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Dear Friends and Neighbors,
As we enter the final weeks of the 2025 legislative session, Democrats in the House and Senate have recently released comprehensive new tax proposals that will impact everyone in Washington. They are calling for new taxes in both the operating and transportation budgets, and we will all feel the impact in our pocketbooks.
Ranging from $15 to $20 billion, if either House or Senate Democratic proposals are enacted, it would be the largest tax increase in Washington state’s history, and that’s just the operating budget (House Bill 1198 or Senate Bill 5167). The transportation proposal would add more than $4 billion more in additional taxes and fees. Click on the image below to watch a video of Rep. Jim Walsh and I discuss the impact of these taxes.
Proposed Taxes to Fund the Operating Budget
The major components of the majority’s packages include a new business and occupation tax surcharge on large businesses, a property tax increase, a new payroll tax, and a new tax on unrealized capital gains.
House Bill 2045 would impose a new Business and Occupation (B&O) tax surcharge on large businesses and financial institutions, which would negatively impact approximately 400 businesses statewide.
Negative Impact: This would affect everyone, as businesses will likely pass these additional taxes on to Washingtonians, making life less affordable, putting loans further out of reach, and discouraging economic growth.
House Bill 2046 would create a new tax on unrealized capital gains for individuals, such as stocks, bonds, mutual funds, and index funds with an assessed value over $50 million.
Negative Impact: This would stifle innovation and investment in Washington, causing entrepreneurs to leave or refrain from coming to our state. When wealthy people leave, we lose tax collection revenue. Jeff Bezos left after our state enacted a capital gains tax.
House Bill 2049 would increase property taxes by lifting the annual growth cap from 1% up to 3%, based on inflation and population changes.
Negative Impact: Affordability is a huge issue in our state, and Washingtonians already pay high property taxes. These increases would push more people out of their homes, prevent more people from purchasing homes, and be passed along to renters. This would exacerbate the affordable housing crisis even worse.
Senate Bill 5796 would establish a new payroll tax for employers with annual payroll expenses exceeding $7 million.
Negative Impact: This would increase costs for nearly 5,300 employers in our state and negatively impact future job growth.
New Transportation Taxes
House Bill 2043 is a costly transportation tax plan that would raise an estimated $4.4 billion over six years by increasing fees and taxes on drivers, working families, and small businesses already struggling with high costs.
These are some of the new tax proposals in this bill:
Additional Fuel Taxes
- 9-cent fuel tax increase, raising the current 49.4-cent tax starting July 1, 2025, with annual adjustments for inflation.
- 12-cent diesel, propane, and biodiesel tax increase beginning July 1, 2025, followed by another 3-cent increase on July 1, 2027.
Vehicle Registration Fee Increases
Example: The base vehicle registration fees total $78.25. This bill would add $4.50 in new registration fees, a $10 weight fee, and $31.44 in a new highway user fee (HUF), totaling $124.19 for a passenger car.
A Highway User Fee (HUF)
This will apply to vehicles with a fuel efficiency of 25 miles per gallon (mpg) or more, excluding electric and plug-in hybrid vehicles, motorcycles, low-speed vehicles, and vehicles over 10,000 pounds. The HUF replaces the existing $75 registration fee for hybrid vehicles.
Other New Fees
A $4 increase per tire on the existing $1 replacement tire fee.
New vehicle sales tax increases as follows:
- 1% on the first $50,000 of a non-commercial vehicle’s value.
- 2% on the value between $50,000 and $100,000.
- 3% on the value over $100,000.
I will not vote for new taxes because state revenue is still at record levels and is forecasted to continue increasing. These new taxes will lead to fewer jobs, higher cost of goods, and more expensive housing at a time when Washingtonians can least afford it.
Senate Republicans have proposed a balanced budget that includes no tax increases or service cuts. The $ave Washington approach is a better way to support the priorities of all Washingtonians, including full funding for K-12 and services for our most vulnerable neighbors, without asking working families to pay more.
I want to know what you think. Do you approve of these taxes? How do you think they will impact you? Please take my survey and share your opinions about these tax increase proposals. You can click here to access the survey from my website or click on the image below. Thank you for the feedback.
Please Stay in Touch
I appreciate your ongoing support and interest in our state government. Please continue reaching out. It’s an honor to serve you.
Sincerely,
Cyndy Jacobsen
