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State will retain about 70% of annual income tax revenues

Gov. Ferguson has signed ESSB 6346, which imposes an income tax. The bill additionally reduces some sales taxes and some business and occupation (B&O) taxes and expands eligibility for the Working Families Tax Credit (WFTC). (I wrote about the details of the final bill last week.) The fiscal note for the enacted bill estimates that […]

New funding for wildfires and WEIA

Interest on loans that are primarily secured by first mortgages or trust deeds on non-transient residential properties is currently subject to the service and other activities B&O tax rate if the loan originator is located in more than 10 states (RCW 82.04.29005). Otherwise, such interest is deducted from B&O tax. SHB 2089, which has been […]

Baseball stats and tax policy

This Opening Day seems like a pertinent time to discuss tax policy, as the Legislature made a major tax change that could impact Washington’s tax structure’s Wins Above Replacement. Although taxes are not the only reason businesses and individuals choose to locate in a state, they are a factor. Some tax structures are more competitive […]

Key provisions in the income tax bill as passed by the Legislature

The 2026 supplemental operating budget, as passed by the Legislature, assumes that the income tax bill (ESSB 6346) would reduce revenues to funds subject to the outlook (NGFO) by $55.4 million in 2025–27 and increase NGFO revenues by $2.292 billion in 2027–29. (The governor has not yet signed either the operating budget or the income […]

Revenue reduction from estate tax bill now estimated to be smaller than assumed in the budget

Several of the major tax bills passed by the Legislature this year were changed at the end of session in ways that could affect revenues. (For example: ESSB 6346, ESB 6228, EHB 2487, and ESB 6347.) For each of these bills, the supplemental operating budget assumes the revenues in the fiscal note available at the […]

Paid family and medical leave rate structure changed again, but it does not improve program solvency

The Legislature has passed 2SSB 5292. If signed by Gov. Ferguson, the bill would change the paid family and medical leave (PFML) tax rate-setting formula. However, more will need to be done to address program solvency. Initially, the tax rate for the program was set at 0.4%. Beginning in 2021, the rate was set based […]

Bracket creep in Washington’s estate and income tax proposals

Typically, federal and state tax codes automatically adjust various provisions—like exclusion and deduction amounts—for inflation. This helps to prevent bracket creep. As the Tax Foundation defines it, bracket creep “occurs when inflation, rather than real increases in income, pushes people into higher income tax brackets or reduces the value they receive from credits and deductions.” […]

Proposed House striking amendment to income tax bill is supported by Gov. Ferguson, but there’s no fiscal note yet

The Senate passed the income tax bill (ESSB 6346) on Feb. 16. (I wrote about the bill as passed here.) As passed by the Senate, the income tax would increase revenues by $2.706 billion in 2027–29 and $7.537 billion in 2029–31. It would use some of those revenues for local government public defense ($189.4 million […]

House Finance version of estate tax bill would reinstate the exclusion amount glitch

Last year the Legislature increased estate tax rates and fixed a long-term problem with the inflation adjustment for the exclusion amount (ESSB 5813). This year, the Senate has passed ESB 6347, which would roll back the tax rate increases in ESSB 5813. Beginning with estates of people dying on or after July 1, 2026, the […]

Legislature keeps kicking the can down the road

The cause of the state’s operating budget shortfall is, ultimately, that in 2023–25, the Legislature chose to spend $4.8 billion more than the state collected in revenues. (All figures in this post are in terms of funds subject to the outlook, or NGFO.) The budget balanced thanks to the use of one-time funds. The budget […]