This bill creates a new law titled the "hospital executive excess compensation tax act" by adding a new chapter to Title 82 RCW. It imposes an excise tax beginning January 1, 2026 (for taxes due in 2027) equal to 7.5 percent of the sum of the annual total compensation of any covered employee who is paid "excess compensation" during the tax year. "Covered employees" are the five highest compensated hospital employees without direct patient responsibilities, plus the lead administrator if not already included. "Excess compensation" is any covered employee’s annual total compensation that exceeds ten times the average annual wage published by the Employment Security Department as of December 31st of the tax year. Annual total compensation must be reported as required under RCW 43.70.052(3). The tax year is the calendar year immediately preceding the year the tax is due. The bill is a tax-creation and procedural-change measure: it establishes a new tax, defines taxable persons and the tax base, and sets filing and administration procedures. Hospitals that owe the tax must file returns and pay on forms prescribed by "the department" as provided in RCW 82.32.045(3). The department may allow affiliated hospitals to file a single return, may enter into data-sharing agreements with the Department of Health, and chapter 82.32 RCW generally applies to administration. Hospitals may reduce the tax base by deducting the portion of a covered employee’s compensation attributable to out-of-state work not in furtherance of the hospital’s business using an hours-based fraction. The tax is explicitly in addition to taxes under chapter 82.04 RCW. The act includes a severability clause. The law would affect hospitals licensed under chapter 70.41 RCW, the defined covered employees, the unspecified "department" that administers the tax, the Department of Health (for reporting), and the Employment Security Department (for the average wage). The extracted text does not specify which state department is meant by "the department," does not include the full contents of the referenced RCWs (including the reporting format and numeric wage amounts), does not define "lead administrator," and does not provide details about revenue allocation, enforcement mechanisms, penalties, or appeals.

If enacted, Washington hospitals licensed under chapter 70.41 RCW would face a new tax starting for tax years beginning January 1, 2026 (taxes due in 2027) equal to 7.5 percent of any covered employee’s annual pay that exceeds a threshold set at ten times the state’s published average annual wage. The most directly affected will be hospitals that employ the five highest-paid staff without direct patient duties (plus the lead administrator if not already included); those hospitals will likely see higher operating costs tied to those executives’ pay, and might reassess compensation, hiring, or affiliate arrangements to limit taxable “excess” pay. Hospitals can reduce the taxable amount for pay earned while working out of state by using an hours-based fraction, and affiliated hospitals may be allowed to file a single return. Hospitals must report the relevant annual total compensation as required under RCW 43.70.052(3) by December 31 of the tax year and file returns and payments on forms prescribed by “the department,” which the text does not explicitly identify. Key details that would affect implementation—such as the numeric average wage used to set the threshold, the precise definition of “lead administrator,” which state department will administer the tax, and how tax revenues are to be used or enforced—are not provided in the extracted facts.