The bill establishes a business and occupation tax deduction specifically for payment card processing activities in Washington State, allowing processors to deduct certain fees, such as interchange and network fees, from their taxable income. It introduces a new section to chapter 82.04 RCW, clarifying that payment card processors are distinct from other taxpayers and that prior tax implications should not be inferred from this act. Key amendments to RCW 82.04.290 set the tax rate for payment card processors at 3.1 percent on their gross income, with exclusions for transactions involving affiliated financial institutions. The bill also updates definitions related to payment processing and adjusts tax rates and surcharges for various business activities, ensuring a fair tax structure for the affected industries.

In addition, the bill introduces a workforce education investment surcharge for businesses engaged in advanced computing, allowing the department to require disclosures from these entities. A penalty of 50 percent of the total surcharge will be imposed on affiliated groups that intentionally evade the surcharge. Exemptions from the surcharge are provided for hospitals and certain healthcare provider clinics, with revenues from the surcharge directed to the workforce education investment account. The act is set to take effect on January 1, 2026, and clarifies that existing laws, RCW 82.32.805 and 82.32.808, do not apply to this new legislation.

Statutes affected:
Original Bill: 82.04.290, 82.04.29004
Substitute Bill: 82.04.290, 82.04.29004
Bill as Passed Legislature: 82.04.290, 82.04.29004
Session Law: 82.04.290, 82.04.29004