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WashingtonHB 20202025-2026 Regular SessionHouseWALLET

Creating a business and occupation tax deduction and increasing the rate for persons conducting payment card processing activities.

Sponsored By: April Berg (Democratic)

Became Law

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 0 benefits, 1 costs, 1 mixed.

Extra 1.2% tax on large financial institutions

Beginning January 1, 2026, large financial institutions pay an extra 1.2% business and occupation (B&O) tax. It applies to gross income taxed under the general service rules. It only applies to institutions in a consolidated group that reported at least $1,000,000,000 in net income last year. The Department of Revenue can require disclosure of group members to enforce the tax. All revenue goes to the state general fund.

Card processors get deduction, face higher rate

Beginning January 1, 2026, payment card processors get a new business and occupation (B&O) tax deduction. They can subtract interchange fees, network fees, and amounts kept by other processors from their taxable amount. The law also sets a 3.1% B&O tax rate on gross income from card processing. The 3.1% rate does not apply if the processor runs the card network, is affiliated with the network and pays an affiliated bank, or is also the issuer. Those excluded activities are taxed at the general service rate and cannot use this new deduction.

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Sponsors & Cosponsors

Sponsor

  • April Berg

    Democratic • House

Cosponsors

  • Ed Orcutt

    Republican • House

  • Joe Fitzgibbon

    Democratic • House

  • Lisa Parshley

    Democratic • House

  • Mia Gregerson

    Democratic • House

  • Timm Ormsby

    Democratic • House

Roll Call Votes

All Roll Calls

Yes: 230 • No: 5

Senate vote • 4/26/2025

3rd Reading & Final Passage

Yes: 47 • No: 0 • Other: 1

House vote • 4/17/2025

3rd Reading & Final Passage

Yes: 92 • No: 1 • Other: 5

House vote • 4/17/2025

Final Passage on Reconsideration

Yes: 91 • No: 4 • Other: 3

Actions Timeline

  1. Effective date 1/1/2026.

    5/20/2025House

  2. Chapter 401, 2025 Laws.

    5/20/2025House

  3. Governor signed.

    5/20/2025legislature

  4. Speaker signed.

    4/27/2025legislature

  5. President signed.

    4/27/2025legislature

  6. Delivered to Governor.

    4/27/2025legislature

  7. Third reading, passed; yeas, 47; nays, 0; absent, 0; excused, 1.

    4/26/2025House

  8. Rules suspended. Placed on Third Reading.

    4/26/2025House

  9. Placed on second reading by Rules Committee.

    4/25/2025House

  10. Passed to Rules Committee for second reading.

    4/25/2025House

  11. WM - Majority; do pass.

    4/25/2025House

  12. First reading, referred to Ways & Means.

    4/18/2025House

  13. Third reading, passed; yeas, 91; nays, 4; absent, 0; excused, 3.

    4/17/2025House

  14. Vote on third reading will be reconsidered.

    4/17/2025House

  15. Third reading, passed; yeas, 92; nays, 1; absent, 0; excused, 5.

    4/17/2025House

  16. Rules suspended. Placed on Third Reading.

    4/17/2025House

  17. 1st substitute bill substituted.

    4/17/2025House

  18. Rules Committee relieved of further consideration. Placed on second reading.

    4/14/2025House

  19. APP - Executive action taken by committee.

    4/8/2025House

  20. Referred to Rules 2 Review.

    4/8/2025House

  21. APP - Majority; 1st substitute bill be substituted, do pass.

    4/8/2025House

  22. Referred to Appropriations.

    3/31/2025House

  23. FIN - Executive action taken by committee.

    3/27/2025House

  24. FIN - Majority; do pass.

    3/27/2025House

  25. First reading, referred to Finance.

    2/24/2025House

Bill Text

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