Washington State Business and Occupation Tax (B&O)
The Washington State Business and Occupation tax (B&O tax) is measured on a company’s gross receipts. This includes the value of products, gross proceeds of sale, or the gross income of the business.
Businesses pay a Washington B&O tax rate depending on their classification.
Washington B&O Tax Classifications
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If you are unsure about your company’s B&O tax classification, you should review the Department of Revenue’s Tax Classifications for Common Business Activities.
How to Pay the Washington B&O Tax
You can pay the Washington B&O Tax on your excise tax return, or you can file electronically through MyDOR. We suggest paying electronically, as processing is faster and more efficient.
- Monthly Returns: Due on the 25th
- Quarterly Returns: Due by the end of the month following the close of the quarter
- Annual Returns: Due January 31
Washington B&O Tax Credits
There is no income tax in Washington State. For this reason, the Department of Revenue does not allow deductions for a Washington LLC or corporation paying the B&O Tax. There are, however, specific credits that are allowed for certain Washington corporations and LLCs.
Eligible companies will have their credits subtracted from their B&O tax.
- Rural County B&O Credit for New Employees
- High Technology B&O Tax Credit
- Small Business B&O Tax Credit
- Multiple Activities Tax Credit (MATC)
Small Business B&O Tax Credit
Washington State is considered one of the better tax states, in no small part because of its Small Business B&O Tax Credit. For small a Washington corporation or LLC, it is actually possible to end up paying no B&O tax at all.
The Small Business B&O Tax Credit is applied on a sliding scale that depends upon the amount of tax you owe. If you owe beneath a certain level, you pay zero tax. As your company becomes more profitable, the scale slides upward. This allows smaller companies with lower income levels to pay a much smaller percentage of their profits to the Department of Revenue.