Democratic leaders, pointing to strong public support for existing progressive revenue measures, pushed for new taxes to balance the budget. Governor Ferguson, however, signaled early and often that he would not accept a budget that leaned more on taxes than on cuts. In the end, lawmakers adopted a $77.8 billion budget with nearly $6 billion in cuts and close to $9 billion in new revenue over four years—far less than Democrats initially proposed.

Sustained advocacy from Life Science Washington and the broader business community helped block especially harmful tax proposals, including a wealth tax and statewide payroll tax. Our efforts also contributed to a final B&O tax increase that was broader, less targeted, and significantly smaller than earlier versions, helping mitigate the impact on Washington’s innovation economy.

Still, several changes in this year’s tax package directly impact life sciences companies and our ecosystem. First, an increase in the capital gains tax rate now makes Washington one of the highest capital gains tax rates in the nation, which could have significant impact on the state’s investment climate.  Second, new rules implemented related to the state supreme decision related to the Antio case will subject more companies to B&O tax on investment income and raising significant funds could push startups into higher tax brackets.  See details of all the tax changes below.

Governor Ferguson’s approval of the budget is due by May 20. He could issue partial vetoes, yet vetoes of any tax measure would likely trigger the need for a special legislative session to rebalance the budget to make up for reduced spending capabilities.

Thanks to proactive engagement before session, top policy threats like PDAB expansion and state-level changes to the 340B program did not advance—but both remain high-risk areas to watch.

Midway through session, LSW and Cyrus Biotechnology CEO Lucas Nivon testified before the House Technology, Economic Development & Veterans Committee to showcase the strength of Washington’s life sciences industry and highlight the need to maintain momentum. Lucas also urged careful AI regulation, noting that biotech AI—unlike consumer applications—requires FDA oversight and lab validation.

Click here to see a detailed report of Life Science Washington budget and policy priorities and new tax legislation that passed the legislature.

Have questions, comments, or concerns about these bills or any other pending legislation? Get in touch with LSW’s Public Affairs Manager, Curtis Knapp.

The post Policy Blog – May 12, 2025 – Washington’s 2025 Legislative Session Ends with High Stakes and Hard-Fought Compromises appeared first on Life Science Washington.

• Capital Gains and Estate Taxes—SB 5813 (Wilson)
  • Adds a 2.9% excise tax on capital gains over $1 million, on top of the current 7% tax applied to gains over $270,000 (adjusted annually for inflation).Increases estate tax rates for individuals who pass away after July 1, 2025 (changed from January 1, 2025).
    
• Business and Occupation (B&O) Tax Surcharges—HB 2081 (Fitzgibbon)
  • Increases B&O tax rates from 1.75% to 2.1% for the ‘service and other activities’ B&O tax rate for businesses with gross income of over $5 million. Businesses with gross income between $1 million and $5 million would remain subject to the 1.75 percent tax rate.Increases B&O tax rates on sectors such as manufacturing, retail, child care, and gambling.Imposes an additional 0.5% surcharge on businesses with state income over $250 million.Increases the Advanced Computing Surcharge from 1.22% to 7.5% and increases the annual cap to $75 million.
  • Provisions responding to the Antio decision apply B&O tax to investment interest income if investment are more than 5% of a businesses total revenue.
    
• Closing Ineffective & Obsolete Tax Preferences—SB 5794 (Salomon)
  • Repeals, modifies, or clarifies the legislative intent of certain tax preferences.
  • Following LSW advocacy, the bill no longer repeals the preferential rate for nonprofit research and development.
    
• Property Tax Cap Adjustment—HB 2049 (Bergquist)
  • Adjusts the annual 1% cap on property tax increases to allow for growth tied to inflation and population, capped at 3%.
  • Revenue would support K–12 education, including special education. 
    
• Sales Tax on Services and Nicotine Products – SB 5814 (Frame)
  • Expands the state’s sales and use tax to cover services like IT consulting, temporary staffing, and advertising.
  • Includes all nicotine products, whether synthetic or tobacco-derived, under the tobacco products tax.
  • Imposed a tax of $.10/cigarette
  • Requires a one-time prepayment of state sales tax from businesses with $3 million+ in taxable retail sales in 2026. The revenue would support education, healthcare, social services, and other programs.

While tax and revenue debates dominated the session, several other Life Science Washington priorities saw progress. Notably, the CARE Fund received full funding, and a number of other priorities advanced. However, as expected, many initiatives requiring new funding were deferred to future sessions.

• Andy Hill Cancer Research Endowment (CARE Fund)
  • $22.2 million for the biennium

• Department of Commerce Strategic Industry Sector Fund
  • $1.219 million per year, a 50% reduction in funding and a reduction of 5.5 FTE. LSW will work with Commerce regarding the realignment of the sector lead program.

• Career Connect Washington (CCW)
  • Career Connected Learning Grants (including sector leads) funded at $4.684 million for the biennium, preserving funding to maintain LSW workforce efforts at CCW sector lead for life sciences.
  • CCW was the target of significant funding cuts, but advocacy from partners including LSW and LSW member companies helped preserve funding for sector leads. We will continue advocacy efforts to urge Governor Ferguson to preserve this funding as he considers potential budget item vetoes.
    
• Chemical Sciences Facilities at the UW Seattle (Capital)
  • Funded at $125 million for the biennium

• CARE Fund administrative changes—SB 5455 allows multiple administrators and nonprofit entities to carry out the fund’s administrative duties. Community outreach grants for clinical trials are exempt from some evaluation and matching fund requirements, though core research grants remain subject to them. The bill also defines “clinical trial” and updates board membership following the Fred Hutch merger.
  
  
• Plastic packaging and recycling—SB 5284 overhauls recycling in Washington state and implement an end-of-life producer responsibility program passed the legislature and has already been signed into law. LSW worked with BIO to ensure that the bill exempts packaging for products regulated by the FDA, including vaccines and biologics.
  
  
• Right to Repair—Following many years of introduction, HB 1483, allowing third-party repair businesses to repair electronic devices by requiring device manufacturers to make available repair manuals, tools, and other proprietary information finally passed the legislature. LSW worked with AdvaMed to ensure the final bill includes exemptions for medical devices from such requirements.

• Reaccreditation of the Washington State University Elson S. Floyd College of Medicine
  • Not funded
    
• Team Health Education Building at WSU Spokane (Capital)
  • Not funded

• Artificial intelligence—LSW and AdvaMed sought amendments to HB 1168 (increasing transparency in artificial intelligence) to exempt systems regulated by the FDA. The sponsor did not accept any amendments sought by industry and ultimately the bill did not advance out of the Appropriations Committee.

• Biomarker testing coverage—LSW testified in person during the public hearing for HB 1062 and highlighted the role of Washington life science companies in developing groundbreaking new technologies, but once again, the bill succumbed to projections of high costs to state health plans and the budget realities facing lawmakers. Additionally, a Department of Health mandated benefit review recommended against extending coverage, claiming that biomarker testing is largely experimental and unproven. LSW will continue working with the American Cancer Society to enter the 2026 session prepared to refute both claims.

• Biosimilar prescribing practices—SB 5594, presented by the Association of Washinton Health Plans was introduced to alter formulary placement and the ability of health plans to steer patients to biosimilars and to allow a pharmacist would be able to substitute a non-interchangeable biosimilar without having to obtain authorization from the prescriber. We worked with BIO and PhRMA to ensure that biosimilars are not substituted unless they have been determined by the FDA to be “interchangeable” biosimilars. The bill passed the Senate with our amendment, but did not advance out of the House Health Care & Wellness Committee.

• Noncompetition agreements—The business community fiercely opposed HB 1155 which would have banned noncompete clauses in Washington state. The sponsor did not entertain efforts at compromise including preserving noncompete clauses for senior executives. Ultimately, the bill did not pass.

• Policies supporting newborn screening—due to budget constraints, neither whole genome sequencing (HB 1444), nor legislation providing for timely implementation and associated funding for enhanced newborn screening in parity with the Recommended Uniform Screening Panel (HB 1697) passed this year.

• Rare Disease Advisory Council—despite attempts to bring down the cost of this program by narrowing its scope to simply conduct a census or rare disease in Washington state and to house the program at UW instead of DOH, SB 5064 succumbed to budget constraints.

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Other notable legislation included a rent cap limiting annual increases (with exemptions for buildings less than 12 years old), a 6-cent per gallon gas tax hike to sustain transportation projects, and a new requirement for certified firearms training for most gun buyers.

The Seattle Times covered highlights of the new state budget and tax package:

• WA Legislature Passes $78B Budget, Rent Cap, Gun Permits as it Adjourns: https://www.seattletimes.com/seattle-news/politics/wa-legislature-passes-78b-budget-rent-cap-gun-permits-as-it-adjourns/
• WA Lawmakers Sprint to Finish Line with Final $9B Tax Plan: https://www.seattletimes.com/seattle-news/politics/wa-lawmakers-sprint-to-finish-line-with-final-9-billion-tax-plan/

Now that the legislature has passed the budgets and tax plans, Governor Ferguson has 20 days to review the plans and sign, veto, or partially veto any of the bills. At this point it remains unclear whether he may veto any of the tax plans. While he is certain to sign the budgets, he may choose to veto individual sections. Ferguson said he is “carefully reviewing the budgets line by line over the next few weeks,” and that he will “carefully review all revenue increases.” LSW worked closely with legislators throughout the session to protect critical investments and safeguard the state’s environment for life sciences innovation:

• Career Connect Washington: LSW opposed proposed cuts to this vital workforce development initiative, emphasizing its role in creating sustainable pipelines of life sciences talent. While advocacy helped mitigate the deepest cuts, the program will still see a reduction in funding, and we are actively evaluating the full implications for the life sciences workforce pipeline.

• Tax Policy: LSW successfully advocated to preserve the nonprofit research preferential Business & Occupation (B&O) tax rate, maintaining critical support for the state’s research institutions. After sustained advocacy from LSW and other business groups, the final B&O tax increase changed significantly from early proposals. Lawmakers ultimately adopted a broader, less targeted, and overall smaller increase — avoiding some of the most harmful impacts on Washington’s innovation economy.

Through sustained advocacy alongside other business allies, Life Science Washington helped mitigate major risks and preserve key drivers of industry growth during a complex and consequential legislative session. We will soon publish a full overview summarizing the outcomes for each of the policy, budget, and tax issues we tracked and advocated for throughout the session.

Here are the measures that passed:

• Capital Gains and Estate Taxes – SB 5813 (Wilson) / HB 2082 (Street)
  • Adds a 2.9% excise tax on capital gains over $1 million, on top of the current 7% tax applied to gains over $270,000 (adjusted annually for inflation).Increases estate tax rates for individuals who pass away after July 1, 2025 (changed from January 1, 2025).
• Business and Occupation (B&O) Tax Surcharges – SB 5815 (Saldaña) / HB 2081 (Fitzgibbon)
  • Increases B&O tax rates on sectors such as manufacturing, retail, child care, and gambling.
  • Imposes a 0.5% surcharge on businesses with state income over $250 million.
  • Raises rates on existing B&O surcharges. Funds would support public schools, higher education, healthcare, and social services. 
• Property Tax Cap Adjustment – SB 5812 (Wellman) / HB 2049 (Bergquist)
  • Adjusts the annual 1% cap on property tax increases to allow for growth tied to inflation and population, capped at 3%.
  • Revenue would support K–12 education, including special education. 
• Sales Tax on Services and Nicotine Products – SB 5814 (Frame) / HB 2083 (Stonier)
  • Expands the state’s sales and use tax to cover services like IT consulting, temporary staffing, and advertising.
  • Includes all nicotine products, whether synthetic or tobacco-derived, under the tobacco products tax.
  • Imposed a tax of $.10/cigarette
  • Requires a one-time prepayment of state sales tax from businesses with $3 million+ in taxable retail sales in 2026. The revenue would support education, healthcare, social services, and other programs.
  • SB 5814 passed the Senate on 4/19 by a vote of 27-22.
• Closing Ineffective & Obsolete Tax Preferences – SB 5794 (Salomon)
  • Repeals, modifies, or clarifies the legislative intent of certain tax preferences.
  • SB 5794 passed the Senate on 4/19 by a vote of 26-21-1.
  • Following LSW advocacy, the bill no longer repeals the preferential rate for nonprofit research and development.

Through sustained advocacy alongside other business allies, Life Science Washington helped mitigate major risks and preserve key drivers of industry growth during a complex and consequential legislative session. We will soon publish a full overview summarizing the outcomes for each of the policy, budget, and tax issues we tracked and advocated for throughout the session.

Have questions, comments, or concerns about these bills or any other pending legislation? Get in touch with LSW’s Public Affairs Manager, Curtis Knapp.

The post Policy Blog – April 28, 2025 – Legislature Adjourns with Budget Cuts and Major Tax Implications appeared first on Life Science Washington.

In response to Ferguson’s April 1st announcement that he will not sign a budget that relies on a wealth tax, Democratic lawmakers began exploring several new tax proposals aimed at generating revenue for public services, education, and healthcare.

But on Thursday afternoon, just hours before the $12B tax package was set to be advanced by the Senate Ways & Means Committee, Governor Ferguson voiced concerns in a press release, calling it “too risky.” However, Ferguson did not present any level of tax revenue policy he would sign, nor specific programmatic cuts he would recommend. 

While the cumulative impact on Washington’s life science industry remains concerning—especially given the state’s long-standing, founder-friendly tax climate—recent changes reflect advocacy efforts led by Life Science Washington. The package no longer includes a payroll tax proposal and a bill to repeal “obsolete” exemptions no longer eliminates the preferential B&O rate for nonprofit research.

Here are the key measures Democrats have proposed:

• Capital Gains and Estate Taxes – SB 5813 (Wilson) / HB 2082 (Street)
  • Adds a 2.9% excise tax on capital gains over $1M, on top of the current 7% tax applied to gains over $270,000 (adjusted annually for inflation). Increases estate tax rates for individuals who pass away after January 1, 2025.Raises the estate tax exclusion from $2.1M to $3M. Revenue from this bill would go to the Education Legacy Trust Account. 
  • SB 5813 passed the Senate  on 4/19 by a vote of 27-21-1 and is scheduled for a hearing in House Finance on 4/21

• Business and Occupation (B&O) Tax Surcharges – SB 5815 (Saldaña) / HB 2081 (Fitzgibbon)
  • Increases B&O tax rates on sectors such as manufacturing, retail, child care, and gambling. Imposes a 0.5% surcharge on businesses with state income over $250M. Raises rates on existing B&O surcharges. Funds would support public schools, higher education, healthcare, and social services. 
  • HB 2081 passed House Finance on 4/19.

• Property Tax Cap Adjustment – SB 5812 (Wellman) / HB 2049 (Bergquist)
  • Adjusts the annual 1% cap on property tax increases to allow for growth tied to inflation and population, capped at 3%.
  • Revenue would support K–12 education, including special education. 
  • HB 2049 passed House Finance on 4/19.

• Sales Tax on Services and Nicotine Products – SB 5814 (Frame) / HB 2083 (Stonier)
  • Expands the state’s sales and use tax to cover services like IT consulting, temporary staffing, and advertising.
  • Includes all nicotine products, whether synthetic or tobacco-derived, under the tobacco products tax.
  • Imposed a tax of $.10/cigarette
  • Requires a one-time prepayment of state sales tax from businesses with $3 million+ in taxable retail sales in 2026. The revenue would support education, healthcare, social services, and other programs.
  • SB 5814 passed the Senate on 4/19 by a vote of 27-22.

• Closing Ineffective & Obsolete Tax Preferences – SB 5794 (Salomon)
  • Repeals, modifies, or clarifies the legislative intent of certain tax preferences.
  • SB 5794 passed the Senate on 4/19 by a vote of 26-21-1.
  • Following LSW advocacy, the bill no longer repeals the preferential rate for nonprofit research and development.

• Financial Assets Tax – SB 5797 (Frame)
  • Establishes a tax at a rate of $0.34 per $1,000 of the true and fair value on certain financial intangible assets on the portion of assets owned by a Washington resident in excess of $50M.
  • SB 5797 passed the Senate Ways & Means Committee on 4/18.

• Repealing or Modifying Tax Preferences — HB 2084 (Ramel)
  • Eliminates tax preferences for the sale of precious metals and bullion.
  • Imposes the business and occupation tax on gross receipts derived from the rental of individual self-service storage units.
  • Restores the B&O preferential tax rate of 0.138 percent for warehousing and reselling prescription drugs.
  • HB 2084 passed the House Appropriations Committee on 4/19.

• The House concurred in the Senate amendments to the Right to repair bill, ESHB 1483 as amended.  It now heads to the governor for his signature. 
• SB 5455, technical amendments relating to the Andy Hill Cancer fund, passed the House and is on its way to the governor for his signature. 
• HB 2068 is the bill relating to regulating and taxing tobacco and nicotine products.  It’s known as the “kids flavored tobacco bill” and it would provide some funding for the Andy Hill Cancer fund.  It was heard on April 7^th but no executive session scheduled yet.

Have questions, comments, or concerns about these bills or any other pending legislation? Get in touch with LSW’s Public Affairs Manager, Curtis Knapp.

The post Policy Blog – April 21, 2025 – The End Game is Here? appeared first on Life Science Washington.