Washington —
no income tax, but the B&O catches everyone off guard.

Washington has no personal or corporate income tax — a huge advantage. But the Business & Occupation (B&O) tax applies to gross revenue regardless of profit, and Seattle's additional taxes add another layer for city-based founders.

0%Income tax rate

1.75%B&O services rate

6.5%Sales tax state rate

10.25%Seattle combined rate

Other state guides

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Washington's biggest tax advantage: No personal income tax and no corporate income tax. Every dollar of profit you earn in Washington is not subject to state income tax — a significant advantage over California, New York, or Hawaii.

Personal income tax

Washington has no personal income tax — a constitutional protection

Corporate income tax

No corporate income tax — businesses pay B&O instead

1.75%

B&O — services

On gross revenue from service businesses. No deduction for expenses

0.471%

B&O — retail sales

Lower rate for product sellers but sales tax also applies on top

6.5%

State sales tax

Base state rate. Local additions bring most areas to 9.5%–10.5%

$60

Annual LLC report fee

Due annually to Secretary of State. Missing this can dissolve your LLC

The B&O trap: Washington's Business & Occupation tax is calculated on gross revenue — not profit. If you had $500,000 in revenue but only $10,000 in profit, you still owe B&O on the full $500,000. This catches service businesses especially hard.

Washington B&O tax — complete guide

The Business & Occupation tax is Washington's primary business tax. It applies to almost every business in the state and is calculated on gross receipts — not profit.

1.75%

Services & others

Consultants, designers, attorneys, accountants, tech — any service business

0.471%

Retail sales

Selling physical goods at retail — also subject to sales tax

0.484%

Wholesale

Selling to licensed resellers. Buyers must provide reseller certificates

0.291%

Manufacturing

Businesses that manufacture products in Washington

$100k

Small biz credit threshold

Annual gross receipts under $100k — significant B&O tax credit available

$28k

Max small biz credit

Maximum credit available for businesses under the threshold

Small business B&O credit: If your annual gross receipts are under $125,000, you may qualify for a small business B&O tax credit that significantly reduces or eliminates your B&O liability. Calculate this before paying — many small WA businesses owe zero B&O after the credit.

B&O is on gross revenue — not profit. If you're a consultant earning $200,000 in revenue with $150,000 in expenses, you owe 1.75% on the full $200,000 ($3,500) — not just your $50,000 profit. Budget for this differently than income tax.

B&O is deductible on your federal return. Washington B&O taxes paid are deductible as a business expense on your federal Schedule C or S-Corp return. At the 22% federal bracket, $3,500 in B&O saves $770 in federal taxes.

Washington forms and filing deadlines

Excise

Combined Excise Tax Return (B&O + Sales Tax)Filed monthly, quarterly, or annually depending on your tax liability. Includes B&O tax and sales tax on one combined return. File at dor.wa.gov.

25th of following month

UBI

Business License Application / UBI RegistrationEvery WA business must register with the Secretary of State and get a Unified Business Identifier (UBI) number. Do this before operating.

Before first sale

Annual

Annual Report to Secretary of State ($60)LLCs and corporations file annually. Due the last day of the anniversary month of formation. Missing this can result in administrative dissolution.

Anniversary month

L&I

Labor & Industries Quarterly ReportIf you have employees, report hours worked and wages paid to L&I quarterly for workers compensation. Rates vary by industry classification.

Quarterly

ESD

Employment Security Quarterly ReportUnemployment insurance contributions for employers. Filed quarterly with Employment Security Department at esd.wa.gov.

Quarterly

Jan 25

December B&O + sales tax return (monthly filers)File Combined Excise Tax Return at dor.wa.gov for December

B&O

Jan 31

W-2s to employees · 1099-NECs · L&I Q4 · ESD Q4Four employer obligations on the same day

Employer

Apr 15

Federal 1040 + Q1 federal estimated taxNo WA state income return — federal only for personal

Federal only

Apr 25

Q1 B&O + sales tax return (quarterly filers)Combined excise return for January–March

B&O

Washington's B&O filing frequency is determined by your annual tax liability. Under $1,200/yr — annual filing. $1,200–$4,800/yr — quarterly. Over $4,800/yr — monthly. DOR will assign your frequency when you register.

Seattle-specific taxes

Seattle adds its own B&O tax on top of the state B&O. If you do business in Seattle, you pay both the Washington State B&O (1.75% for services) AND Seattle's B&O (typically 0.215% for most services).

10.25%

Seattle sales tax

State 6.5% + King County + Seattle additions. One of the highest in the nation

0.215%

Seattle B&O add-on

Most service businesses. Stacks on top of the 1.75% state rate

$150k

Seattle B&O threshold

Annual Seattle gross receipts under $150k — no Seattle B&O owed

$20/hr

Seattle min wage

Large employers. Small businesses may have slightly different rates — check current rules

If your business is based outside Seattle but you perform work or have clients in Seattle, you may still owe Seattle B&O on that revenue. Seattle uses an apportionment method based on where services are performed and where customers are located.

Key tips for Washington founders

No income tax is your superpower. Washington is one of only 9 states with no personal income tax. A founder earning $200k in profit in Washington saves $18,000–$22,000 in state income tax compared to an equivalent California founder. This compounds dramatically over time.

Register for B&O before you make your first sale. You need a UBI number and a business license from the WA Secretary of State before you legally collect sales tax or owe B&O. The registration is fast and cheap — do it first.

B&O is owed even on unpaid invoices. Washington B&O is based on the gross amount billed — not collected. If a client doesn't pay you, you still owe B&O on that invoice. You can take a bad debt deduction later but you have to pay first.

Don't forget the annual report. Washington LLCs and corporations file an annual report with the Secretary of State. The due date is the last day of the anniversary month of formation — not a fixed date. Missing it triggers administrative dissolution.