What is the business and occupation (B&O) tax?
The state B&O tax is a gross receipts tax. It is measured on the value of products, gross proceeds of sale, or gross income of the business. Washington, unlike many other states, does not have an income tax. Washington's B&O tax is calculated on the gross income from activities. This means there are no deductions from the B&O tax for labor, materials, taxes, or other costs of doing business.
What is that B&O tax rate?
The B&O tax rate varies by classification. Once you know which classification your business fits into you can find the rate that corresponds to your classification on the list of B&O tax rates. If you are not sure of your classification see, tax classifications for common business activities or tax classification definitions.
I'm supposed to report on my "gross income" - what does that mean?
The B&O tax is based on gross, rather than net income. The term "gross income" refers to the total amount of income earned by the business for products sold or services rendered. Retail sales tax you charge should not be included in the gross income figure you report. There are no deductions allowed for costs of doing business, materials used, labor or delivery expenses, or taxes.
What retail sales tax rate do I collect or pay?
The place of sale determines the rate of sales tax to charge. The type of transaction involved, whether it is a sale of tangible personal property, sale of labor and services, or rental or lease of tangible personal property, also makes a difference.
What is use tax and who owes it?
Use tax is a tax on goods used or certain services provided in Washington when sales tax has not been paid.
For example, you would owe use tax if:
- you purchased good from an out-of-state business via the Internet or from a mail-order catalog and the out-of-state business does not collect sales tax.
- you purchased goods in a state with no sales tax or a state with a sales tax lower than Washington's.
What is personal property?
The primary characteristic of personal property is its mobility. It includes machinery, equipment, supplies, and furniture. Property tax applies to the personal property used when conducting business, farming, or to other personal property not exempt by law. Household goods and personal effects are exempt. The personal property valuation guidelines will give an overview of the tax.
How is real property value determined?
The county assessor must determine the fair market value of property using one or more of three generally accepted appraisal methods: The Market Approach, Coast Approach, or Income Approach. The frequency of changes in value to your property depends on your county's revaluation cycle, for more information see DOR's publication, Comparison of County Assessor's Statistics report.
Where does the property tax money go?
More than 55% of property tax goes to support public schools. Of the remaining 45%, about 17% supports county services, nearly 14% goes to cities and towns and the remaining tax dollars support all other taxing districts (fire districts, libraries, ports, hospitals, etc.).
