State Director Patrick Connor reports from Olympia on Week 15 of the 2025 session

The 2025 legislative session appears headed toward an on-time adjournment sine die on Sunday, April 27.

The Senate Ways & Means Committee meets this afternoon, Friday, April 25, to amend and approve nearly two dozen budget-related bills, including several tax proposals. Both chambers will continue with floor sessions today and throughout the weekend as they race toward Sunday’s adjournment deadline.

Budget & Taxes

Loud public opposition and resistance from Gov. Bob Ferguson pushed legislative Democrats to abandon their plan to include property tax increases as a key part of their multi-billion-dollar revenue plan. NFIB opposed property tax increase legislation.

Still alive are bills increasing Business & Occupation (B&O), estate, capital gains, sales and other excise taxes.

NFIB did secure an increase in the estate tax’s Qualified Family-Owned Business Interests (QFOBI) deduction for the first time in the decade since its enactment. SB 5813 now includes a base $3 million individual and QFOBI exclusion, both of which will be indexed to inflation. In simplest terms, an estate that includes a small, family-owned business where multiple family members are actively employed will be able to deduct the $3 million QFOBI and then take the additional $3 million exclusion amount before applying the estate tax, so long as the business value is no more than $6 million and greater than 50% of the full estate value. That bill also increases the capital gains tax to 9.9% for annual earnings over $1 million. The sale of a small business valued up to $10.79 million is exempt from the capital gains tax. That amount increases annually with inflation.

HB 2081, scheduled for executive action today (April 25) in Senate Ways & Means, includes an across-the-board B&O tax increase from 0.471% or 0.484% to 0.5% for retail, wholesale, extraction, and other activities utilizing those rate classifications. The bill also includes a number of surcharges to services, advanced computing, banking and financial institutions, and many businesses with gross receipts of $250 million or more. Service firms with earnings between $1 million and $5 million should not see an increase to their existing surcharge. NFIB was unsuccessful in its efforts to secure an increase in the Small Business Tax Credit or setting a threshold similar to services before the 0.5% B&O rate would apply. During floor debate on the bill, House Finance Committee chair Rep. April Berg mentioned the possibility of a trailer bill next session to address the Small Business Tax Credit in response to NFIB’s testimony and amendments offered at our request. NFIB opposes HB 2081 since it does not include our amendments. An Action Alert on the measure is still active, asking members to contact Senators to voice their opposition to the bill.

Priority Bills

Most of the priority bills we discussed last week have been sent to the governor for signature, many despite NFIB’s objections.

HB 1213 — Paid Family & Medical Leave mandates
The House agreed with the Senate-passed version that will require job protection and maintenance of health insurance for workers taking this leave for firms with 25 or more employees beginning next year, 15 or more in 2027, and 8 or more employees in 2028. NFIB opposes the bill and is part of an employer coalition urging the governor to veto it.

HB 1308 — Personnel records
The House concurred with the Senate amendment removing subsection (g). NFIB opposes the bill, which has been sent to the governor for signature.

HB 1382 — All payer claims database
The House did concur with Senate amendments to the bill, which has been sent to the governor for signature. NFIB supports the bill.

HB 1409 — Clean fuels standards
The House concurred with Senate amendments. NFIB opposes the measure. The bill has been sent to the governor for signature.

HB 1483 — Right to Repair
The House accepted the negotiated amendments adopted in the Senate. This NFIB-supported bill has been delivered to the governor for signature.

HB 1533 — Specialty electricians
Senate amendments were agreed to by the House and the bill has been sent to the governor for signature. NFIB supports the bill.

HB 1788 — Workers’ compensation benefit increase
This bill passed the Senate 10 days ago and was sent to the governor for signature. NFIB opposes the bill.

SB 5041 — Unemployment benefits for striking workers
A conference committee was appointed Wednesday, April 23, and returned with a report the next morning. The new agreement will provide six weeks of unemployment benefits for workers who choose to go on strike. We expect both chambers to approve the revised bill. NFIB remains opposed.

SB 5408 — Job posting right to cure
The Senate accepted the House amendments and will send the bill to the governor for signature.

Despite some small successes, this has been a largely disappointing session that will make it more difficult for our Main Street small businesses in Washington state. Employers will face a more challenging labor environment, added regulatory burdens, as well as higher costs, premiums, and taxes across numerous fronts.

Special elections for legislative seats this fall hold a glimmer of hope to shift perhaps as many as three seats to more small-business-friendly lawmakers in the Senate, but not enough to change control of the chamber.

Prior Legislative Reports

— April 18: Lawmakers Hunker Down on Budge and Tax Issues

— April 12: Tax Increases Loom as Session Draws to a Close

— March 28: Small Business Dodges Tax Bullets

— March 22: NFIB Testifies on Two Big WC, UI Bills

— March 15: How of Origin Deadline Passes, Sending Many Bills to an Early Grave

— March 8: Bill Giving Striking Workers UI Benefits

— February 28: Lawmakers Trying to Skirt Federal Law on Unemployment Benefits

— February 21: Minimum Wage Bills Dead For Now

— February 15: NFIB Members Turn Out in Force to Oppose Minimum Wage Bill

— February 8: Minimum Wage Bills Coming Up for First Hearings 

— January 31: Entrepreneurs called on to testify on upcoming legislation by signing-in

— January 25: NFIB Testifies Against Giving Striking Workers Unemployment Benefits

— January 18: Washington State Legislature Begins 2025 Session