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WashingtonHB 20202025-2026 Regular SessionHouse

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

Sponsored By: April Berg (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

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

Large financial institutions pay broader extra tax

Beginning January 1, 2026, Washington expands its existing 1.2% additional tax to covered payment card processing income. It also applies to covered income taxed under the general service-business rates. Covered institutions generally belong to financial groups with at least $1 billion in net income in the previous calendar year. A firm can remain covered after consolidated filing ends if it paid this tax in two of the previous four years. Revenue goes to the state general fund.

Large tech groups face broader workforce tax

Beginning January 1, 2026, Washington extends its 1.22% workforce education surcharge to covered payment card processing income. It also covers income taxed under the general service-business rates. Covered groups must include an advanced computing business and have more than $25 billion in worldwide revenue the previous year. The annual group cap remains $9 million, with statutory exceptions. Hospitals, qualifying provider clinics, and specified affiliates are exempt; financial institutions and groups mainly providing mobile or transmission services are excluded. Payments are due quarterly, and revenue goes to the Workforce Education Investment Account.

Card processors face higher taxes and deductions

Beginning January 1, 2026, Washington taxes covered payment card processing income at 3.1%. Eligible processors can subtract interchange fees, network fees, and fee shares kept by other processors; the deduction is not retroactive. Card issuing, card authorization, network clearance and settlement, retail services, and retail hardware or software sales are excluded. Processors that also issue cards instead pay the general 1.75% or 1.5% rate and cannot use the new deduction. That same treatment covers specified transactions involving processors operating or affiliated with payment networks and paying affiliated financial institutions.

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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