Taxes

The state's chief taxes are summarized in the table below. A comprehensive list can be found at the Department of Revenue (DOR) web site. Washington State offers several tax incentives to help businesses lower their taxes. These are summarized on our Incentives page.

• Deferrals, Exemptions and Credits (Washington State Dept. of Revenue)
  
• Tax Incentives
  
• Outline of Major Taxes in Washington State (Washington State Dept. of Revenue)

Business and Occupation Tax

Washington State's business and occupation tax (B&O) is based on gross receipts. Virtually all businesses are subject to B&O tax, including corporations, partnerships, sole proprietors, and nonprofit corporations. The only major exempt activities are farming and the sale or long-term rental of real estate.

Expanding businesses may receive B&O tax credits for hiring and training in some areas. There is also a high technology B&O tax credit. These credits are described on our Incentives page.

• B&O FAQ (Washington State Dept. of Revenue)
  
• B&O Information Sheet (PDF) (Washington State Dept. of Revenue)
  

Retail Sales and Use Tax

The state sales tax is 6.5%. Local governments may also levy the sales tax, adding 0.5 to 2.4% to the base rate. In addition to most tangible products, the following services are subject to retail sales tax: cleaning, repairing, altering or improving real property, and landscaping. Manufacturers, high-tech firms, warehousing and distribution firms locating or expanding, may qualify for a Sales and Use Tax Exemption or deferral. For more information, see our Incentives page or visit the links below.

• Sales Tax Lookup Tool (Washington State Dept. of Revenue)
  
• Resale Certificate information sheet (PDF) (Washington State Dept. of Revenue)
  
• Retail Sales Tax (PDF) (Washington State Dept. of Revenue)
  

Property Tax

Property taxes have state and local tax components. Rates vary by location and taxes are based on the assessed value of property. Some categories of property exempt from property tax include business inventories; intangibles, such as currency, bank deposits, stocks and bonds; household goods and personal items; and certain agricultural, timber, mineral or metallic products manufactured in other states to be transported out of Washington State.

Statewide, the average property tax rate dropped by over $1.25 per $1,000 assessed value between 1999 and 2003. The average rate in 2006 was $11.32, with county averages ranging from $6.89 to $15.42.

• Links to County Agencies (Washington State Dept. of Revenue)
  
• Property Tax Publications (Washington State Dept. of Revenue)
  
• Property Tax Information (Washington State Dept. of Revenue)
  
• Property Tax Statistics and Reports (Washington State Dept. of Revenue)
  

Workers' Compensation

Washington is the only state with Workers' Compensation tax rates based on the hours worked. Workers' compensation is not paid for hours the worker is off the job, including sick leave, vacation, holidays, and leaves of absence.

• Workers' Comp Industrial Insurance Rates (Washington State Dept. of Labor and Industries)
  

Unemployment Insurance

Unemployment premium rates are based on the company's or industry's actual experience with unemployment. The lowest rates are assigned to businesses with the lowest unemployment costs. New employers enrolling in the state's unemployment insurance program are initially assigned the average experience rating for their industry. Experience ratings are received after three years.

• Unemployment Insurance (Washington State Employment Security Dept.)
  
• Unemployment Tax Handbook (Washington State Employment Security Dept.)

Licensing

For information about licensing, please see our Doing Business in Washington page

Updated January 2008