The King County Journal reported that the 43-year-old driver was sacked in September for giving Mr Bush the finger when his presidential motorcade passed her bus during a visit in June.
The driver, who has not been identified, was reported to the school district by Republican Congressman Dave Reichert, who was accompanying Mr Bush at the time.
The paper said the woman had filed a grievance seeking re-instatement.
A statement from the the Issaquah School District, meanwhile, said the bus driver had been sacked for making the gesture in front of children.
"This incident has to do with the responsibility of an employee who is supervising students to act professionally and serve as a role model for appropriate behavior," the district superintendent said.