Early Tuesday morning, the State House passed its B&O tax increase bill with a 50-48 vote. Engrossed Substitute House Bill 2081 increases the Business & Occupation (B&O) tax rate for categories that include construction businesses to 0.5%, effective January 1, 2027.
In addition, the bill would impose a 0.5% B&O tax surcharge on businesses with more than $250 million in Washington taxable income, applicable from January 1, 2026, through December 30, 2029.
|
|
Current |
Proposed |
% Increase |
|
|
|
|
|
|
Retail (inc. prime contractors and subs without reseller permit) |
0.471% |
0.5% |
6.1% |
|
Wholesale (inc. subs with reseller permit) |
0.484% |
0.5% |
3.3% |
|
Manufacturing |
0.484% |
0.5% |
3.3% |
|
Public Road Construction |
0.484% |
.5% |
3.3% |
AGC’s Lobbyist, Michele Willms, testified before both the House and Senate last week, warning that “the increased B&O taxes and the other tax proposals under consideration would drive up the cost of construction and be passed on through as higher bids, which will drive up the cost of building homes and apartments, transportation infrastructure, public works, and private development.” She also emphasized that “contractors want predictability in their taxes from year to year.”
This bill will be heard by the Senate Ways and Means Committee later this week. If you have any questions about this proposal, contact AGC’s Lobbyist, Michele Willms