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Bill

SB 5777

Creating a business and occupation tax deduction and increasing the rate for persons conducting payment card processing activities.

2025-2026 Regular Session Introduced by John Braun and 2 co-sponsors

Bill increases tax rate for payment card processors while creating a business tax deduction, potentially generating revenue while adjusting B&O tax liability distribution across business sectors.

Public hearing in the Senate Committee on Ways & Means at 4:00 PM.
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Bill Summary · SB 5777

Legislative bill overview

SB 5777 modifies Washington's Business and Occupation (B&O) tax by creating a new deduction for certain businesses while simultaneously increasing the tax rate specifically for payment card processing activities. The bill targets the payment processing industry—companies that handle credit and debit card transactions for merchants—with a rate increase while offering tax relief through a newly created deduction mechanism for other B&O taxpayers.

Why is this important

Payment processing is a high-revenue sector, and targeted rate increases could generate substantial state revenue while the deduction may offset tax burdens for other business categories. This directly affects how Washington funds state services and influences business operating costs—particularly for retailers, restaurants, and service providers who rely on card payment processing, which ultimately may affect consumer prices.

Potential points of contention

  • Industry impact specificity: Payment card processors may argue the rate increase unfairly targets their sector, potentially driving businesses to other states or reducing service competition in Washington
  • Deduction scope and fairness: The nature and breadth of the new deduction are unclear—businesses excluded from the deduction may feel singled out, raising questions about whether the tax structure becomes more or less equitable
  • Economic pass-through: Whether costs are absorbed by processors or passed to merchants and consumers, potentially regressive to small businesses and lower-income shoppers who cannot avoid card transactions

Compiled from official sources — confirm details with the bill’s official record.

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