Substitute House Bill 2257 makes numerous amendments, reenactments, additions, and repeals across Washington tax and related law to clarify definitions, correct technical errors, and change administration and sourcing rules. It revises the definition of "sale at retail"/"retail sale" in RCW 82.04.050 to add detailed inclusions and exclusions for many categories (digital goods, digital codes, digital automated services, prewritten and custom software, advertising services, athletic and fitness facility charges, temporary staffing and paymaster services, extended warranties, and many recreational and service activities), updates marketplace facilitator and seller rules, and adds various sourcing and valuation rules for sales and use tax. The bill also creates or adjusts several taxes and surcharges and changes procedures for tax administration. Major tax changes include a 0.5% surcharge on Washington taxable income over $250,000,000 effective January 1, 2026 and expiring December 31, 2029 (RCW 82.04.288); a reenacted and amended "workforce education investment surcharge" on select advanced computing businesses with specified rates (1.22% April 1, 2020–December 31, 2025; 7.5% beginning January 1, 2026) and a $75,000,000 affiliated-group cap, with revenue deposited to the workforce education investment account; an additional tax on specified financial institutions with specified rates and reporting rules; a noncommercial aircraft use tax equal to 10% of value above $500,000; revised estate and family-owned business deduction rules including an "applicable deduction amount" schedule and an additional estate tax on certain postdeath events with reporting, lien, and penalty provisions; changes to use tax valuation and sourcing (including a provision depositing 0.1% of certain collections to the multimodal transportation account beginning July 1, 2027); expanded direct pay permit rules and revocation procedures; exemptions and special sourcing for digital products, audio/video programming, advertising services, and multiple-points-of-use purchases; and new limited exemptions for services sold to K–12 school entities. The act adds a temporary election for treatment of amounts under "qualifying existing contracts" during a transition period (Oct. 1, 2025–Mar. 31, 2026) and repeals RCW 82.04.29001. Many sections reference detailed cross-references, reporting, payment, and penalty rules, and several effective dates and expirations are specified in the extracted text. The provided material is fragmentary in places: several subsections are shown mid-sentence or refer to subsection (17) and other provisions not included here, some definitions and cross-referenced RCW texts are omitted, and the specific department named to carry out certain duties is not always identified in these extracts. Those missing portions are necessary to fully determine the precise scope, operative mechanics, and any additional exceptions or limits.

If enacted, the bill will raise new, targeted state taxes and change who must collect and report existing taxes. Beginning January 1, 2026 there is a temporary 0.5% surcharge on Washington taxable income above $250 million (through Dec. 31, 2029) with specific exemptions for farmers and certain industries, while “select advanced computing” businesses in large affiliated groups face a workforce education surcharge that rises from 1.22% (through 2025) to 7.5% starting January 1, 2026, subject to a $75 million annual cap for affiliated groups; specified financial institutions also face an additional tax (1.2% through Sept. 30, 2025, then 1.5%). These changes shift significant new tax cost and compliance risk onto very large technology, cloud, marketplace, and finance firms and their affiliated groups, increase Department of Revenue audit and disclosure authority (including steep penalties for intentional nondisclosure), and direct revenues to a workforce education investment account with a requirement to fund additional computer science and engineering enrollments beginning in fiscal year 2028 when demand exceeds seats by specified amounts. The bill also tightens and clarifies what counts as retail sales and use (including detailed rules for digital goods, codes, automated services, advertising services, athletic/fitness facilities, marketplace facilitators, and sourcing), creates or expands exemptions (for example, certain K‑12 and higher education uses and specified public broadcasting and direct-mail rules), amends direct pay permit eligibility and procedures (thresholds, application, recordkeeping, and revocation rules), and imposes new taxes and reporting rules in other narrow areas (noncommercial aircraft use tax; estate-related reporting and potential additional tax for family-owned business deductions). Practically, online platforms, software and advertising sellers, schools, large purchasers eligible for direct pay permits, and heirs/estate filers will face changed responsibilities, possible higher costs, or new filing and documentation requirements; however, many provisions refer to other subsections and cross-referenced rules that are not included in the extracted text, so some operational details and exact scope of obligations remain unclear.