This bill creates a new excise tax chapter in Title 82 RCW called the "hospital executive excess compensation tax act" that imposes a tax on excess compensation paid by hospitals. It is a new tax (not an amendment to an existing excise) that takes effect January 1, 2026, with taxes first due in 2027. The stated legislative intent is to fund expanded access to affordable health care by taxing excess compensation paid by hospitals. The tax applies to hospitals licensed under chapter 70.41 RCW and targets "covered employees" defined as the five highest‑compensated employees of a hospital who have no direct patient responsibilities and for whom compensation must be reported under RCW 43.70.052(3); if those five do not include the lead administrator, the lead administrator is also a covered employee. "Excess compensation" is the portion of annual total compensation (as reported to the Department of Health under RCW 43.70.052(3)) that exceeds ten times the "average annual wage" published by the Employment Security Department as of December 31 of the tax year. The tax equals 7.5 percent of the sum of the annual total compensation of any covered employee who is paid excess compensation during the tax year. Procedurally, taxpayers must file returns on forms prescribed by "the department" and pay the tax as provided in RCW 82.32.045(3); the bill allows affiliated hospitals (as defined in RCW 82.04.299) to report on a single return. Chapter 82.32 RCW generally governs administration except as provided otherwise, a deduction is allowed for compensation attributable to work performed outside Washington state when that work is not in furtherance of the hospital’s in‑state business (calculated by an hours‑based fraction), the department may enter into data‑sharing agreements with the Department of Health for required reporting, the tax is in addition to taxes under chapter 82.04 RCW, and the bill includes a severability clause. The text repeatedly refers to "the department" without naming which agency that is. The specific contents of the cited provisions (RCW 43.70.052(3), RCW 50.04.355, RCW 82.04.299) are not included here, the term "lead administrator" is not defined in the provided text, and the bill excerpt does not state how tax revenues will be allocated or include details on enforcement or penalties.

If enacted, hospitals licensed in Washington that pay their top five highest-paid employees without direct patient duties (and possibly the lead administrator) would owe a new 7.5 percent excise tax on any part of those employees’ annual reported pay that exceeds ten times the state’s published average annual wage. The tax applies to compensation paid in 2026 (taxes due in 2027), is levied on hospitals rather than individual employees, can be claimed down for hours worked outside Washington that aren’t for the hospital’s in-state business, and is additional to existing taxes; affiliated hospital systems may file a single consolidated return. The immediate effects would be higher operating costs for hospitals with very highly paid nonclinical executives and likely pressure on those hospitals to change compensation, hiring, or contracting strategies to limit taxable excess pay. The Department of Health and the Employment Security Department are involved because of pay reporting and the wage threshold, and an unnamed state department would handle forms, collection, and possible data sharing, but the bill excerpt does not specify which department that is, how revenue will be allocated in practice, or some definitions and administrative details referenced to other statutes.