Washington has no corporate or personal income tax. Its main business tax is the Business & Occupation (B&O) tax — a gross-receipts tax on the privilege of doing business in the state. Critically, there is no deduction for the cost of doing business: the tax applies to gross income, not profit.
Rates depend on your business activity ("classification"). A business with multiple activities reports each separately and may owe under several classifications at once.
Estimate your Washington B&O in under a minute.
Open calculatorKey numbers
0.471%
Retailing
0.484%
Wholesaling / Manufacturing
1.5%
Services (under $1M)
1.75%
Services ($1M–$5M)
2.1%
Services ($5M+)
Who owes it
- Businesses with more than $100,000 of receipts attributed to Washington generally must register and file (economic nexus); physical presence also creates nexus.
- Very small businesses may be placed on active non-reporting status, and the Small Business B&O Tax Credit can reduce or eliminate the tax for low-volume filers.
- The tax applies to nearly all business activities, each at its classification's rate.
How the tax is calculated
- 1Determine the classification for each activity (Retailing, Wholesaling, Manufacturing, Service & Other Activities, etc.).
- 2Take the gross receipts attributable to that activity — no cost deductions.
- 3Multiply by the classification rate.
- 4For Service & Other Activities, the rate is tiered by prior-year income (1.5%, 1.75%, or 2.1%).
What's excluded from the base
- No general deduction for labor, materials, rent, or other costs
- Multiple Activities Tax Credit prevents double taxation when goods are both made and sold in-state
- Small Business B&O Tax Credit reduces tax for low-volume filers
Deadlines & filing
Combined Excise Tax Return (B&O reported within it)
Filed via MyDOR
Monthly, quarterly, or annual (by tax liability). Due Monthly 25th · Quarterly end of next month · Annual Apr 15.
Recent changes
- Effective Oct 1, 2025, the Service & Other Activities classification moved from a flat 1.5% to tiered rates (1.5% / 1.75% / 2.1%) based on prior-year income.
- A temporary 0.5% surcharge on Washington taxable income over $250M applies from Jan 1, 2026 (most businesses are unaffected).
Frequently asked questions
Sources
Administered by Washington State Department of Revenue. Informational only — not tax advice.