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

Classification Tax Rate
Retailing .00471
Wholesaling .00484
Manufacturing .00484
Service and Other Activities .015

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.

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.