SB5777 creates a business and occupation tax deduction for payment card processors and increases the tax rate for payment card processing activities.

SB5777 amends Washington's business and occupation tax to create a deduction for payment card processors. Processors can deduct interchange fees, network fees, and portions of fees retained by other processors from their tax liability. The bill also increases the tax rate for payment card processing activities from 0.9% to 3.0%. The new tax rate applies to gross income from payment card processing activities, excluding certain credit, debit, or prepaid card transactions. Revenues from the tax are directed to the workforce education investment account. The changes take effect January 1, 2026.

SB5777 creates a business and occupation tax deduction for payment card processors and increases the tax rate for payment card processing activities.

SB5777 amends Washington's business and occupation tax to create a deduction for payment card processors. Processors can deduct interchange fees, network fees, and portions of fees retained by other processors from their tax liability. The bill also increases the tax rate for payment card processing activities from 0.9% to 3.0%. The new tax rate applies to gross income from payment card processing activities, excluding certain credit, debit, or prepaid card transactions. Revenues from the tax are directed to the workforce education investment account. The changes take effect January 1, 2026.