The bill seeks to amend the capital gains tax framework under chapter 82.87 RCW by closing existing loopholes and replacing the business and occupation tax credit with a capital gains tax credit, effective from the tax year 2025. Key provisions include the introduction of a nonrefundable credit against taxes due for sales or exchanges also subject to the business and occupation tax, as well as new requirements for brokers and barter exchanges. The bill also clarifies definitions related to capital gains, establishes a late payment penalty waiver, and modifies the credit for taxes paid in other jurisdictions. Notably, certain provisions will expire on January 1, 2026, and unused credits cannot be carried forward or refunded.

Additionally, the bill revises the tax deduction process for charitable donations, stipulating a minimum threshold for deductions and mandating electronic filing of tax returns. It clarifies the tax treatment of spouses and domestic partners, ensuring their activities and assets are combined for tax purposes. The bill also introduces penalties for late filings and outlines conditions for waiving these penalties. Furthermore, it adjusts deadlines and penalties related to electronic filing compliance, establishes a minimum compliance period before penalties can be imposed, and mandates brokers to electronically submit IRS Form 1099-B for long-term capital asset transactions. The new provisions will take effect on January 1, 2026, and the bill will be null and void if specific funding is not provided by June 30, 2025.

Statutes affected:
Original Bill: 82.04.4497, 82.87.020, 82.87.060, 82.87.070, 82.87.080, 82.87.100, 82.87.110, 82.87.120, 82.87.150, 82.08.0206, 82.32.090
Substitute Bill: 82.04.4497, 82.87.020, 82.87.060, 82.87.070, 82.87.080, 82.87.100, 82.87.110, 82.87.120, 82.87.150, 82.08.0206, 82.32.090
Bill as Passed Legislature: 82.04.4497, 82.87.020, 82.87.060, 82.87.070, 82.87.080, 82.87.100, 82.87.110, 82.87.120, 82.87.150, 82.08.0206, 82.32.090
Session Law: 82.04.4497, 82.87.020, 82.87.060, 82.87.070, 82.87.080, 82.87.100, 82.87.110, 82.87.120, 82.87.150, 82.08.0206, 82.32.090