HB 1839
In CommitteeHouse
Advanced computing surcharge
Increasing the investments in our workforce by amending the advanced computing surcharge.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill adds a 1.22% surcharge on the Washington gross income of large advanced computing businesses (those with over $25 billion in worldwide revenue), with a $9 million annual cap per affiliated group. Revenue from the surcharge will fund expanded workforce education—including more financial aid, teacher training, college seats, and STEM research support—for Washington residents.
- Imposes a 1.22% surcharge on the Washington gross income of 'select advanced computing businesses'—defined as large tech firms (with over $25 billion in worldwide revenue) engaged in software/hardware development, cloud computing, online platforms, or marketplace facilitation.
- Limits total surcharge liability for affiliated business groups to $9 million per year.
- Requires quarterly reporting and payment of the surcharge to the Department of Revenue, with penalties of up to 50% for intentional noncompliance or evasion.
- Exempts hospitals, health care provider clinics, and certain telecommunications and financial institutions from the surcharge.
- Directs all surcharge revenue into the Workforce Education Investment Account, to fund expanded access to higher education and training, especially for low- and moderate-income students.
- Expands the Washington College Grant to families earning up to 70% of the median family income, increases funding for teacher and STEM teacher training, adds in-state college seats, and funds work-study wages for STEM research.
Who is affected
- Large advanced computing businesses (e.g., tech giants) — Large technology companies with over $25 billion in worldwide gross revenue that operate in Washington and engage in advanced computing (e.g., software/hardware development, cloud services, online platforms). These businesses must pay a 1.22% surcharge on their Washington-based advanced computing income, up to a $9 million annual cap per affiliated group.
- Students and low- to moderate-income families — Students and low- to moderate-income families who may benefit from expanded access to higher education and training programs, including increased eligibility for the Washington College Grant, more in-state college seats, and work-study opportunities in STEM fields.
- Public higher education institutions — Public higher education institutions in Washington (e.g., universities, community colleges, technical colleges) that may receive increased funding to expand in-state student capacity, teacher training, and STEM research support.
- Hospitals and health care providers — Health care providers and hospitals that are exempt from the surcharge, preserving their current operations and services without additional tax burden.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
All surcharge revenue is dedicated to expanding access to higher education—including Washington College Grant eligibility up to 70% of median income, teacher training, and STEM work-study—directly benefiting low- and moderate-income students who otherwise face financial barriers to postsecondary credentials.
EducationPeopleRef: Sec. 2(3), Sec. 1The bill targets a projected 600,000-worker credential gap by funding in-state college seats and STEM research, addressing a structural workforce shortage that disproportionately harms working-class and first-generation students seeking upward mobility.
EducationPeopleRef: Sec. 1, Sec. 2(3)The $9M annual cap per affiliated group limits the surcharge’s impact on large firms’ Washington operations, helping prevent job cuts or relocation while still extracting revenue from high-margin activities based in the state.
Business & EmploymentPeopleRef: Sec. 2(1)(b), Sec. 1By targeting only firms with $25B+ in global revenue, the bill avoids burdening small and mid-sized tech employers—preserving local innovation ecosystems while capturing revenue from the most profitable segment of the tech sector.
EducationPeopleRef: Sec. 2(1)(f)(vi), (e)(vi)The 50% penalty for intentional evasion and quarterly reporting requirements improve tax compliance and deter aggressive tax avoidance, reinforcing fairness in the business tax system and supporting public trust in revenue use.
Public SafetyPeopleRef: Sec. 2(1)(d), (e)(i)
Potential Concerns (5)
The 1.22% surcharge on large tech firms' Washington gross income may reduce profitability and capital reinvestment in the state, potentially slowing hiring or expansion by affected firms—though the $9M cap per affiliated group limits exposure for most operations.
Business & EmploymentRef: Sec. 2(1)(a), (1)(f)(vi)The $25B worldwide revenue threshold excludes all but the largest tech firms (e.g., Microsoft, Amazon, Meta), leaving mid-sized tech employers and local tech startups unaffected—reducing competitive fairness and potentially distorting market incentives.
Business & EmploymentRef: Sec. 2(1)(f)(vi), (e)(vi)Exemptions for health care providers, financial institutions, and telecom infrastructure operators may create distortions—e.g., large health systems with tech subsidiaries could restructure to avoid the surcharge, while pure-play tech firms cannot.
Business & EmploymentLean peopleRef: Sec. 2(1)(f)(vi), (e)(vi)The 50% penalty for intentional noncompliance with affiliated-group reporting creates legal risk and administrative burden, especially for complex multi-entity corporate structures, potentially diverting resources from core business activities.
Business & EmploymentRef: Sec. 2(1)(d), (e)(i)While health care providers are exempt, the narrow definition of “provider clinic” and exclusion of affiliates that don’t directly provide clinical services may leave some health tech or digital health startups ineligible for exemption despite offering health-related computing services—creating regulatory uncertainty for health innovation.
HealthcareLean peopleRef: Sec. 2(2)(a)(i)-(ii), (2)(c)
Who Is Most Affected
Large tech firms with $25B+ global revenue operating in Washington (e.g., Microsoft, Amazon) will pay up to $9M/year in surcharge on their WA advanced computing income. While this is a new cost, it is capped and unlikely to affect core operations or employment significantly given their scale and margins.
Low- and moderate-income students (households earning ≤70% of median income, ~$60K for a family of 4) gain expanded access to college grants and work-study in STEM fields—directly improving educational attainment and long-term earnings potential.
Public higher education institutions (e.g., UW, WSU, community colleges) receive dedicated funding to expand in-state seats, teacher training, and STEM research—alleviating budget pressures and enabling growth in high-demand fields.
Health care providers (hospitals, clinics, provider groups) are exempt, avoiding new tax liability—but those with tech subsidiaries or digital health platforms may face uncertainty if their computing activities fall outside the narrow exemption.
Mid-sized tech employers and local startups benefit from the $25B threshold, avoiding the surcharge entirely—preserving their competitiveness while large firms absorb the cost. However, they gain little directly from the education funding unless they hire graduates from the expanded pipeline.