WashingtonSB 57942025-2026 Regular SessionSenate

Adopting recommendations from the tax preference performance review process, eliminating obsolete tax preferences, clarifying legislative intent, and addressing changes in constitutional law.

Sponsored By: Jesse Salomon (Democratic)

Became Law

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Bill Overview

Analyzed Economic Effects

10 provisions identified: 2 benefits, 8 costs, 0 mixed.

Dairy businesses get temporary lower taxes

Qualifying dairy manufacturing and sales receive a 0.138% B&O tax rate from July 1, 2035, through December 31, 2045. Eligible goods include specified dairy products, their by-products, and products containing at least 70% qualifying dairy by weight or volume. Qualifying buyers must transport goods out of Washington or use them as ingredients or components in dairy manufacturing. Sales on or after July 1, 2023, for dairy manufacturing in Washington are excluded. Sellers must keep proof of qualifying transport or manufacturing use for the legally required recordkeeping period.

Seafood and produce businesses get lower taxes

Beginning July 1, 2035, qualifying seafood and processed fruit or vegetable businesses pay a 0.138% B&O tax rate. Seafood must remain raw, raw frozen, or raw salted after manufacturing; qualifying sales require buyers to transport it out of Washington. Produce processing includes canning, preserving, freezing, processing, or drying, but excludes cannabis products. Qualifying wholesale produce sellers must have made the goods, and buyers must transport them out of Washington. Sellers must keep proof of qualifying transport for the legally required recordkeeping period.

Bank acquisitions trigger credit union tax

Beginning October 1, 2025, some Washington-organized credit unions lose their B&O tax exemption and pay 1.2% of gross income. This applies when they merge with or acquire a bank regulated by Washington's Department of Financial Institutions. Transactions with regulatory approval applications submitted before October 1, 2025, are excluded.

Bullion sellers lose special tax rule

The law removes a special B&O tax rule for sales of precious metal bullion and monetized bullion. That rule governed how those sales counted as wholesale or retail sales and how businesses calculated tax. The provided text does not establish the resulting tax rate or whether a particular seller pays more.

Foreign bank branches face added tax

Foreign bank agencies and branches are included in Washington's additional 1.2% B&O tax, even when otherwise exempt under the cited law. The tax applies to qualifying groups with at least $1 billion in net income in the previous calendar year. An alternative legal test applies when consolidated financial statements are no longer required. The tax is based on gross income taxable under the service-business tax rules, not the group's net income.

International service businesses lose hiring credit

The law ends a B&O tax credit for new jobs in international service activities in eligible areas. Businesses that qualified lose this tax savings. The provided text does not state the credit amount.

Lenders lose mortgage interest tax deduction

Businesses lose a B&O tax deduction for interest on investments or loans backed by mortgages or deeds of trust. The law also repeals a separate tax rule for loan interest. The provided text does not explain that separate repeal's effect on lenders' taxes. These are business tax changes, not a repeal of households' mortgage interest deduction.

Power and gas businesses lose credit

The law ends a business and occupation (B&O) tax credit for light, power, and gas distribution businesses. Businesses that claimed it lose that tax savings. The provided text does not state the credit amount or any change in household utility bills.

Self-storage businesses pay tax on rentals

Beginning April 1, 2026, self-service storage businesses pay B&O tax on rentals or leases of individual storage spaces. Rentals lasting 30 days or longer do not qualify for the stated real-estate sales exclusion. The tax follows the service-business rate rules; the provided provision does not state a numerical rate. It does not set the prices customers pay.

Title insurance agents lose tax preference

Beginning January 1, 2026, licensed title insurance agents lose access to the 0.484% B&O tax rate under this provision. Their taxes follow the otherwise applicable law. The provided text does not specify their replacement rate.

Sponsors & Cosponsors

Sponsor

Jesse Salomon
Democratic • Senate

Cosponsors

Bill Ramos
Democratic • Senate
Bob Hasegawa
Democratic • Senate
Emily Alvarado
Democratic • Senate
Jessica Bateman
Democratic • Senate
Lisa Wellman
Democratic • Senate
Liz Lovelett
Democratic • Senate
Manka Dhingra
Democratic • Senate
Marcus Riccelli
Democratic • Senate
Noel Frame
Democratic • Senate
T'wina Nobles
Democratic • Senate
Yasmin Trudeau
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 125 • No: 117

Senate vote • 4/24/2025

Final Passage as Amended by the House

Yes: 26 • No: 22

House vote • 4/23/2025

Final Passage as Amended by the House

Yes: 53 • No: 45

Senate vote • 4/19/2025

3rd Reading & Final Passage

Yes: 26 • No: 22 • Other: 1