2025 Legislative Outcomes

The 2025 legislative session ended with a $77.8 billion budget, deep political divisions, and critical tax decisions still pending final approval from Governor Ferguson. Life Science Washington helped block some of the most damaging proposals and continued advocating for policies that protect and grow Washington’s life sciences industry.  Below is a summary of key aspects of the tax and revenue package followed by a summary of key LSW legislative priorities.

• 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.