The 2025 Washington legislative session adjourned Sine Die on April 28 after 105 days of intense policymaking and budget negotiations. Despite expanded Democratic majorities, deep divisions over how to close a $16 billion deficit—driven by years of overspending and reliance on one-time federal funds—created frequent clashes within and across party lines, and with newly elected Governor Bob Ferguson.
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.
