This bill aims to eliminate the business and occupation tax deduction for investment income for corporations and other business entities in Washington State. The legislature has identified that this deduction results in significant revenue loss for the state, estimated in the hundreds of millions of dollars over a biennium, and creates an inequitable tax burden. By allowing companies to avoid taxes on revenues generated from out-of-state investments, the current law discourages local reinvestment and job creation. The bill seeks to close this loophole to promote fairness in the tax system and ensure that all businesses contribute their fair share towards funding public education and essential state services.

The bill amends RCW 82.04.4281, specifically modifying the language regarding what can be deducted from the measure of tax. It introduces a new section that clarifies the definitions and exclusions related to investment income, including the insertion of "by individuals" in the context of deductible amounts derived from investments. Additionally, it removes several specific exclusions that previously limited the deductibility of certain income types, such as amounts received from loans and those received by banking or lending businesses. The act is set to take effect on August 1, 2025.

Statutes affected:
Original Bill: 82.04.4281