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

SB 6229 modifies Washington State's capital gains tax code to include gains from Section 1202 qualified small business stock in taxable income. It requires Washington residents who sell this specific type of small business stock (which often receives federal tax benefits) to include those gains in their state tax calculation, starting January 1, 2026. The bill amends the definition of "adjusted capital gain" to explicitly add these gains back into taxable income, reversing a prior exclusion. This change directly affects Washington residents who sell qualifying small business stock after 2025, making those gains subject to state capital gains tax.