Concerning taxation of a long-term capital gain of a section 1202 small business stock.

HB 2292 changes Washington state tax rules to include gains from federally designated small business stock in state capital gains calculations. It affects Washington residents who sell qualifying small business stock after January 1, 2026, by requiring these gains to be taxed under state law. The bill adds these gains to Washington’s adjusted capital gain calculation, which previously excluded them. This means more small business investment profits will now be subject to Washington’s capital gains tax starting in 2026.