state of Washington, or for contributions to the Washington 9
state patrol memorial foundation. 10
(4) Subsection (1) of this section does not exempt any pension or 11
other benefit received under this chapter from tax under Title 82A 12
RCW (the new title created in section 1003 of this act).13
PART IX14
TAX RELIEF15
Sec. 901. RCW 82.08.0206 and 2024 c 3 s 1 are each amended to 16
read as follows: 17
(1) A working families' tax credit, funded by sales and use tax 18
imposed, is provided to eligible low-income persons for calendar 19
years beginning on or after January 1, 2022. The credit is refundable 20
and is calculated as provided in this section. 21
(2) For purposes of the credit in this section, the following 22
definitions apply: 23
(a)(i) "Eligible low-income person" means an individual who:24
(A) Is eligible for the credit provided in Title 26 U.S.C. Sec. 25
32 of the internal revenue code; 26
(B) Properly files a federal income tax return for the prior 27
federal tax year, and was a Washington resident during the year for 28
which the credit is claimed; and 29
(C) Has paid either retail sales tax under this chapter or use 30
tax under chapter 82.12 RCW, or both. There is a rebuttable 31
presumption that a person paid either retail sales tax under this 32
chapter or use tax under chapter 82.12 RCW, or both, if they were a 33
Washington resident during the year for which the credit is claimed.34
(ii) "Eligible low-income person" also means an individual who 35
meets the requirements provided in (a)(i)(B) of this subsection and 36
would otherwise qualify for the credit provided in Title 26 U.S.C. 37
p. 51 SB 6346
Sec. 32 of the internal revenue code except that one or any 1
combination of the following conditions apply: 2
(A) The individual filed a federal income tax return for the 3
prior federal tax year using a valid individual taxpayer 4
identification number in lieu of a social security number, and the 5
individual's spouse, if any, and all qualifying children, if any, 6
have a valid individual taxpayer identification number or a social 7
security number; ((or))8
(B) The individual filed their federal income tax return for the 9
prior federal tax year under the married filing separately status. 10
For purposes of the refund provided in this section, the special rule 11
for separated spouse under Title 26 U.S.C. Sec. 32 (d)(2)(B) of the 12
internal revenue code does not apply; or13
(C) The individual does not meet the age requirement under Title 14
26 U.S.C. Sec. 32 (c)(1)(A)(ii)(II) of the internal revenue code, but 15
is at least age 18 by the end of the prior federal tax year.16
(b) "Income" means earned income as defined by Title 26 U.S.C. 17
Sec. 32 of the internal revenue code. 18
(c) "Individual" means an individual or an individual and that 19
individual's spouse if they file a federal joint income tax return.20
(d) "Internal revenue code" means the United States internal 21
revenue code of 1986, as amended, as of June 9, 2022, or such 22
subsequent date as the department may provide by rule consistent with 23
the purpose of this section. 24
(e) "Maximum qualifying income" means the maximum federally 25
adjusted gross income for the prior federal tax year.26
(f) "Qualifying child" means a qualifying child as defined by 27
Title 26 U.S.C. Sec. 32 of the internal revenue code, except the 28
child may have a valid individual taxpayer identification number in 29
lieu of a social security number. 30
(g) "Washington resident" means an individual who is physically 31
present and residing in this state for at least 183 days. "Washington 32
resident" also includes an individual who is not physically present 33
and residing in this state for at least 183 days but is the spouse of 34
a Washington resident. For purposes of this subsection, "day" means a 35
calendar day or any portion of a calendar day. 36
(3)(a) Except as provided in (b) and (c) of this subsection, for 37
calendar year 2023 and thereafter, the working families' tax credit 38
refund amount for the prior calendar year is: 39
(i) $300 for eligible persons with no qualifying children;40
p. 52 SB 6346
(ii) $600 for eligible persons with one qualifying child;1
(iii) $900 for eligible persons with two qualifying children; or2
(iv) $1,200 for eligible persons with three or more qualifying 3
children. 4
(b) Except as provided in (f) of this subsection, the refund 5
amounts provided in (a) of this subsection will be reduced, rounded 6
to the nearest dollar, as follows: 7
(i) For eligible persons with no qualifying children, beginning 8
at $2,500 of income below the federal phase-out income for the prior 9
federal tax year, by 18 percent per additional dollar of income until 10
the minimum credit amount as specified in (c) of this subsection is 11
reached. 12
(ii) For eligible persons with one qualifying child, beginning at 13
$5,000 of income below the federal phase-out income for the prior 14
federal tax year, by 12 percent per additional dollar of income until 15
the minimum credit amount as specified in (c) of this subsection is 16
reached. 17
(iii) For eligible persons with two qualifying children, 18
beginning at $5,000 of income below the federal phase-out income for 19
the prior federal tax year, by 15 percent per additional dollar of 20
income until the minimum credit amount as specified in (c) of this 21
subsection is reached. 22
(iv) For eligible persons with three or more qualifying children, 23
beginning at $5,000 of income below the federal phase-out income for 24
the prior federal tax year, by 18 percent per additional dollar of 25
income until the minimum credit amount as specified in (c) of this 26
subsection is reached. 27
(c) If the refund for an eligible person as calculated in this 28
section is greater than zero cents, but less than $50, the refund 29
amount is $50. 30
(d) The refund amounts in this section shall be adjusted for 31
inflation every year beginning January 1, 2024, based upon changes in 32
the consumer price index that are published by November 15th of the 33
previous year for the most recent 12-month period. The adjusted 34
refund amounts must be rounded to the nearest $5. 35
(e) For purposes of this section, "consumer price index" means, 36
for any 12-month period, the average consumer price index for that 37
12-month period for the Seattle, Washington area for urban wage 38
earners and clerical workers, all items, compiled by the bureau of 39
labor statistics, United States department of labor.40
p. 53 SB 6346
(f) The percentage rate of remittance reductions in (b) of this 1
subsection must be adjusted every year beginning January 1, 2023, 2
based on calculations by the department that result in the minimum 3
credit being received at the maximum qualifying income level.4
(4) The working families' tax credit shall be administered as 5
provided in this subsection. 6
(a) The refund paid under this section will be paid to eligible 7
filers who apply pursuant to this subsection. 8
(i) Application must be made to the department in a form and 9
manner determined by the department. If the application process is 10
initially done electronically, the department must provide a paper 11
application upon request. The application must include any 12
information and documentation as required by the department. The 13
department may use the information provided by the individual to 14
calculate the refund amount. Income reported on the application may 15
be rounded to the nearest dollar. 16
(ii) An individual applying for the credit under this section 17
must keep records necessary for the department to verify eligibility 18
under this section. Any information provided by the individual is 19
subject to audit verification by the department. 20
(iii) In addition to information provided on the application, the 21
department may verify that an individual qualifies as a Washington 22
resident through the use of automated verification tools or other 23
reasonable means. 24
(iv)(A) Except as provided in (a)(iv)(B) of this subsection (4), 25
application for a refund under this section must be made in the year 26
following the year for which the federal tax return was filed, but in 27
no case may any refund be provided for any period before January 1, 28
2022. 29
(B)(I) A person may apply for any refund for which they were 30
eligible but did not claim under (a)(iv)(A) of this subsection (4) 31
for up to three additional years. A person must complete an 32
application to claim this refund within the three calendar years 33
after the end of the calendar year in which the federal income tax 34
return for that tax year was legally due for federal income tax 35
purposes, without regard to any federal extension.36
(II) If a person seeks to increase the amount of a refund that 37
has been made under this subsection (4), the person must apply for 38
the amended refund within the nonclaims period established under RCW 39
82.32.060(1). 40
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(v) A person may not claim a credit on behalf of a deceased 1
individual. No individual may claim a credit under this section for 2
any year in a disallowance period under Title 26 U.S.C. Sec. 32 (k)(1) 3
of the internal revenue code or for any year for which the individual 4
is ineligible to claim the credit in Title 26 U.S.C. Sec. 32 of the 5
internal revenue code by reason of Title 26 U.S.C. Sec. 32 (k)(2) of 6
the internal revenue code. 7
(b) The department shall protect the privacy and confidentiality 8
of personal data of refund recipients in accordance with chapter 9
82.32 RCW. 10
(c) The department shall, in conjunction with other agencies or 11
organizations, design and implement a public information campaign to 12
inform potentially eligible persons of the existence of, and 13
requirements for, the credit provided in this section.14
(d) The department must work with the internal revenue service of 15
the United States to administer the credit on an automatic basis as 16
soon as practicable. 17
(5) Receipt of a refund under this section may not be used in 18
eligibility determinations for any state income support programs or 19
in making public charge determinations. 20
(6) The department may adopt rules necessary to implement this 21
section. This includes establishing a date by which applications will 22
be accepted, with the aim of accepting applications as soon as 23
possible. 24
(7) The department must review the application and determine 25
eligibility for the working families' tax credit based on information 26
provided by the applicant and through audit and other administrative 27
records, including, when it deems it necessary, verification through 28
information from the internal revenue service of the United States, 29
other federal agencies, Washington state agencies, third-party 30
entities, or other persons. The department may accept a signed 31
attestation in a form and manner determined by the department from an 32
individual to presumptively validate that an individual meets all the 33
eligibility requirements as provided in this section. The signed 34
attestation is subject to audit verification by the department to 35
validate an individual's eligibility for the working families' tax 36
credit. 37
(8) If, upon review of internal revenue service data or other 38
information obtained by the department, it appears that an individual 39
received a refund that the individual was not entitled to, or 40
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received a larger refund than the individual was entitled to, the 1
department may assess against the individual the overpaid amount. The 2
department may also assess such overpaid amount against the 3
individual's spouse if the refund in question was based on both 4
spouses filing a joint federal income tax return for the year for 5
which the refund was claimed. 6
(a) Interest as provided under RCW 82.32.050 applies to 7
assessments authorized under this subsection (8) starting six months 8
after the date the department issued the assessment until the amount 9
due under this subsection (8) is paid in full to the department. 10
Except as otherwise provided in this subsection, penalties may not be 11
assessed on amounts due under this subsection. 12
(b) If an amount due under this subsection is not paid in full by 13
the date due, or the department issues a warrant for the collection 14
of amounts due under this subsection, the department may assess the 15
applicable penalties under RCW 82.32.090. Penalties under this 16
subsection (8)(b) may not be made due until six months after the 17
department's issuance of the assessment. 18
(c) If the department finds by clear, cogent, and convincing 19
evidence that an individual knowingly submitted, caused to be 20
submitted, or consented to the submission of, a fraudulent claim for 21
refund under this section, the department must assess a penalty of 50 22
percent of the overpaid amount. This penalty is in addition to any 23
other applicable penalties assessed in accordance with (b) of this 24
subsection (8). 25
(9) If, within the period allowed for refunds under RCW 26
82.32.060, the department finds that an individual received a lesser 27
refund than the individual was entitled to, the department must remit 28
the additional amount due under this section to the individual.29
(10) Interest does not apply to refunds provided under this 30
section. 31
(11) Chapter 82.32 RCW applies to the administration of this 32
section. 33
Sec. 902. 2023 c 456 s 3 (uncodified) is amended to read as 34
follows: 35
(1) This section is the tax preference performance statement for 36
the tax preference contained in section 2, chapter 195, Laws of 2021 37
((and)), section 1, chapter 456, Laws of 2023 , and section 901, 38
chapter . . ., Laws of 2026 (section 901 of this act) . This 39
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performance statement is only intended to be used for subsequent 1
evaluation of the tax preference. It is not intended to create a 2
private right of action by any party or be used to determine 3
eligibility for the preferential tax treatment. 4
(2) The legislature categorizes this tax preference as one 5
intended to provide tax relief for certain individuals as indicated 6
in RCW 82.32.808(2)(e). 7
(3) It is the legislature's specific public policy objective to 8
allow low-income and middle-income workers to recover some or all of 9
the sales tax they pay to support state and local government as a way 10
to increase their economic security and to decrease the regressivity 11
of our state tax code. It is the legislature's intent to provide a 12
sales and use tax credit, in the form of a remittance, to low-income 13
and middle-income working families. 14
(4) The joint legislative audit and review committee shall review 15
this preference in 2028 and every 10 years thereafter. If a review 16
finds that the working families' tax credit does not provide 17
meaningful financial relief to low-income and middle-income 18
households, RCW 82.08.0206 expires at the end of the calendar year 19
two years after the adoption of the final report containing that 20
finding. The joint legislative audit and review committee shall 21
provide written notice of the expiration date of RCW 82.08.0206 to 22
the department of revenue, the chief clerk of the house of 23
representatives, the secretary of the senate, the office of the code 24
reviser, and others as deemed appropriate by the joint legislative 25
audit and review committee. In its review of the program, the joint 26
legislative audit and review committee should use at least the 27
following metrics: Size of the benefit per household, number of 28
household beneficiaries statewide, and demographic information of 29
beneficiaries to include family size, income level, race and 30
ethnicity, and geographic location. (5) In order to obtain the data 31
necessary to perform the review in subsection (4) of this section, 32
the joint legislative audit and review committee may refer to the 33
remittance data prepared by the department of revenue.34
NEW SECTION. Sec. 903. A new section is added to chapter 82.08 35
RCW to read as follows: 36
(1) Beginning January 1, 2029, the tax levied by RCW 82.08.020 37
does not apply to the sales of grooming and hygiene products.38
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(2) For the purpose of this section, "grooming and hygiene 1
products" means soaps and cleaning solutions, shampoo, toothpaste, 2
mouthwash, antiperspirants, and sun tan lotions and screens, 3
regardless of whether the item meets the definition of "over-the-4
counter drug," as defined in RCW 82.08.0281. 5
NEW SECTION. Sec. 904. A new section is added to chapter 82.12 6
RCW to read as follows: 7
(1) Beginning January 1, 2029, the tax levied by RCW 82.12.020 8
does not apply to the use of grooming and hygiene products.9
(2) For purposes of this section, "grooming and hygiene 10
products" has the same meaning as provided in section 903 of this 11
act. 12
Sec. 905. RCW 82.04.4451 and 2022 c 295 s 1 are each amended to 13
read as follows: 14
(1) In computing the tax imposed under this chapter, a credit is 15
allowed against the amount of tax otherwise due under this chapter, 16
as provided in this section. Except for taxpayers that report at 17
least 50 percent of their taxable amount under RCW 82.04.255, 18
82.04.290(2)(a), and 82.04.285, the maximum credit for a taxpayer for 19
a reporting period is (($55)) $110 multiplied by the number of months 20
in the reporting period, as determined under RCW 82.32.045. For a 21
taxpayer that reports at least 50 percent of its taxable amount under 22
RCW 82.04.255, 82.04.290(2)(a), and 82.04.285, the maximum credit for 23
a reporting period is (($160)) $320 multiplied by the number of 24
months in the reporting period, as determined under RCW 82.32.045.25
(2) When the amount of tax otherwise due under this chapter is 26
equal to or less than the maximum credit, a credit is allowed equal 27
to the amount of tax otherwise due under this chapter.28
(3) When the amount of tax otherwise due under this chapter 29
exceeds the maximum credit, a reduced credit is allowed equal to 30
twice the maximum credit, minus the tax otherwise due under this 31
chapter, but not less than zero. 32
(4) The department may prepare a tax credit table consisting of 33
tax ranges using increments of no more than five dollars and a 34
corresponding tax credit to be applied to those tax ranges. The table 35
shall be prepared in such a manner that no taxpayer will owe a 36
greater amount of tax by using the table than would be owed by 37
performing the calculation under subsections (1) through (3) of this 38
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section. A table prepared by the department under this subsection 1
must be used by all taxpayers in taking the credit provided in this 2
section. 3
Sec. 906. RCW 82.32.045 and 2023 c 374 s 12 are each amended to 4
read as follows: 5
(1) Except as otherwise provided in this chapter and subsection 6
(6) of this section, payments of the taxes imposed under chapters 7
82.04, 82.08, 82.12, 82.14, 82.16, and 82.27 RCW, along with reports 8
and returns on forms prescribed by the department, are due monthly 9
within 25 days after the end of the month in which the taxable 10
activities occur. 11
(2) The department of revenue may relieve any taxpayer or class 12
of taxpayers from the obligation of remitting monthly and may require 13
the return to cover other longer reporting periods, but in no event 14
may returns be filed for a period greater than one year. Except as 15
provided in subsection (3) of this section, for these taxpayers, tax 16
payments are due on or before the last day of the month next 17
succeeding the end of the period covered by the return.18
(3) For annual filers, tax payments, along with reports and 19
returns on forms prescribed by the department, are due on or before 20
April 15th of the year immediately following the end of the period 21
covered by the return. 22
(4) The department of revenue may also require verified annual 23
returns from any taxpayer, setting forth such additional information 24
as it may deem necessary to correctly determine tax liability.25
(5) Notwithstanding subsections (1) and (2) of this section, the 26
department may relieve any person of the requirement to file returns 27
if the following conditions are met: 28
(a) The person's value of products, gross proceeds of sales, or 29
gross income of the business, from all business activities taxable 30
under chapter 82.04 RCW, is less than (($125,000)) $250,000 per year;31
(b) The person's gross income of the business from all activities 32
taxable under chapter 82.16 RCW is less than $24,000 per year; and33
(c) The person is not required to collect or pay to the 34
department of revenue any other tax or fee which the department is 35
authorized to collect. 36
(6)(a) Taxes imposed under chapter 82.08 or 82.12 RCW on taxable 37
events that occur beginning January 1, 2019, through June 30, 2019, 38
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and payable by a consumer directly to the department are due, on 1
returns prescribed by the department, by July 25, 2019.2
(b) This subsection (6) does not apply to the reporting and 3
payment of taxes imposed under chapters 82.08 and 82.12 RCW:4
(i) On the retail sale or use of motor vehicles, vessels, or 5
aircraft; or 6
(ii) By consumers who are engaged in business, unless the 7
department has relieved the consumer of the requirement to file 8
returns pursuant to subsection (5) of this section.9
Sec. 907. RCW 82.04.288 and 2025 c 420 s 201 are each amended to 10
read as follows: 11
(1) Beginning January 1, 2026, in addition to all other taxes 12
imposed under this chapter, persons must pay a surcharge on 13
Washington taxable income over $250,000,000 in a calendar year.14
(2) The rate of the tax is 0.5 percent of the amount of 15
Washington taxable income over $250,000,000. 16
(3)(a) Any Washington taxable income subject to the tax in RCW 17
82.04.29004 is exempt from the surcharge imposed in this section.18
(b)(i) Any Washington taxable income subject to the manufacturing 19
tax rates in RCW 82.04.240, 82.04.2404, 82.04.241, 82.04.260, 20
82.04.2602, 82.04.287, 82.04.2909, or 82.04.294(1) is exempt from the 21
surcharge imposed in this section. 22
(ii) Any Washington taxable income attributable to the wholesale 23
or retail sale of products so manufactured by a person subject to the 24
manufacturing tax rates specified in (b)(i) of this subsection (3) is 25
exempt from the surcharge imposed in this section.26
(iii) Any Washington taxable income attributable to retail sales 27
that are exempt from the imposition of sales tax in RCW 82.08.0293, 28
82.08.0297, and 82.08.0281 is exempt from the surcharge imposed in 29
this section. 30
(iv) Any Washington taxable income subject to the tax rates in 31
RCW 82.04.260(12) is exempt from the surcharge imposed in this 32
section. 33
(v) Any Washington taxable income attributable to the wholesale 34
or retail sale of petroleum products by a person who is both located 35
in a state other than Washington and the owner of such materials 36
processed for it in Washington by an affiliated processor for hire 37
subject to the rate in RCW 82.04.280(1)(c), is exempt from the 38
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surcharge imposed in this section. For the purposes of this 1
subsection (3)(b)(v), the following definitions apply:2
(A) "Affiliated" means a person that directly or indirectly, 3
through one or more intermediaries, controls, is controlled by, or is 4
under common control with another person; 5
(B) "Control" means the possession, directly or indirectly, of 6
more than 50 percent of the power to direct or cause the direction of 7
the management and policies of a person, whether through the 8
ownership of voting shares, by contract, or otherwise; and9
(C) "Petroleum product" has the same meaning as in RCW 82.21.020.10
(4)(a) The surcharge imposed under this section does not apply to 11
taxable income for which a credit is allowed under RCW 82.04.440.12
(b) The surcharge imposed under this section does not apply to a 13
person engaged in business primarily as a farmer or eligible apiarist 14
as defined in RCW 82.04.213. 15
(c) The surcharge imposed under this section does not apply to a 16
person subject to the tax imposed pursuant to RCW 82.04.299.17
(d) The surcharge imposed under this section does not apply to 18
taxable income for wholesale and retail transactions of fuel as 19
defined in RCW 82.38.020. 20
(5) Any income that is exempt from the surcharge imposed under 21
this section is not included in the calculation of Washington taxable 22
income in subsection (1) of this section. 23
(6) This section expires December 31, ((2029)) 2028.24
NEW SECTION. Sec. 908. Section 905 of this act applies to taxes 25
initially due and payable on or after January 1, 2029.26
PART X27
MISCELLANEOUS28
Sec. 1001. RCW 1.90.100 and 2024 c 5 s 1 (Initiative Measure No. 29
2111) are each amended to read as follows: 30
(1) Neither the state nor any county, city, or other local 31
jurisdiction in the state of Washington may tax any individual person 32
on any form of personal income. For the purposes of this chapter, 33
"income" has the same meaning as "gross income" in 26 U.S.C. Sec. 61.34
(2) Subsection (1) of this section does not apply to the tax 35
authorized in chapter 82A.--- RCW (the new chapter created in section 36
1003 of this act).37
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NEW SECTION. Sec. 1002. NULL AND VOID. If a court of final 1
jurisdiction invalidates section 201 of this act, this act is null 2
and void in its entirety.3
NEW SECTION. Sec. 1003. CODIFICATION. Sections 101 through 704 4
and 708 through 711 of this act constitute a new chapter in a new 5
title in the Revised Code of Washington, to be codified as Title 82A 6
RCW.7
NEW SECTION. Sec. 1004. CONFORMING AMENDMENTS. If any 8
amendments in this act, or any sections enacted or affected by 9
chapter . . ., Laws of 2026 (this act), are enacted in a 2026 10
legislative session that do not take cognizance of chapter . . ., 11
Laws of 2026 (this act), the code reviser must prepare a bill for 12
introduction in the 2027 or 2028 legislative session that 13
incorporates any such amendments into the reorganization adopted by 14
chapter . . ., Laws of 2026 (this act) and corrects any incorrect 15
cross-references.16
NEW SECTION. Sec. 1005. (1) Section 901 of this act takes 17
effect January 1, 2029.18
(2) Refunds may not be provided under section 901 of this act for 19
any period before January 1, 2028. 20
NEW SECTION. Sec. 1006. Except as provided in section 902 of 21
this act, RCW 82.32.805 and 82.32.808 do not apply to this act.22
NEW SECTION. Sec. 1007. The tax imposed in this act is 23
necessary for the support of the state government and its existing 24
public institutions.25
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