2026 Legislative Outcomes

The 2026 legislative session has adjourned following one of the most contentious debates in recent years, driven by a projected budget shortfall and resulting in major fiscal changes, including a new income tax on high earners. Lawmakers finalized a broad set of tax, budget, and policy decisions in the final days, balancing competing priorities under ongoing fiscal constraints. The final outcomes reflect a mix of progress and continued challenges, with key workforce development wins, and defeating harmful proposals. This report provides an overview of the session’s key outcomes and where work remains.

Harmful Tax Legislation Defeated

DEFEATED: HB 2292/SB 6229 capital gains tax on small business stock. Legislation to apply the capital gains tax to small business stock did not advance this session, following strong opposition from the state’s startup community, including Life Science Washington. Its defeat avoids new tax exposure for startup founders and investors, preserving an important incentive for early-stage investment and company growth in Washington.

DEFEATED: HB 2100/SB 6093: statewide payroll tax. Proposals to establish a Seattle JumpStart-style statewide payroll tax (HB 2100 / SB 6093) did not advance this session, following engagement from Life Science Washington and partners. Preventing this new tax helps maintain a more competitive environment for employers across the state.

Millionaire’s Income Tax

legislature moved forward with the Millionaire’s Tax (SB 6346), one of the session’s most consequential and controversial measures. The bill establishes a new 9.9% tax on income above $1M beginning in 2028, alongside a range of related tax changes and policy adjustments. Governor Ferguson has signed the measure into law, and legal challenges are expected as implementation moves forward.

Estate Tax Changes

SB 6347 reduces Washington’s estate tax rates by restoring the prior, lower pre-2025 rate structure, including lowering the top marginal rate back to 20 percent and decreasing rates across most estate value brackets for estates of decedents dying beginning in mid-2026. The bill also sets the exclusion amount at $3M. This represents a rollback from provisions passed in 2025, which increased rates across the schedule and raised the top rate to 35 percent (nation’s highest).

CARE Fund

While the final state operating budget appropriates $10M for the Andy Hill Cancer Research Endowment (CARE) Fund, that amount falls short of maintaining the program’s current level of support. SB 6129, the tobacco, nicotine, and vapor tax legislation, was designed to provide an additional $10M to supplement the budget and sustain funding for cancer research grants. However, the bill ultimately died in the House Finance Committee due to disagreements about anti-smoking and vaping provisions. As a result, the failure of SB 6129 leaves the CARE Fund $10M short for the biennium, reducing the total funding available for new research investments, and leaving the structural errors in place that direct all tobacco and nicotine taxes to the general fund without diverting some revenue to the public health and CARE Fund state match accounts.

UW Bothell Center for Biotechnology Innovation and Training

We are thrilled to report that the final operating budget approved by the Legislature includes $250,000 to support the Center for Biotechnology Innovation and Training (CBIT) at the University of Washington Bothell. CBIT was developed in partnership with life science employers to create an applied biotechnology pipeline aligned with high-demand industry needs. The program combines industry-informed curriculum, paid internships, and direct employer engagement to prepare students for lab and biomanufacturing roles. This investment will help strengthen Washington’s life science workforce pipeline and support the continued growth of our state’s innovation economy.

Budget Directs WEIA Oversight Board to Engage High-Tech Industry

The final budget also includes language directing the Workforce Education Investment Account (WEIA) Oversight Board to partner with Washington’s high-technology industry associations as part of its 2026 report to the Legislature. The report will examine how the state can better support investment in high-demand degree and advanced certificate programs. This was a core priority when the Workforce Education Investment Act was originally enacted, and paid for by a tiered B&O tax surcharge on Washington companies, including Life Science Washington members. Strengthening alignment between industry workforce needs and WEIA investments will help ensure the program continues to support the sectors driving Washington’s innovation economy.

340B Manufacturer Mandate Bill

SB 5981, addressing hospital contract pharmacy arrangements under the federal 340B program, was a major focus of Life Science Washington’s advocacy this session. We devoted significant time to raising concerns about the bill’s impact and successfully pushed for the inclusion of transparency and reporting provisions to better understand how the program operates in Washington and whether patients actually see a benefit. Governor Ferguson signed the bill into law, and a lawsuit was filed shortly thereafter. The issue is likely to remain a key policy and legal focus moving forward.

Health Technology Assessments

SB 5915, a priority bill for rare disease patients, aims to make it easier for treatments to receive state purchased health program coverage. The bill provides flexibility for the Health Technology Clinical Committee to consider all valid clinical trials and scientific data when evaluating technologies and making assessments, rather than only randomized and controlled trials.

Animal testing

We were successful in defeating HB 2542, which would ban animal testing in drug development when alternative methods are available. LSW and BIO submitted a joint letter raising our concerns with the bill, emphasizing that while the industry supports continued development of alternatives, no current methods can fully replace animal testing for ensuring safety and efficacy before therapies reach patients. We noted that restricting these tools would not eliminate animal testing globally but could instead push innovation and investment out of Washington. Over the interim, will continue engaging with lawmakers to educate them about drug development.

Artificial Intelligence regulation

Artificial intelligence policy remained an active area of discussion this session, with several proposals introduced to address the use and oversight of AI systems. Life Science Washington worked closely with AdvaMed to review AI bills introduced this session and determined that none required changes to support the continued use of AI in the life science industry. Overall, the final outcomes did not create new barriers for AI driven innovation in the sector. HB 1170 was the one new AI policy signed into law, and is focused primarily on consumer transparency, requiring disclosure when content is AI generated and when users are interacting with certain AI systems.

Rare disease priorities

Rare disease priorities saw limited progress in 2026. Funding for expanded newborn screening was ultimately included in the final budget after being proposed by both chambers. However, policy proposals such as biomarker testing coverage did not pass due to continued budget constraints.

After significant reductions in 2025, the 2026 legislative session ultimately avoided the most severe additional cuts to Washington’s higher education system, even as budget pressures remained high. Last year’s actions included across-the-board funding reductions for public institutions, elimination of key student support programs like the Washington Student Loan Program and bridge grants, and targeted cuts to workforce and access initiatives such as Career Connect Washington and the Regional Challenge Grant. Lawmakers also shifted nearly $500M in General Fund support into the Workforce Education Investment Account (WEIA), breaking the original intent that new WEIA revenues would supplement, not replace, higher education funding.

Against that backdrop, initial 2026 budget proposals raised concerns about deeper reductions, but final agreements largely preserved core institutional funding for universities like UW and WSU and avoided many of the more substantial cuts under consideration. While this outcome provides short-term stability, many of the structural funding challenges created in 2025 remain unresolved, particularly for student financial aid, workforce development programs, and the long-term integrity of the WEIA funding model.