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Pre-filed bills would make changes to the 2025 tax package, including a proposed repeal of ESSB 5814

The 2025 tax package was rushed through the legislative process, leading to considerable uncertainty. The implementation of ESSB 5814, which extended the sales tax to more services, has been particularly fraught. Unsurprisingly, three bills have been pre-filed that would make changes to ESSB 5814. Additionally, two bills would make changes to ESSB 5794, which repealed […]

Two pre-filed bills would increase certain state B&O taxes and a third would allow counties to levy B&O taxes

Last week, I wrote about a proposed payroll expense tax bill. Other bills have been pre-filed so far that would increase state or local business and occupation (B&O) taxes. County B&O Taxes HB 2097 would allow county legislative authorities to impose B&O taxes effective Jan. 1, 2027. The maximum county B&O tax rate would be […]

Newly proposed payroll expense tax would be volatile and revenues would probably not materialize until FY 2028

The historically large tax package that was adopted earlier this year increased business taxes significantly. The adopted package did not include a payroll expense tax, though one was considered during the 2025 session (SB 5796). SB 5796 would impose a 5% tax on wages over the Social Security taxable wage base ($176,100 in 2025 and […]

Since the 2025–27 operating budget was adopted, revenues are down by $1.690 billion over the outlook period

According to the Economic and Revenue Forecast Council, revenues for funds subject to the outlook (NGFO) are estimated to be $66 million lower over the outlook period than was forecasted in September. Final revenues for 2023–25 (which ended June 30) total $67.137 billion, an increase of $13.1 million compared to the September forecast. The forecast […]

Washington has the nation’s sixth least competitive taxes

According to the Tax Foundation’s 2026 State Tax Competitiveness Index, Washington’s tax climate ranks 45th overall. (In the Tax Foundation’s index, one is the best rank and 50 is the worst.) This ranking reflects state tax systems as of July 1, 2025, so it does not yet incorporate many of the tax changes made by […]

New brief: SJR 8201: Investment Flexibility for Long-Term Care Funds

SJR 8201 would amend the state constitution to allow money in the long-term services and supports (LTSS) trust account to be invested as authorized by law. Effectively, the amendment would allow the funds to be invested in a broader range of vehicles, including stocks. Currently, the funds may only be invested in fixed-income securities. Over […]

DOR issues final interim guidance statement related to ESSB 5814

Earlier today, the Department of Revenue (DOR) published the last interim guidance statement (IGS) for ESSB 5814. The bill expands the sales tax to more services and goes into effect Oct. 1. (See our report on the tax package for more details.) The final IGS covers custom software and the customization of prewritten software. As […]

Paid family and medical leave premium rate is projected to increase to 1.13% in 2026; solvency issues loom

The paid family and medical leave (PFML) premium rate is projected to increase to 1.13% in 2026. (The actual rate will be based on the account balance on Sept. 30, so this is not yet final.) Further, a presentation by the PFML actuary to the PFML advisory committee yesterday shows that the financial outlook for […]

September revenue forecast is down, putting the current biennium in the red

Revenues for funds subject to the outlook (NGFO) are now expected to be $903 million lower over the outlook period than was forecasted in June. Compared to the June revenue forecast, the estimate for 2023–25 (which ended June 30) decreased by $13 million, to $67.124 billion. The forecast for 2025–27 decreased by $412 million, to […]

The perils of rushing tax policy: A legal challenge to ESSB 5814 and interim guidance for taxpayers

ESSB 5814, which was part of this year’s historically large tax package, will expand the sales tax to more services beginning Oct. 1. We described the bill in detail in our report on the tax package. Our report also discussed the many unintended administrative, legal, and policy ramifications the tax bills—particularly ESSB 5814—could have. For […]