This bill creates a new state tax surcharge tied to corporate executive pay ratios by adding new sections to chapters 82.04 and 82.16 RCW. Beginning January 1, 2026, taxpayers whose reported executive pay ratio (as defined by section 953 of the Dodd‑Frank Act and reported to the U.S. Securities and Exchange Commission) is at least 50 to one will owe an additional surcharge on taxes otherwise payable after specified credits: 10 percent when the ratio is at least 50 to one but less than 150 to one, and 25 percent when the ratio is 150 to one or greater. If a taxpayer does not disclose the SEC‑reported ratio to the Department of Revenue for the prior year, the 25 percent rate applies. The surcharge applies to taxes due for the calendar year following the year in which the executive pay ratio occurred, with midyear changes taking effect January 1 of the calendar year after the change. Subsidiaries that are not publicly traded but are listed as subsidiaries in a parent company's SEC filings are subject to the surcharge if the parent company is subject to it. All revenues collected under the surcharge must be deposited into the state general fund. The Department of Revenue must submit a report to the legislature by December 1, 2026, on the feasibility of extending the law to taxpayers not currently required to disclose executive pay ratio under Dodd‑Frank. The bill was first read February 3, 2025, and was referred to the Committee on Finance. Important details are not included in the provided text: it does not specify which particular taxes within chapters 82.04 and 82.16 are affected, does not define the term "person," does not reproduce the Dodd‑Frank details on calculation of annual and median compensation, and does not provide specific new RCW section numbers.

If enacted, starting January 1, 2026 publicly traded companies and subsidiaries listed in parent SEC filings that report a CEO-to-median-worker pay ratio of 50:1 or higher will face an additional tax surcharge on top of the taxes they already owe (after other credits). The surcharge increases their tax bill by 10% if the ratio is between 50:1 and 149:1 and by 25% if the ratio is 150:1 or higher; if a company does not disclose its SEC‑reported ratio to the Department of Revenue, the 25% rate applies. The surcharge applies to taxes due in the calendar year after the year the ratio occurred, with midyear changes taking effect the next January 1, and all revenues go to the state general fund. The most affected parties are publicly traded firms and listed subsidiaries, which will likely see higher tax costs and narrower after‑tax margins when their executive pay ratios exceed the thresholds. The Department of Revenue will have new duties to receive ratio disclosures, apply the surcharge, and report to the Legislature by December 1, 2026, potentially increasing its administrative workload. Important details that would change how much tax is actually charged—exactly which taxes in the cited RCW chapters are covered, how “annual compensation” and median pay are calculated, and the legal definition of “person”—are not specified here and depend on the Dodd‑Frank disclosure rules, so the practical tax impact could vary.