This bill amends RCW 82.87.020 to redefine "adjusted capital gain" by adding provisions that specifically address long-term capital gains from the sale or exchange of qualified small business stock under section 1202 of the Internal Revenue Code. The new language includes an insertion that allows for the inclusion of long-term capital gains from such stock in the calculation of adjusted capital gain, provided these gains were excluded in the federal net long-term capital gain calculation. Additionally, the bill clarifies the definitions of various terms related to capital gains and losses, ensuring consistency with federal tax law.

Furthermore, the bill establishes that the new provisions will apply to capital gains earned on or after January 1, 2026. This timeline allows for a transition period before the new tax implications take effect, ensuring that taxpayers and businesses can prepare for the changes in how long-term capital gains are taxed in Washington state.

Statutes affected:
Original bill: 82.87.020