HB 2046
In CommitteeHouse
Intangible assets tax
Creating fairness in Washington's tax by imposing a tax on select financial intangible assets.
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 creates a new tax on high-value financial assets—like publicly traded stocks and bonds—for Washington residents whose total such assets exceed $50 million. The tax is $8 per $1,000 of value above the exemption and is dedicated to funding K-12 schools, higher education, and early learning. It includes exemptions for retirement and education accounts, and rules to prevent tax avoidance and protect spouses in joint filing situations.
- Imposes a new intangible assets tax of $8 per $1,000 of the true and fair value of a Washington resident’s taxable worldwide financial intangible assets exceeding $50 million.
- Defines financial intangible assets broadly to include publicly traded stocks, bonds, mutual funds, ETFs, options, futures, and similar investments—but excludes retirement accounts, 529 plans, pensions, and nonfinancial intangible assets (e.g., patents, trademarks).
- Exempts the first $50 million of financial intangible assets per household (or $25 million each for spouses filing separately), and provides detailed exemptions for specific asset types (e.g., retirement accounts, education savings accounts, government bonds).
- Requires annual filing and electronic payment by April 15, with penalties for late filing (up to 25%) and late payment (interest and penalties under existing tax law).
- Includes an innocent spouse relief provision allowing one spouse to avoid joint liability if they can prove lack of knowledge of underreported assets and that it would be inequitable to hold them liable.
Who is affected
- High-net-worth Washington residents — High-net-worth individuals and families with over $50 million in financial intangible assets (e.g., stocks, bonds, mutual funds) may owe a new tax of $8 per $1,000 of value above the $50 million exemption threshold.
- Families with minor children — Families with minor children may be affected if assets are transferred to children under 18—those assets would still be counted as part of the parent’s taxable intangible assets until the child turns 18.
- Married or state-registered domestic partner couples — Spouses or state-registered domestic partners who file jointly may be held jointly liable for taxes, penalties, and interest unless one qualifies for innocent spouse relief under strict criteria.
- Retirees and education savers — Retirees, students, and families using tax-advantaged accounts (e.g., 401(k)s, IRAs, 529 plans) are unaffected because those assets are fully exempt from the tax.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The tax is dedicated to the Education Legacy Trust Account to fund K-12 schools, higher education access, early learning, and child care—services that directly benefit Washington families, especially low- and middle-income households with school-aged children. This addresses chronic underfunding in public education and expands equitable access to early learning programs.
EducationPeopleRef: Sec. 3(1); Sec. 19; Sec. 1Retirement and education savings accounts (401(k)s, IRAs, 529 plans, Coverdell ESAs) are fully exempt, protecting everyday Washingtonians’ long-term financial security from taxation—especially important for retirees and families saving for college—while targeting only extreme concentrations of liquid wealth.
FinancialPeopleRef: Sec. 6(6), (13); Sec. 1The innocent spouse relief provision—though narrow—provides a statutory safeguard for spouses (particularly women and lower-income partners) who may be unaware of their household’s full asset holdings, reducing the risk of unfair liability in divorce or death scenarios.
Rights & LibertiesPeopleRef: Sec. 8; Sec. 3(1)The anti-abuse provision helps prevent tax avoidance through artificial asset transfers, preserving revenue integrity and ensuring the tax base remains broad enough to fund education—this strengthens fairness and deters gaming of the system by wealthy actors.
Public SafetyLean peopleRef: Sec. 14(3)(d); Sec. 14(2)The bill directly addresses Washington’s status as the nation’s second-most-regressive tax system by imposing a modestly progressive tax on extreme wealth—approximately $8 per $1,000 on assets over $50M—reducing the disproportionate tax burden on low- and middle-income households, who currently pay 3× more of their income in state/local taxes than the top 0.1%.
FinancialPeopleRef: Sec. 1; Sec. 19
Potential Concerns (5)
The tax applies only to households with over $50 million in financial intangible assets—approximately 1,200–1,500 Washington households—meaning the vast majority of residents pay nothing. However, the administrative and compliance burden (e.g., valuation, documentation, electronic filing) falls disproportionately on those few high-net-worth filers, who must hire specialists to navigate complex reporting and avoid penalties, increasing their effective cost of compliance.
FinancialIndustryRef: Sec. 3(1); Sec. 6(1)The bill explicitly exempts all intangible assets held by artificial persons (corporations, LLCs, partnerships, etc.), meaning large financial institutions, investment firms, and corporate entities with substantial holdings in stocks and bonds are entirely excluded from taxation—despite the tax being framed as targeting “high-value financial assets.” This creates a structural advantage for institutional investors and corporate wealth over individual high-net-worth residents.
Business & EmploymentIndustryRef: Sec. 6(8); Sec. 3(1)Joint filing with joint liability exposes spouses—particularly non-working or lower-income spouses—to significant financial risk if their partner underreports or misvalues assets. While innocent spouse relief exists, the burden of proof is high (clear and convincing evidence), and the provision explicitly bars relief for transfers within 12 months, limiting autonomy and financial agency for non-asset-holding spouses.
Rights & LibertiesIndustryRef: Sec. 6(1); Sec. 8The bill imposes steep penalties (up to 50% for gross misvaluation) and a $5,000 threshold for substantial understatement, which disproportionately affects high-net-worth filers who may face valuation uncertainty on complex assets (e.g., private equity stakes, derivatives, international holdings), increasing litigation risk and compliance costs.
FinancialLean industryRef: Sec. 10; Sec. 6(1)The broad anti-abuse authority (Sec. 14) allows the Department of Revenue to disregard transactions—even where there is no proven fraud—if assets are transferred before year-end while control is retained. This creates regulatory uncertainty for estate planners, wealth advisors, and families using trusts or gifting strategies, potentially chilling legitimate wealth transfer planning.
Business & EmploymentLean industryRef: Sec. 14(3)(d); Sec. 14(2)
Who Is Most Affected
Approximately 1,200–1,500 Washington households with over $50M in financial intangible assets will owe tax; compliance costs and valuation complexity will be high, but the tax rate is modest ($8/$1,000), and exemptions for retirement/education accounts protect core savings. Net effect: negative for this group, but narrowly so—most will still retain >$99M in assets after tax.
Families with minor children benefit indirectly but significantly from increased K-12 and early learning funding. However, if assets are held in a child’s name (e.g., UTMA), they are attributed to the parent and counted toward the $50M threshold—potentially pushing families near the threshold into tax liability.
Retirees and education savers are protected: retirement accounts (401(k), IRA, 403(b), 457) and 529/ Coverdell accounts are fully exempt. No adverse impact; in fact, this preserves the value of long-term savings from new taxation.
Corporations, LLCs, partnerships, and other artificial persons are entirely exempt from the tax—even if they hold billions in publicly traded stocks. This protects institutional investors and financial firms but means the tax burden falls solely on individuals, not the entities that manage and hold such assets.
Spouses filing jointly face joint liability, which can unfairly burden non-working or less-informed spouses—especially women, older spouses, or those in unequal partnerships. Innocent spouse relief is available but difficult to obtain, creating potential for inequitable outcomes in divorce or death.