CERTIFICATION OF ENROLLMENT
ENGROSSED SUBSTITUTE HOUSE BILL 2482
Chapter 261, Laws of 2024
68th Legislature
2024 Regular Session
SEMICONDUCTOR MANUFACTURING TAX INCENTIVES—REINSTATEMENT
EFFECTIVE DATE: March 26, 2024
Passed by the House March 5, 2024 CERTIFICATE
Yeas 94 Nays 1
I, Bernard Dean, Chief Clerk of the
House of Representatives of the
LAURIE JINKINS State of Washington, do hereby
Speaker of the House of certify that the attached is
Representatives ENGROSSED SUBSTITUTE HOUSE BILL
2482 as passed by the House of
Representatives and the Senate on
the dates hereon set forth.
Passed by the Senate March 1, 2024
Yeas 47 Nays 1
BERNARD DEAN
DENNY HECK Chief Clerk
President of the Senate
Approved March 26, 2024 9:24 AM FILED
March 27, 2024
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 ENGROSSED SUBSTITUTE HOUSE BILL 2482
AS AMENDED BY THE SENATE
Passed Legislature - 2024 Regular Session
State of Washington 68th Legislature 2024 Regular Session
By House Finance (originally sponsored by Representatives Harris,
Santos, and Stonier)
READ FIRST TIME 02/05/24.
1 AN ACT Relating to reinstating semiconductor tax incentives;
2 amending RCW 82.04.2404, 82.08.9651, and 82.12.9651; reenacting and
3 amending RCW 82.32.790, 82.04.426, 82.04.448, 82.08.965, 82.08.970,
4 82.12.965, 82.12.970, and 84.36.645; adding a new section to chapter
5 82.04 RCW; creating new sections; providing a contingent effective
6 date; providing expiration dates; providing contingent expiration
7 dates; and declaring an emergency.
8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
9 Sec. 1. RCW 82.32.790 and 2022 c 56 s 11 are each reenacted and
10 amended to read as follows:
11 (1)(a) ((Sections 510, 512, 514, 516, 518, 520, 522, and 524,
12 chapter 37, Laws of 2017 3rd sp. sess., sections 9, 13, 17, 22, 24,
13 30, 32, and 45, chapter 135, Laws of 2017, sections 104, 110, 117,
14 123, 125, 129, 131, and 150, chapter 114, Laws of 2010, and sections
15 1, 2, 3, and 5 through 10, chapter 149, Laws of 2003)) RCW 82.04.426,
16 82.04.448, 82.08.965, 82.08.970, 82.12.965, 82.12.970, 84.36.645, and
17 section 2 of this act are contingent upon the siting and commercial
18 operation of a significant semiconductor microchip fabrication
19 facility in the state of Washington by January 1, ((2024)) 2034.
20 (b) For the purposes of this section:
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 1 (i) "Commercial operation" means the same as "commencement of
2 commercial production" as used in RCW 82.08.965.
3 (ii) "Semiconductor microchip fabrication" means "manufacturing
4 semiconductor microchips" as defined in RCW 82.04.426.
5 (iii) "Significant" means the combined investment of new
6 buildings and new machinery and equipment in the buildings, at the
7 commencement of commercial production, will be at least ((one billion
8 dollars)) $500,000,000.
9 (2) The sections referenced in subsection (1) of this section
10 take effect the first day of the month in which a contract for the
11 construction of a significant semiconductor fabrication facility is
12 signed, if the contract is signed and received by January 1, ((2024))
13 2034, as determined by the director of the department of revenue.
14 (3)(a) The department of revenue must provide notice of the
15 effective date of the sections referenced in subsection (1) of this
16 section to affected taxpayers, the legislature, the office of the
17 code reviser, and others as deemed appropriate by the department.
18 (b) If, after making a determination that a contract has been
19 signed and the sections referenced in subsection (1) of this section
20 are effective, the department discovers that commencement of
21 commercial production did not take place within three years of the
22 date the contract was signed, the department must make a
23 determination that ((chapter 149, Laws of 2003 is)) are no longer
24 effective, and all taxes that would have been otherwise due are
25 deemed deferred taxes and are immediately assessed and payable from
26 any person reporting tax under ((RCW 82.04.240(2))) section 2 of this
27 act or claiming an exemption or credit under RCW 82.04.426,
28 82.04.448, 82.08.965, 82.12.965, 82.08.970, 82.12.970, or 84.36.645.
29 The department is not authorized to make a second determination
30 regarding the effective date of the sections referenced in subsection
31 (1) of this section.
32 (4)(a) This section expires January 1, ((2024)) 2034, if the
33 contingency in subsection (2) of this section does not occur by
34 January 1, ((2024)) 2034, as determined by the department.
35 (b) The department must provide written notice of the expiration
36 date of this section and the sections referenced in subsection (1) of
37 this section to affected taxpayers, the legislature, the office of
38 the code reviser, and others as deemed appropriate by the department.
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 1 NEW SECTION. Sec. 2. A new section is added to chapter 82.04
2 RCW to read as follows:
3 (1) Upon every person engaging within this state in the business
4 of manufacturing semiconductor materials, as to such persons the
5 amount of tax with respect to such business is, in the case of
6 manufacturers, equal to the value of the product manufactured, or, in
7 the case of processors for hire, equal to the gross income of the
8 business, multiplied by the rate of 0.275 percent. For the purposes
9 of this subsection "semiconductor materials" means silicon crystals,
10 silicon ingots, raw polished semiconductor wafers, compound
11 semiconductors, integrated circuits, and microchips.
12 (2) A person reporting under the tax rate provided in this
13 section must file a complete annual tax performance report with the
14 department under RCW 82.32.534.
15 (3) Pursuant to RCW 82.32.790, this section is contingent on the
16 siting and commercial operation of a significant semiconductor
17 microchip fabrication facility in the state of Washington.
18 (4) Any person who has claimed the preferential rate under this
19 section must reimburse the department for 50 percent of the amount of
20 the tax preference under this section if the number of persons
21 employed by the person claiming the tax preference is less than 90
22 percent of the person's three-year employment average for the three
23 years immediately preceding the year in which the preferential rate
24 is claimed.
25 (5) This section expires January 1, 2034, unless the contingency
26 in RCW 82.32.790(2) occurs.
27 Sec. 3. RCW 82.04.426 and 2017 3rd sp.s. c 37 s 524 are each
28 reenacted and amended to read as follows:
29 (1) The tax imposed by ((RCW 82.04.240(2))) section 2 of this act
30 does not apply to any person in respect to the manufacturing of
31 semiconductor microchips.
32 (2) For the purposes of this section:
33 (a) "Manufacturing semiconductor microchips" means taking raw
34 polished semiconductor wafers and embedding integrated circuits on
35 the wafers using processes such as masking, etching, and diffusion;
36 and
37 (b) "Integrated circuit" means a set of microminiaturized,
38 electronic circuits.
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 1 (3) A person reporting under the tax rate provided in this
2 section must file a complete annual tax performance report with the
3 department under RCW 82.32.534.
4 (4) Pursuant to RCW 82.32.790, this section is contingent on the
5 siting and commercial operation of a significant semiconductor
6 microchip fabrication facility in the state of Washington.
7 (5) Any person who has claimed the exemption under this section
8 must reimburse the department for 50 percent of the amount of the tax
9 preference under this section if the number of persons employed by
10 the person claiming the tax preference is less than 90 percent of the
11 person's three-year employment average for the three years
12 immediately preceding the year in which the exemption is claimed.
13 (6) This section expires January 1, ((2024)) 2034, unless the
14 contingency in RCW 82.32.790(2) occurs.
15 Sec. 4. RCW 82.04.448 and 2017 3rd sp.s. c 37 s 516 are each
16 reenacted and amended to read as follows:
17 (1) Subject to the limits and provisions of this section, a
18 credit is authorized against the tax otherwise due under ((RCW
19 82.04.240(2))) section 2 of this act for persons engaged in the
20 business of manufacturing semiconductor materials. For the purposes
21 of this section "semiconductor materials" has the same meaning as
22 provided in ((RCW 82.04.240(2))) section 2 of this act.
23 (2)(a) The credit under this section equals ((three thousand
24 dollars)) $3,000 for each employment position used in manufacturing
25 production that takes place in a new building exempt from sales and
26 use tax under RCW 82.08.965 and 82.12.965. A credit is earned for the
27 calendar year a person fills a position. Additionally a credit is
28 earned for each year the position is maintained over the subsequent
29 consecutive years, up to eight years. Those positions that are not
30 filled for the entire year are eligible for ((fifty)) 50 percent of
31 the credit if filled less than six months, and the entire credit if
32 filled more than six months.
33 (b) To qualify for the credit, the manufacturing activity of the
34 person must be conducted at a new building that qualifies for the
35 exemption from sales and use tax under RCW 82.08.965 and 82.12.965.
36 (c) In those situations where a production building in existence
37 on the effective date of this section will be phased out of
38 operation, during which time employment at the new building at the
39 same site is increased, the person is eligible for credit for
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 1 employment at the existing building and new building, with the
2 limitation that the combined eligible employment not exceed full
3 employment at the new building. "Full employment" has the same
4 meaning as in RCW 82.08.965. The credit may not be earned until the
5 commencement of commercial production, as that term is used in RCW
6 82.08.965.
7 (3) No application is necessary for the tax credit. The person is
8 subject to all of the requirements of chapter 82.32 RCW. In no case
9 may a credit earned during one calendar year be carried over to be
10 credited against taxes incurred in a subsequent calendar year. No
11 refunds may be granted for credits under this section.
12 (4) If at any time the department finds that a person is not
13 eligible for tax credit under this section, the amount of taxes for
14 which a credit has been claimed is immediately due. The department
15 must assess interest, but not penalties, on the taxes for which the
16 person is not eligible. The interest must be assessed at the rate
17 provided for delinquent excise taxes under chapter 82.32 RCW, is
18 retroactive to the date the tax credit was taken, and accrues until
19 the taxes for which a credit has been used are repaid.
20 (5) A person claiming the credit under this section must file a
21 complete annual tax performance report with the department under RCW
22 82.32.534.
23 (6) Credits may be claimed after the expiration date of this
24 section, for those buildings at which commercial production began
25 before the expiration date of this section, subject to all of the
26 eligibility criteria and limitations of this section.
27 (7) Any person who has claimed the credit under this section must
28 reimburse the department for 50 percent of the amount of the tax
29 preference under this section if the number of persons employed by
30 the person claiming the tax preference is less than 90 percent of the
31 person's three-year employment average for the three years
32 immediately preceding the year in which the credit is claimed.
33 (8) Pursuant to RCW 82.32.790, this section is contingent on the
34 siting and commercial operation of a significant semiconductor
35 microchip fabrication facility in the state of Washington.
36 (9) This section expires January 1, ((2024)) 2034, unless the
37 contingency in RCW 82.32.790(2) occurs.
38 Sec. 5. RCW 82.08.965 and 2017 3rd sp.s. c 37 s 510 are each
39 reenacted and amended to read as follows:
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 1 (1) The tax levied by RCW 82.08.020 does not apply to charges
2 made for labor and services rendered in respect to the constructing
3 of new buildings used for the manufacturing of semiconductor
4 materials, to sales of tangible personal property that will be
5 incorporated as an ingredient or component of such buildings during
6 the course of the constructing, or to labor and services rendered in
7 respect to installing, during the course of constructing, building
8 fixtures not otherwise eligible for the exemption under RCW
9 82.08.02565(2)(b). The exemption is available only when the buyer
10 provides the seller with an exemption certificate in a form and
11 manner prescribed by the department. The seller must retain a copy of
12 the certificate for the seller's files.
13 (2) To be eligible under this section the manufacturer or
14 processor for hire must meet the following requirements for an eight-
15 year period, such period beginning the day the new building commences
16 commercial production, or a portion of tax otherwise due will be
17 immediately due and payable pursuant to subsection (3) of this
18 section:
19 (a) The manufacturer or processor for hire must maintain at least
20 ((seventy-five)) 75 percent of full employment at the new building
21 for which the exemption under this section is claimed.
22 (b) Before commencing commercial production at a new facility the
23 manufacturer or processor for hire must meet with the department to
24 review projected employment levels in the new buildings. The
25 department, using information provided by the taxpayer, must make a
26 determination of the number of positions that would be filled at full
27 employment. This number must be used throughout the eight-year period
28 to determine whether any tax is to be repaid. This information is not
29 subject to the confidentiality provisions of RCW 82.32.330 and may be
30 disclosed to the public upon request.
31 (c) In those situations where a production building in existence
32 on the effective date of this section will be phased out of operation
33 during which time employment at the new building at the same site is
34 increased, the manufacturer or processor for hire must maintain
35 seventy-five percent of full employment at the manufacturing site
36 overall.
37 (d) ((No application is necessary for the tax exemption.))
38 Applications for the exemption under this section must be made at
39 least 90 days before initiation of the construction of the
40 significant semiconductor microchip manufacturing facility in a form
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 1 and manner prescribed by the department. The person is subject to all
2 the requirements of chapter 82.32 RCW. A person claiming the
3 exemption under this section must file a complete annual tax
4 performance report with the department under RCW 82.32.534.
5 (3) If the employment requirement is not met for any one calendar
6 year, one-eighth of the exempt sales and use taxes will be due and
7 payable by April 1st of the following year. The department must
8 assess interest to the date the tax was imposed, but not penalties,
9 on the taxes for which the person is not eligible.
10 (4) The exemption applies to new buildings, or parts of
11 buildings, that are used exclusively in the manufacturing of
12 semiconductor materials, including the storage of raw materials and
13 finished product.
14 (5) For the purposes of this section:
15 (a) "Commencement of commercial production" is deemed to have
16 occurred when the equipment and process qualifications in the new
17 building are completed and production for sale has begun.
18 (b) "Full employment" is the number of positions required for
19 full capacity production at the new building, for positions such as
20 line workers, engineers, and technicians.
21 (c) "Semiconductor materials" has the same meaning as provided in
22 ((RCW 82.04.240(2))) section 2 of this act.
23 (6) No exemption may be taken after the expiration date of this
24 section, however all of the eligibility criteria and limitations are
25 applicable to any exemptions claimed before that date.
26 (7) Pursuant to RCW 82.32.790, this section is contingent on the
27 siting and commer