HB 2093
In CommitteeHouse
Precious metals tax exempt.
Reinstating the tax exemptions for the sale of precious metals and bullion.
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 reinstates a sales tax exemption for transactions involving precious metal bullion and monetized bullion (e.g., gold/silver bars and government coins used as currency), meaning buyers will no longer pay Washington sales tax on these items. It also adjusts how dealers calculate business taxes on such sales.
- Exempts the sale of precious metal bullion (e.g., gold, silver, platinum, palladium bars or refined forms) and monetized bullion (e.g., government-issued gold or silver coins used as currency) from Washington’s sales and use tax.
- Clarifies that only the commission portion of a dealer’s transaction (not the full sale price) is subject to business and occupation (B&O) tax, and no deduction is allowed for commissions or salaries paid to employees.
- Defines key terms: 'precious metal bullion' means refined metals whose value is based on material content, not form; 'monetized bullion' means coins or money made from precious metals and used as legal tender—but excludes items intended for jewelry or art.
- Specifies that existing tax rules for bullion dealers (RCW 82.32.805 and 82.32.808) do not apply to this new exemption.
Who is affected
- Precious metals dealers and individual investors — Buyers and sellers of precious metal bullion (like gold or silver bars, coins, or monetized bullion) will no longer pay Washington state sales tax on these transactions, reducing their transaction costs.
- Jewelry stores, coin shops, and bullion dealers — Retailers and dealers who buy or sell precious metal bullion will no longer collect or remit sales tax on these items, simplifying their tax reporting but potentially affecting revenue streams tied to tax collection.
- State and local governments — State and local governments may see a small reduction in sales tax revenue from precious metal transactions, though the impact is expected to be minimal due to the relatively small share of such sales in overall retail activity.
Pro/Con Analysis
Potential Benefits (2)
Eliminating sales tax on bullion transactions lowers the barrier to entry for low- and middle-income individuals seeking to build small savings in tangible assets. Bullion is often used as a hedge against inflation and currency devaluation—issues that disproportionately impact wage-earners and retirees on fixed incomes.
FinancialPeopleRef: Sec. 1(1)By taxing only commissions rather than full transaction value, the bill reduces the tax burden on bullion dealers’ operations—especially small, locally owned shops that act as intermediaries. This may improve cash flow and support continued operation of local coin shops and precious metals retailers, preserving local jobs in niche retail sectors.
Business & EmploymentPeopleRef: Sec. 1(2)
Potential Concerns (3)
The sales tax exemption for precious metal bullion and monetized bullion reduces state and local tax revenue by an estimated < $1 million annually. While this amount is small in absolute terms, it represents a regressive shift: the exemption benefits high-net-worth individuals who hold bullion as an investment, while the lost revenue reduces funds available for public services that benefit all residents—including education, transportation, and healthcare.
FinancialIndustryRef: Sec. 1(1)The B&O tax change—taxing only commissions (not full transaction value) and disallowing deductions for employee compensation—increases the effective tax rate on bullion dealers’ labor and operational costs. While dealers may report lower gross receipts, the tax base shift disproportionately burdens small dealers with thin margins who rely on commission income, potentially reducing profitability and hiring incentives.
Business & EmploymentIndustryRef: Sec. 1(2)The bill excludes bullion held for jewelry or art production from the exemption, but does not clarify whether bullion held in retirement accounts (e.g., self-directed IRAs) qualifies. Ambiguity may lead to inconsistent enforcement and legal challenges, disproportionately affecting middle-class investors who use bullion as a retirement hedge—potentially undermining its intended purpose as an accessible savings vehicle.
HousingIndustryRef: Sec. 1(3)(a)-(b)
Who Is Most Affected
High-net-worth individuals and retirees who hold bullion as a store of value benefit significantly from the sales tax exemption, reducing their transaction costs and improving after-tax returns on alternative investments. However, they are not the *primary* beneficiaries of the B&O change, which favors dealers over end users.
Small bullion dealers and coin shops benefit from reduced tax liability on commissions and simplified compliance, but may face competitive pressure if large national dealers absorb the market share more easily due to scale advantages. The net effect is modestly positive for independent operators.
Low- and middle-income individuals who use bullion as a savings tool gain from lower transaction costs and greater access to inflation-protected assets. However, the benefit is limited because bullion purchases remain a niche activity among this group—most do not hold significant bullion balances.
State and local governments experience a small direct revenue loss (< $1M/year), but this is offset minimally by increased economic activity in the bullion sector. The net fiscal impact is slightly negative, though not severe given the scale of the state budget.
Large financial institutions and bullion exchanges (e.g., APMEX, JM Bullion) benefit from reduced compliance complexity and lower effective tax rates on commission income, giving them a structural advantage over smaller competitors. They are the primary beneficiaries of the B&O structure change.