GSBA Advocacy Update

2026 WA Legislative Session Recap

What passed, what’s next, and where GSBA showed up in Olympia.
Written by Gabriel Neuman, JD; GSBA Director of Policy and Advocacy

Dear GSBA Members,

The 60-day sprint in Olympia has officially come to a close. While 2025 focused on setting the foundation and navigating a projected budget shortfall, 2026 became a session defined by historic growth, bleak cuts, and fiscal rebalancing.

Despite the “short” session, legislators introduced 1,669 new bills on top of the thousands carried over from last year. Facing a Democratic supermajority, House Republicans filed a record 593 amendments before the cutoff, far above the average for short sessions, resulting in the delay or failure of multiple bills. This strategy was used vigorously, though ultimately unsuccessfully, during the marathon 24-hour debate over the Millionaire’s Tax.

Overall, the legislature passed just 694 bills during the combined 2025-26 biennial session, a significant drop from the 866 passed in 2023-24.

What’s next? The ink isn’t even dry, and the Governor will be signing (and potentially vetoing) bills for weeks to come. As the focus shifts to the interim, we expect a flurry of legal challenges against the Millionaire’s Tax and a likely repeal initiative for the November ballot.

Budget Highlights and Policy Updates

The 2026 Supplemental Budget

Lawmakers finalized an $80.2 billion supplemental operating budget. This represents a nearly 3% increase from the original 2025 biennial total of $77.9 billion.

  • A net increase of $1.7 billion in the general fund and $3.2 billion in total budgeted funds to continue current programs and meet statutory obligations.
  • The largest cost drivers for these increases are Medicaid medical assistance, Working Connections Child Care, and long-term care services.
  • The finalized plan projects an ending balance of $231 million and total reserves of $1.3 billion for the biennium.
  • The budget was balanced on several assumptions, including an $880 million transfer from the Budget Stabilization Account, $157 million from prior period adjustments, $767 million in expenditure savings from reversions, and $395 million from a revised capital gains tax distribution.
  • The budget assumes $36 million in new state revenue in 2025-27 from several relatively small tax changes. It also assumes $2.2 billion in 2027-29, including revenue tied to the millionaires’ tax (see below).

 

The Millionaire’s Tax (SB 6346)

This was the defining battle of the session. After clearing the Senate in February, SB 6346 triggered a record-breaking, 25-hour continuous House floor session. To protest the bill, Republicans (and some Democrats) introduced over 80 amendments, forcing a parliamentary slog that saw lawmakers sleeping in shifts on office couches until the final 51-46 vote on Tuesday evening.

The bill imposes a 9.9% tax on Washington taxable income exceeding $1 million for all filers and is projected to raise $3.7 billion in annual revenue starting in 2029.

Key highlights:

  • A massive projected expansion of the Working Families Tax Credit reaching ~800,000 households.
  • Companies grossing less than $300,000 a year will be exempt from paying the state’s main business tax.
  • Sales tax for diapers, personal care products, like shampoo and deodorant, and many over-the-counter drugs will be eliminated.
  • Starting July 1, public schools would be exempt from paying a new state sales tax on services, including for live presentations, temporary staffing and security (ESSB 5814).
  • Most retail sales taxes lawmakers adopted last year (SB 5814) on services will end on Jan. 1, 2029. This includes taxes on IT training, website development, security services, custom software, live presentations, and more. However, it does not repeal the tax of advertising services, including digital advertising.
  • An amendment by Rep. Engell specifically exempts income from licensed health care services providers from the 0.5% B&O surcharge (from 2025’s HB 2081, which applied to businesses in Washington with at least $250 million in Washington taxable income). Curious about how this income tax could impact your LLC or S-Corp? Economic Opportunity Institute has a breakdown.
  • And finally, the law contains a NULL AND VOID clause that states that if a court of final jurisdiction invalidates section 201 (the tax on millionaires), the bill is null and void in its entirety.

This will ultimately play out both in the courts and likely on the ballot this fall, where opponents will need to gather more than 300,000 signatures for a ballot initiative.

GSBA Advocacy in Action

GSBA tracked dozens of bills this year and engaged in testimony, coalition work, and met directly with Legislators on several important issues.

Below is a list of bills GSBA supported this year that PASSED. These bills will expediate permitting, ensure community reinvestments, regulate automatic license plate readers, and much more.

Supported Bills That Passed

✅ HB 2274 – Modifying the Washington commercial electronic mail act. Companion bill: SB 5976

Requires the sender of a commercial email to have knowledge that the subject line is false or misleading to be a violation of the Commercial Electronic Mail Act (CEMA) and decreases the statutory damages for a recipient of a prohibited commercial email or text message to the greater of $100 or actual damages.

✅ HB 2418 – Concerning permit review processes.

Specifies that a county or city’s determination of project permit application completeness must be based on procedural completeness rather than substantive review. It requires certain government entities to review residential project permit applications within specific deadlines or refund 20 percent of the fee, and mandates that local governments designate both a permit-responsible official for final decisions and a single point-of-contact for each application.

✅ HB 2431 – Increasing the maximum annual limit for regularly scheduled fundraising activities for the nonprofit public assembly halls and meeting places property tax exemption.

Modifies the nonprofit public assembly hall and meeting places property tax exemption.

✅ HB 2523 – Concerning the community reinvestment program. Companion bill: SB 6275

Requires the Office of Equity and the Department of Commerce to review and update the Community Reinvestment Plan every five years starting in 2032 to address fund distribution. It creates a work group to facilitate a transition plan for joint program administration and provide a report with legislative recommendations by November 1, 2026, and mandates the Washington State Institute for Public Policy to study the distribution and use of funds by June 30, 2027.

✅ SB 5855 – Concerning the use of face coverings by law enforcement officers. Companion bill: HB 2173

Prohibits local, state, and federal law enforcement officers from wearing masks while interacting with the public, with certain exceptions, and allows individuals detained by an unlawfully masked officer to sue that officer in their official capacity.

✅ SB 5917 – Improving access to abortion medications. Companion bill: HB 2182

Removes requirements that the Department of Corrections (DOC) sell its abortion medications at a specific cost, instead allowing but not requiring the DOC to obtain payment for distributed medications, and modifies the definition of “abortion medications” to specifically include misoprostol.

✅ HB 2325 – Establishing a tourism self-supported assessment program to fund statewide tourism promotion. Companion bill: SB 6061

Authorizes the Washington Tourism Marketing Authority (WTMA) to develop a self-supported assessment program to fund statewide tourism, creates an oversight board within the WTMA to design said program, and modifies the membership of the WTMA Board of Directors.

✅ SB 6002 – Concerning driver privacy protections. Companion bill: HB 2332

Creates a regulatory structure for the use of Automatic License Plate Reader (ALPR) systems and the captured data, restricts ALPR use by state and local agencies, sets data retention periods, and limits data sharing.

✅ SB 6081 – Protecting Washingtonians from invasion of privacy, including the unauthorized disclosure of sex designation information and historic sex designation changes in official government records.

Exempts or prohibits from public disclosure sex designation information included in vital records and records maintained by the Department of Licensing.

Looking Ahead

This year’s legislative session was packed with high-stakes fiscal decisions, major policy debates, and important wins for communities across Washington.

GSBA will continue tracking implementation, engaging policymakers, and advocating for legislation that supports small businesses, protects our communities, and advances equity across the state.

Thank you for staying engaged with GSBA Advocacy and if you have any questions, email them to gabrieln@theGSBA.org