HB 2398
In CommitteeHouse
Maritime trade ed. assist.
Establishing business and occupation and public utility tax credits for small business employers providing maritime trade educational assistance.
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 tax credits for small Washington businesses that pay for maritime trade education or training for employees working aboard or servicing U.S.-flagged vessels. The credits apply to both B&O and PU taxes, up to $20,000 per business per year, and are designed to support workforce development in maritime industries.
- Creates a 100% tax credit (up to $20,000 per business per year) for small businesses that pay for maritime trade education or training for employees working on U.S.-flagged vessels.
- Applies to both the Business and Occupation (B&O) tax (under chapter 82.04 RCW) and the Public Utility (PU) tax (under chapter 82.16 RCW), but prohibits double-claiming the same costs under both taxes.
- Credits can be carried forward for up to five years if not fully used in a given year, but no refunds are allowed—only credit against future tax liability.
- Eligible expenses include tuition, books, on-campus lodging, simulator fees, and tools (e.g., gloves, boots, dividers) for maritime trade training at approved institutions or apprenticeship programs.
- Employees must be full- or part-time workers enrolled in maritime trade programs in Washington and must have applied for federal or state financial aid or be in a union training trust.
- The program expires for new claims on January 1, 2038, and the statutory authority expires on January 1, 2039—unless the legislature extends it after reviewing increases in employer participation and maritime program enrollment.
Who is affected
- Small businesses in the maritime sector — Small businesses in Washington (with 50 or fewer employees) that provide educational assistance to employees working on U.S.-flagged vessels may reduce their business and occupation (B&O) or public utility (PU) tax liability through refundable tax credits, up to $20,000 per year.
- Maritime trade employees — Employees of small businesses who are enrolled in maritime trade training programs in Washington and meet eligibility criteria (e.g., federal/state financial aid application or union training trust participation) may receive tuition and training cost support from their employers, supported by the tax credit.
- Educational institutions offering maritime training — Washington-based educational institutions—including community colleges, technical schools, and maritime training providers with U.S. Coast Guard approvals—may see increased enrollment and funding from employer-sponsored educational assistance programs.
- Washington State Department of Revenue — The Washington State Department of Revenue will be responsible for administering and verifying eligibility for the tax credits, including reviewing electronic filings and maintaining records.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The 100% tax credit for maritime training expenses directly reduces the net cost for small businesses to upskill employees, potentially increasing employer willingness to invest in training—especially for costly credentials like Coast Guard-approved programs, simulator fees, and tools. This can strengthen retention and career progression for maritime workers.
Business & EmploymentPeopleRef: Sec. 1(1), Sec. 1(7)(a), Sec. 1(7)(c)By tying the credit to approved maritime training institutions—including community colleges, technical schools, and Coast Guard–approved programs—the bill creates a direct financial incentive for educational providers to expand maritime programs, potentially increasing enrollment and state investment in high-demand, high-wage maritime careers.
EducationPeopleRef: Sec. 1(7)(b), Sec. 1(7)(e)The inclusion of union training trusts and financial aid application as eligibility pathways supports workers in formal apprenticeship pathways, many of whom are unionized maritime workers—often among the most stable and well-compensated in the sector—potentially improving job quality and career mobility.
Business & EmploymentPeopleRef: Sec. 1(7)(d), Sec. 1(7)(e)The five-year carryforward provision allows businesses to smooth the benefit across years, improving predictability for cash-strapped firms and enabling them to claim credits in higher-profit years—though the non-refundable nature still limits value for low-tax firms.
FinancialLean peopleRef: Sec. 1(2), Sec. 2(2)The legislative review and conditional extension mechanism—triggered by increases in employer participation and program enrollment—creates accountability and could lead to program expansion if outcomes are positive, potentially scaling benefits to more workers over time.
Business & EmploymentPeopleRef: Sec. 3(4)
Potential Concerns (5)
The $20,000 annual cap and non-refundable nature of the credit means many small businesses—especially those with low tax liability—will be unable to fully utilize the credit, reducing its real-world impact. Since credits cannot be refunded, a business with $5,000 in B&O tax liability can only claim $5,000 in credits, even if it spent $20,000 on training. This limits effectiveness for the smallest firms.
FinancialRef: Sec. 1(3), Sec. 2(3)The requirement that employees apply for federal/state financial aid or be in a union training trust excludes many low-income or non-union workers who might otherwise benefit from employer-sponsored training, limiting access to the most vulnerable workers.
Business & EmploymentRef: Sec. 1(7)(d), Sec. 1(7)(e)The definition of 'small business' includes entities with up to 50 employees, but the $20,000 credit cap may disproportionately benefit larger small businesses (e.g., 40–50 employee firms) that can afford to train more workers, while micro-businesses (1–10 employees) may not reach the threshold to make the credit meaningful.
Business & EmploymentRef: Sec. 1(7)(f), Sec. 1(7)(a)The sunset clause and performance-based extension requirement create uncertainty for long-term planning by educational institutions and employers, potentially undermining program stability and discouraging sustained investment in maritime workforce development.
Local GovernmentRef: Sec. 3(4)The prohibition on refunds means businesses with insufficient tax liability (e.g., startups, seasonal firms, or those in loss years) cannot realize the full value of the credit, effectively turning it into a regressive benefit that favors profitable businesses.
FinancialRef: Sec. 1(2), Sec. 2(2)
Who Is Most Affected
Small maritime businesses (e.g., tugboat operators, ship repair shops, marine contractors) with 50 or fewer employees may reduce tax liability and lower the net cost of training workers—potentially increasing workforce development investment. However, those with low tax liability or fewer than 5–10 employees may not benefit meaningfully due to the non-refundable cap.
Maritime employees—especially unionized or financially aid applicants—gain access to employer-sponsored training that may lead to Coast Guard credentials and higher wages. However, non-union, low-income, or recent entrants without financial aid applications may be excluded, limiting equity of access.
Community colleges, technical schools, and Coast Guard–approved maritime training providers may see increased enrollment and demand for maritime programs, supporting program sustainability and expansion. However, institutions without approved maritime programs or Coast Guard credentials may not benefit.
The Department of Revenue gains administrative responsibility but faces no new funding or staffing mandate, potentially straining existing resources without additional support. The agency must verify eligibility and prevent double-claiming, increasing compliance complexity.
State and federal general funds are not directly impacted, but the state forgoes tax revenue equal to claimed credits—potentially hundreds of thousands annually if uptake is high. This reduction in revenue could affect public services unless offset, indirectly impacting all residents who rely on state services.