HB 2713
In CommitteeHouse
Detention facilities B&O tax
Imposing a business and occupation tax surcharge on the operators of private detention facilities.
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% surcharge to the Business and Occupation (B&O) tax for private detention facilities in Washington that earn over $1 million in annual gross receipts from in-state operations. The tax applies only to income directly tied to running those facilities and begins in 2026.
- Imposes a 1% surcharge on the Washington taxable income of private detention facility operators with over $1 million in annual Washington gross receipts.
- The surcharge applies only to income directly tied to operating a private detention facility, not other business income.
- The tax takes effect for tax years beginning on or after July 1, 2026.
- The surcharge is in addition to all other Business and Occupation (B&O) taxes already paid by the facility operator.
Who is affected
- Private detention facility operators — Private companies that operate detention facilities in Washington and have over $1 million in annual Washington gross receipts will owe an additional 1% tax on income from those facilities.
- Local government agencies — Local governments and counties that contract with private detention facilities may face higher service costs if operators pass on the tax burden.
- Immigrant and refugee communities — Immigrant and refugee communities may be indirectly affected if private detention facilities reduce services or capacity in response to the tax.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The $2–3M annual revenue generated will support state and local services — including public safety, health, and social services — that benefit everyday Washingtonians, especially vulnerable populations who rely on public infrastructure.
Public SafetyPeopleRef: Sec. 1(1), (2); Fiscal Impact sectionThe tax targets only large, for-profit detention operators earning over $1M annually — not small businesses — and redirects revenue toward community-based alternatives (e.g., diversion, legal aid, housing), supporting equitable economic development and reducing reliance on punitive systems.
Business & EmploymentPeopleRef: Sec. 1(1), (2); Fiscal Impact sectionBy increasing the cost of private detention, the policy may reduce overreliance on incarceration for immigrants — particularly families and asylum seekers — aligning with growing public support for humane, community-based immigration processing.
Rights & LibertiesPeopleRef: Sec. 1(1), (2)Revenue from the surcharge could fund educational support for immigrant and refugee communities — such as English language learning, legal education, and K–12 retention programs — improving long-term outcomes for at-risk youth.
EducationPeopleRef: Sec. 1(1), (2)Reduced detention capacity may decrease energy use, water consumption, and waste generation at private facilities — though this is a secondary effect and not the bill’s primary purpose.
EnvironmentLean peopleRef: Sec. 1(1), (2)
Potential Concerns (5)
Private detention facility operators with over $1M in Washington gross receipts will face an additional 1% tax on facility-related income, potentially reducing profit margins and discouraging investment or expansion in this sector — especially for smaller operators near the $1M threshold.
Business & EmploymentPeopleRef: Sec. 1(1), (2)Counties and local governments that contract with private detention facilities may face higher costs if operators pass the tax onto public agencies through increased service fees, potentially straining public budgets and limiting contract flexibility.
Local GovernmentPeopleRef: Sec. 1(1), (2)If operators reduce capacity, staffing, or programming in response to the tax — especially in facilities housing non-citizens awaiting immigration proceedings — it could degrade oversight, increase safety risks for staff and detainees, and strain local law enforcement and emergency response systems.
Public SafetyLean peopleRef: Sec. 1(1), (2)Reduced facility capacity or services may limit access to medical and mental health care for detainees — many of whom are immigrants with urgent health needs — potentially increasing emergency department use and long-term public health burdens.
HealthcareLean peopleRef: Sec. 1(1), (2)If operators reduce bed capacity or exit the market due to the surcharge, it may increase pressure on public housing and shelter systems for individuals released from detention without adequate community-based alternatives.
HousingLean peopleRef: Sec. 1(1), (2)
Who Is Most Affected
Large for-profit detention operators (e.g., CoreCivic, GEO Group) face a direct tax on facility income above $1M — reducing after-tax profits. Smaller operators near the $1M threshold may be disproportionately affected due to thin margins.
Counties and cities that contract with private detention facilities may see per-diem or service costs rise if operators pass on the tax — potentially reducing funds available for other public services like schools or roads.
Immigrant and refugee communities — especially those with members detained or fearing detention — benefit from reduced reliance on private prisons and potential reallocation of funds to community-based support services.
Taxpayers and public service users benefit from new state revenue ($2–3M/year) that can fund health, education, and safety programs — especially in communities disproportionately impacted by immigration enforcement.
Legal aid and social service providers may see increased demand if detention use declines, but also potential new funding streams if state reallocates surcharge revenue to community-based alternatives.