Bill > SB5766

This bill clarifies the business and occupation (B&O) tax treatment of investment income for passive investment vehicles managed by certain taxpayers, specifically in response to a recent Washington State Supreme Court decision (Antio, LLC v. Department of Revenue) that created uncertainty about tax deductions. The bill amends RCW 82.04.4281 to specifically allow deductions for investment income generated through investment management or advisory agreements with persons subject to tax under RCW 82.04.290(1), which typically covers service and other business activities. The bill broadly defines "investment" to include securities, fixed income instruments, derivative instruments, and commodities, ensuring a comprehensive understanding of investment types. It maintains existing provisions that prohibit deductions for certain types of financial activities, such as loans from banking or lending businesses, while clarifying that the new provisions do not affect the B&O tax obligations of the managing entities. Importantly, the bill applies retroactively but does not allow tax refunds for investments made before the effective date, thus providing legal clarity without creating significant financial disruption for taxpayers or the state revenue system.

Budget and Finance

https://app.leg.wa.gov/billsummary?BillNumber=5766&Year=2025&Initiative=false