Washington HB 1895: Establishing a business and occupation tax credit for small business employers providing educational assistance to employees.

Bill Text

AN  ACT  Relating  to  establishing  a  business  and  occupation  tax 1
credit for small business employers providing educational assistance 2
to employees; adding a new section to chapter 82.04 RCW; creating new 3
sections; and providing an expiration date.4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW  SECTION.   Sec.  1.   The  legislature  finds  that  Washington 6
state  faces  immense  workforce  challenges  to  fill  both  high  paying 7
blue and white-collar jobs. The legislature further finds that nearly 8
half of Washington state high school students are not going into an 9
accredited program after school; this means that high school students 
10
are not going to college, community college, or trade school. Rather, 11
these  students  are  largely  entering  the  workforce  in  predominately 12
low-wage jobs. The legislature intends to work with small businesses 13
to  support  them  while  they  support  their  employee's  reeducation  or 14
training, whether that is through trade school, community college, or 15
college,  to  ultimately  fill  high-wage  jobs  in  trades  or  other 16
industries. The legislature intends to provide small businesses with 17
tax relief in exchange for investments in their employee's education 18
at  an  accredited  institution  and  participation  in  the  financial  aid 19
process to help improve access to the Washington college grant, among 20
other financial aid options. By partnering with small businesses, the 21
H-0932.2
HOUSE BILL 1895
State of Washington69th Legislature2025 Regular Session
By Representatives  Richards,  Paul,  Walen,  Rule,  Volz,  Springer,  and 
Shavers
Read first time 02/07/25.  Referred to Committee on Finance.
p. 1HB 1895

legislature  intends  to  help  these  businesses  invest  in  their 1
employee's  long-term  success.  The  legislature  intends  that  the 2
success of this tax preference to be measured through the increased 3
growth  of  small  businesses  and  in  enrollment  in  accredited 4
institutions.5
NEW SECTION.  Sec. 2.  A new section is added to chapter 82.04 6
RCW
 to read as follows:7
(1)  Beginning  January  1,  2026,  a  person  is  allowed  a  credit 8
against the tax imposed in this chapter equal to 100 percent of the 9
costs  related  to  providing  educational  assistance  to  employees  of 10
small businesses.11
(2)  The  credit  claimed  may  not  exceed  the  tax  that  would 12
otherwise  be  due  under  this  chapter.  Refunds  may  not  be  granted  in 13
the place of credits. Any amount of credit earned under this section 14
not  claimed  by  the  taxpayer  in  one  calendar  year  may  be  carried 15
forward for no more than one calendar year immediately following the 16
year that the credit was earned.17
(3) The total credit amount approved under this section may not 18
exceed  $20,000  for  each  person  claiming  the  credit  in  a  calendar 19
year.20
(4) The department must administer the credit. To claim a credit 21
under this section, the person applying must complete an application 22
for credit based on qualifying expenditures incurred by the eligible 23
person  the  previous  calendar  year.  The  department  must  rule  on 24
applications within 60 days of receipt. The department may extend the 25
time  of  processing  an  application  upon  notice  to  the  person  and  by 26
providing the person an explanation on why the application processing 27
cannot be completed on time.28
(5)  To  claim  a  credit  under  this  section,  a  person  must 29
electronically file with the department all returns, forms, and other 30
information  the  department  requires  in  an  electronic  format  as 31
provided  and  approved  by  the  department.  Any  return,  form,  or 32
information  required  to  be  filed  in  electronic  format  under  this 33
section  is  not  filed  until  received  by  the  department  in  an 34
electronic format. For purposes of this subsection, "returns" has the 35
same meaning as "return" in RCW 82.32.050.36
(6) The following definitions apply to this section:37
p. 2HB 1895

(a) "Educational assistance" means any payments from an employer 1
directly  to  an  educational  institution  for  educational  or  training 2
expenses.3
(b)  "Educational  expenses"  means  tuition,  books,  and  on-campus 4
lodging  for  the  employee  relating  to  a  transfer  associate  degree, 5
applied   bachelor's   degree,   registered   apprenticeship,   specific 6
professional   and   technical   associates   degree,   or   stackable 7
credential.8
(c)  "Educational  institution"  means  any  university,  college, 9
community   college,   junior   college,   technical,   vocational,   or 10
professional  school,  or  approved  noncampus-based  apprenticeship 11
program   that   participates   in   state   financial   aid   programs 12
administrated by the Washington student achievement council.13
(d)  "Employee"  means  a  full  or  part-time  employee  that  is  a 14
stu