The bill amends Washington’s business and occupation (B&O) tax law by adding a new deduction for payment processors and by changing several tax classifications and rates. It adds a new section to chapter 82.04 RCW allowing processors, when computing tax under RCW 82.04.290(4), to deduct amounts retained by other persons such as interchange fees, network fees, and portions of fees retained by other processors. It amends RCW 82.04.290 to set multiple rates including a 3.0% rate on gross income from payment card processing activities (with specified exclusions and definitions), a 0.275% rate for certain international investment management services, general rates of 1.75% (default) or 1.5% for qualifying taxpayers subject to affiliate rules, and a 0.9% aerospace product development rate effective through July 1, 2040. It also amends RCW 82.04.29004 to impose an additional 1.2% tax on certain financial institutions beginning January 1, 2020. The act creates new definitions for terms used in the payment card processing provisions (including acquirer, issuer, payment network, processor, interchange fee, and network fees) and references existing definitions for affiliates, financial institutions, and aerospace product development. It gives the Department authority to require written or electronic identification of affiliates or certification for persons claiming the 1.5% rate and states that failure to provide complete and accurate information within 30 days, if the department establishes intent to evade, makes the person ineligible for the 1.5% rate for the current calendar year and the following four years. Persons using the aerospace product development rate must file an annual report. The act directs that 14.3% of certain revenues be deposited into the workforce education investment account (RCW 43.79.195). The bill also imposes a workforce education investment surcharge of 1.22% on “select advanced computing businesses” (defined in the text) on gross income taxable under RCW 82.04.290(2) and (4), with a combined affiliated-group cap of $9,000,000 annually. The surcharge is reported and paid quarterly, the Department of Revenue may audit and require affiliated-group disclosure, and if the department proves intentional nondisclosure to evade the surcharge it must assess a penalty equal to 50% of the total surcharge payable by the affiliated group for that year. Revenues from the surcharge are deposited into the workforce education investment account. The act takes effect January 1, 2026. Important context is missing: the complete definition of “financial institution” in Sec. 4 is cut off, the reenacted and amended text of RCW 82.04.299 is not included, the specific department named to administer these provisions is not identified in the extracted text, and some referenced effective dates or related provisions may be in omitted portions.

If enacted, companies that process payment card transactions would face a new 3.0% business-and-occupation tax on gross income from those processing activities, but processors may subtract from their taxable amount the interchange and network fees and portions of fees retained by other processors. Large financial institutions meeting the bill’s size test would also owe an extra 1.2% tax on applicable gross income going back to 2020, and very large “select advanced computing” businesses (affiliated groups with worldwide revenue over $25 billion) would pay a new 1.22% surcharge on some revenue streams, subject to a $9 million per-group annual cap and quarterly reporting; revenues from these surcharges go to the state’s workforce education investment account. Hospitals and certain primary care providers are exempt from the advanced computing surcharge. The practical effects are higher tax bills for payment processors, certain big banks, and very large tech firms, increased revenue flowing to workforce education, and heavier compliance and disclosure duties for affected businesses and their affiliates—departments can audit, require affiliate identification, and impose steep penalties (including group-wide penalties) for intentional nondisclosure or evasion. Important details are incomplete in the extracted text—most notably the full definition of “financial institution,” the reenacted/amended affiliate rules, and some effective date specifics—so who exactly is captured and the precise timing of some taxes cannot be determined from the provided material.