2026 Legislative Session Halftime Report

by Mike Nelson

Tuesday, February 17, was the ceremonial halfway point for Washington’s 2026 Legislative Session, which began on January 12. In order for bills to advance, they needed to be voted out of their originating chamber by February 17. Legislators have debated many issues so far this year, and the WSCPA Government Affairs team has been watching and commenting on a number of issues. This halftime report will focus on two tax bills which are significant areas of interest and concern for CPAs and their clients.  

Sales Tax  

First, legislation from the Department of Revenue (DOR), House Bill (HB) 2257 and Senate Bill (SB) 6113, is intended to adopt DOR guidance issued on the sales tax changes made by the 2025 legislature and implemented on October 1, 2025. Many of the changes and clarity are acceptable. We remain concerned with the placement of the exemption for professional services, such as those offered by CPAs, under the digitally automated services (DAS) law. As currently written, the proposed bill would not be as widely exempting as the existing DOR guidance. However, the bill would allow for the broadening of the exemption through DOR rulemaking, and we will continue to engage with them to solidify rules that exempt professional services offered by CPAs.  

Another piece of HB 2257 of interest to the CPA profession would add an exemption for nonprofit organizations from collecting sales tax on the sale of live presentations. This would certainly help those with clients in the non-profit space and those who purchase CPE from the WSCPA. While the bill does not include an exemption for all continuing education as we have sought, any CPE provider that is a nonprofit, such as the WSCPA, would no longer be required to charge sales tax on live presentations.  

Millionaires Tax  

The second tax that has received a lot of attention is being called the “millionaires’ tax” (SB 6346). This would implement, for the first time, an income tax in the state of Washington. Since the state has not administered an income tax before, the legislature is grappling with many moving pieces with potential implementation. One piece that has been added to the tax scheme is a Pass-Through Entity Tax (PTET) Credit. We have been working with legislators to ensure that this piece of the bill is as workable as possible, should this tax be voted on and survive legal challenges. Most states with income taxes have adopted a PTET system in recent years, since the state and local tax (SALT) cap was lowered federally. Should an income tax in Washington be adopted, this credit system would be very helpful to have in place.  

Our advocacy game plan is to continue to work with legislators and DOR to ensure smooth implementation of the many other technical provisions that are being determined. Our hope is that the implementation will be smoother than that of the capital gains tax.  

SB 6346 was voted out of the State Senate on Monday, February 16. In that bill, senators included an amendment to repeal, as of January 1, 2030, most of the sales tax changes made in the 2025 legislative session. This would eliminate the sales tax on live presentations, temporary staffing, DAS changes, among others.  

We will continue to monitor these and other bills until the Legislative Session final whistle on March 13. 

Image: Washington State Capitol Building and Downtown Olympia by Halbergman