WA Democrats propose 5 new tax bills on Tax Day—and they’re coming for the big dogs

If you’re a millionaire, a mega-corporation, or a company hoarding electric car credits, you might want to sit down.

Democrats in Washington state’s House and Senate dropped five brand-new tax bills Tuesday—on Tax Day, of course—that aim to wring more cash out of the state’s wealthiest players and biggest industries.

The target? More funding for schools, clean energy, and public services.

The mood? Less “nickel and dime,” more “fork it over.”

All five bills are scheduled for their first public hearing Wednesday, giving supporters and critics barely any time to digest the details.

It’s all part of a democratic strategy to cover what Washington Governor Bob Ferguson has said is a $16 billion shortfall in tax revenue needed to fund already-existing programs over the next two years. Republicans have already blasted the proposals, saying lawmakers need to reduce spending, not increase taxes.

Here’s what’s on the legislative table:

SB 5814: Sales taxes expand, and big retailers get an early bill

The flashiest bit in this one? Big retailers would be forced to pre-pay part of their 2027 sales tax liability in 2026—or get slapped with a 10% penalty.

Under Senate Bill 5814, any business making $3 million or more in sales during 2026 would have to pay 80% of their June 2027 sales tax by June 25—a full month early. Miss the deadline or underpay? That’s a 10% fine unless you can prove a serious revenue drop.

But that’s not all. This bill also updates the tax code for the digital age:

• Services like IT consulting, website design, advertising, and staffing? Now taxed like retail goods.
• Digital services involving human effort—like live webinars, ad targeting, and data analysis—also get hit with sales tax.
• Non-tobacco nicotine products (think synthetic vapes)? Treated just like tobacco for tax purposes.

Why? Democrats say it’s about fairness, consistency, and creating a more stable revenue stream to support things like health care and education. For businesses, though, it’s a tax buffet—and they’re the main course.

SB 5813: ‘Tax the Rich’ becomes official education policy

Senate Bill 5813 puts a big, shiny target on high earners and ultra-wealthy estates.

Remember Washington’s 7% capital gains tax? The tax voters decided in November to keep. This bill adds a new top tier of 9.9% on gains over $1 million, starting in 2025.

No changes to retirement accounts or real estate, but if you’re cashing out stocks or selling a business—yep, you’ll be paying more.

On the estate side: The exemption rises to $3 million (up from just over $2.1M), but the top tax rate jumps from 20% to 35% for estates worth over $9 million.

Where’s the money going? Straight into the Education Legacy Trust Account—which funds K-12 schools, higher ed, early learning, and financial aid programs.

SB 5815: B and O Tax gets beefed up

Big businesses, consider this your formal request to chip in more.

Senate Bill 5815 hikes Washington’s already unique Business and Occupation (B and O) tax rates for several sectors:

• Retail, manufacturing, and wholesale: from ~0.48% to 0.5%
• Gambling (aka “contests of chance”): from 1.5% to 1.8%
• High-income service providers (earning over $1M/year): from 1.75% to 2.1%

Then there’s the heavy hitter: a temporary 0.5% surcharge on businesses pulling in more than $250 million in WA-based revenue, with tech companies being the primary target.

Advanced computing companies? Their surcharge would skyrocket from 1.22% to 5%, and the cap on that tax would rise from $9 million to $50 million per year.

Where’s the extra money going? Right into public schools, health care, and social programs. In other words: the state’s biggest earners just got handed the check.

SB 5812: Property taxes get smarter—and schools get the benefit

Senate Bill 5812 appears to be a remix of Washington’s school funding formula.

First up: the property tax cap. Instead of a flat 1% growth limit, the new formula ties annual increases to population growth + inflation, with a 3% max. That means growing communities won’t get left behind.

But there’s some confusion about how this pairs with another bill proposing to raise the local portion of property taxes from 1% to 3%.

School districts would also get more room to raise local levy dollars—up to $5,035 per student by 2031, adjusted for inflation.

For poorer districts, the state would chip in more through Local Effort Assistance, adding up to $300 more per student over the next few years.

Special education also gets a major upgrade:

• The current cap limiting SPED services to 16% of enrolled students? Gone in 2028.
• A set portion of basic ed funding will be directly funneled into special ed programs.

Plus, a new workgroup will re-evaluate the entire school funding system, with a report due in late 2025.

Bottom line: This isn’t just a tax hike—it’s a long-term structural play to get schools the money they need, when and where they need it.

SB 5811: Tesla’s free ride on EV credits could be over

If Senate Bill 5811 had a motto, it’d be: “If you’re profiting off EV credits without actually putting EVs on our roads—pay up.”

Tesla and other electric-only automakers have made millions by selling off excess Zero-Emission Vehicle (ZEV) credits earned under Washington’s clean car rules. This bill slaps a tax on that hustle:

• Selling credits? 2% tax.
• Banking credits for later? 10% of average credit price, per year.
• Pooling credits to other states? 10% tax—or 50% if you’re not selling enough EVs here.

Small players (those with fewer than 25,000 EVs per model year) are exempt from the first two, but pooled credits? Always taxed.

Where does the money go?

• 30% to EV incentives (rebates, charging stations, etc.).
• 70% to the state’s general fund until 2027, and the carbon reduction fund after that.

In short: Tesla’s cash cow is about to get milked.

Final take

Each of the Senate Bills has a companion bill in the House that could move on a parallel track, but the bills will have to move quickly because the session ends April 27.

This five-bill blitz isn’t just a bunch of tax tweaks—it’s a wave of new revenue-raising policies, layered on top of a half-dozen other proposals already working their way through Olympia.

Democratic lawmakers say it’s about equity, sustainability, and smart public investment. And they’re going where the money is.

So whether you’re a billionaire, a Big Tech exec, a booming business owner, or just a regular property owner, the message from the Democratic majority is loud and clear: It’s time to pay more so the state can spend more.

Matt Markovich is the KIRO Newsradio political analyst. Follow him on X. Read more of his stories here.

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