Washington is rolling back a state sales tax carveout for replacing data center equipment and backtracking on a significant estate tax increase after Gov. Bob Ferguson signed a set of tax bills into law.
Ferguson (D) also signed two measures from the Democrat-led legislature that make changes to the state’s business and occupation tax, its primary method of taxing business income.
These tax policy updates come on the heels of Washington’s landmark move to adopt a new income levy on taxpayers making more than $1 million a year.
The data center bill (S.B. 6231) that Ferguson signed Wednesday mirrors efforts by other states to reconsider tax benefits for the industry as state budgets tighten and local residents raise concerns over energy use. The Washington bill removes a retail sales and use tax exemption for replacing server equipment at existing data centers starting July 1.
“This bill does not change existing exemptions when a data center is constructed,” the governor said at a signing ceremony.
On March 24, Ferguson had signed S.B. 6347. The bill reverses a previously adopted measure that significantly hiked Washington’s estate tax rate for high-value estates after the increase drew pushback.
Two other enacted bills target the state’s business and occupation tax. One (H.B. 2487), signed Wednesday, changes how insurance companies can apply exemptions to the tax based on what a company already pays in taxes on insurance premiums. The other (H.B. 2089), signed March 23, requires high-volume mortgage lenders to pay the state’s business and occupation tax on income from interest on certain investments in order to fund the state’s wildfire mitigation efforts.
The legislative session in Washington closed March 12.
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