What Is the WA B&O Tax?
Washington State's Business & Occupation (B&O) tax is a gross receipts tax — meaning it's calculated on your total revenue, not your profit. Unlike most states that tax net income, Washington taxes the top line. This makes it unique and often surprising for new business owners.
The B&O tax applies to virtually all businesses operating in Washington, with rates varying by business classification. There is no deduction for labor, materials, or other costs of doing business (with limited exceptions).
2026 B&O Tax Rates by Classification
| Classification | State Rate |
|---|---|
| Service & Other Activities (under $1M) | 1.500% |
| Service ($1M – $5M revenue) | 1.750% |
| Service (over $5M revenue) | 2.100% |
| Retailing | 0.471% |
| Wholesaling | 0.484% |
| Manufacturing | 0.484% |
Small Business B&O Tax Credit
Businesses with gross income under $62,500 per quartermay qualify for the Small Business B&O Tax Credit. The credit gradually phases out as income approaches the threshold, reducing or eliminating your B&O liability entirely if your revenue is low enough.
Seattle City B&O Tax (2026)
Seattle imposes its own B&O tax on top of the state tax. For 2026:
- Service activities: 0.658% (up from 0.427%)
- Retail activities: 0.342% (up from 0.222%)
- Deduction: First $2,000,000 is exempt (up from $100K)
The 2026 changes represent a significant shift — higher rates but a much larger deduction, meaning most small businesses in Seattle are now exempt from the city B&O tax entirely.
When Is B&O Tax Due?
B&O tax is filed through the Washington Department of Revenue's My DOR portal. Most businesses file monthly or quarterly, depending on their tax liability. Annual filing is available for businesses with less than $28,000 in annual tax liability.
Disclaimer: This calculator provides estimates for informational purposes only. It is not tax advice. Consult a licensed CPA or tax professional for your specific situation. Rates shown are for tax year 2026.