From lobbyist Jim Hedrick:
"The Margin Tax was introduced in the legislature this week as Senate Bill 5482 (link below). SB 5482 is scheduled for a committee hearing next week on Thursday, January 26 at 10:30am before the Senate Committee on Business, Financial Services, Gaming & Trade.

Click here for a link to Senate Bill 5482 Margins Tax

How The Margin Tax Works:

Instead of a business paying tax on their gross revenue with no deductions (unless you are lucky enough to have a special exemption in the code!), ALL BUSINESSES GET A DEDUCTION. Each year, a business gets to take one major deduction of their choosing: cost of labor, cost of goods sold, a flat 30% or a flat $1 million, and then their tax is calculated on their remaining margin.

The rate for all business activity in Washington state under this proposal is 3.1966%. Businesses with $5 million of revenue or less can opt instead to use the EZ rate off 1.75% and pay on gross receipts rather than their margin.

Here are additional resources at taxworkgroup.org:

• Overview of margin tax proposal developed by the Tax Structure Work Group for the 2023 legislature
• Comparison of margin tax proposal, Texas franchise tax, and Washington business & occupation (B&O) tax
• Current law business and occupation (B&O) tax incentives in the margin tax proposal
• Business tax incidence graphs: comparison of business and occupation (B&O) tax vs. margin tax by industry and firm size
• Margin tax bill: SB 5482 Concerning the margin tax

Want to see how much your business would pay? Use the Tax Calculator which has been fully modeled to match SB5482."

Thank your to Jim and the Government Affairs Committee for providing this info to our members.