Business Development
Susan St Germain
(206) 256-6114

 
Taxes
Tax System
#5
Best in the nation
Business
#1
Starting a business (2009)
Tax Climate
#9
Tax Foundation (2010)




 

Washington's tax system is designed to reward and incent companies who increasingly improve productivity, not penalize those that are profitable. Washington does not have a corporate income tax. This means that regardless of the profitability of the company or the personal wealth of the employees, the company will only be taxed on its gross receipts. 

Washington has been recognized as the best state to start a business according to U.S. News & Report and one of the top 5 states to do business in, according to Forbes.com . Based on sound policies that reward the most productive companies, the state allows companies to keep profits necessary to continually improve operations. This is one of the many reasons why Washington companies achieve such high levels of success, placing them at the top of the global economy. 

Washington state ranks 5th in the Small Business Entrepreneurship Council's  list of best tax systems for entrepreneurship and small business .  Washington is the only west coast state included in the top ten ranking.

Washington state ranks #9 best business tax climate according to the 2010 study by the Tax Foundation.

 
The Business & Occupation Tax (B&O)

Washington uses a Business & Occupation Tax (B&O) in place of an income tax, virtually all businesses are subject to this tax. Based on company gross receipts, and depending on the industry, this taxation structure can be very beneficial to a company. 

The general rates are as follows:
    Aerospace Mfting    .002904
    Manufacturing:          .00484
    Wholesaling:              .00484
    Retailing:                    .00471
    Services & 
    Other Activities:         .015

Example: 
A manufacturing operation would be taxed 0.484% on the sales of all products manufactured in Washington. The tax equals $4,840 for every 1 million dollars of taxable sales. 

The Washington State Department of Revenue provides an overview of the B&O tax. Expanding and new businesses may receive B&O tax credits and reductions.

Retail Sales & Use Tax

Washington state relies on consumer taxes rather than income tax - the most significant of these taxes is the retail sales tax. Sales tax does not apply to food product, prescription drugs, or professional and personal services. The state sales tax is 6.5%. Local governments may levy the sales tax, adding 0.5 to 2.4% to the base rate. 

Manufacturers, high tech firms, warehousing and distribution firms locating or expanding may qualify for a sales and use tax exemption or deferral.

 
 
Washington State Property Tax

Property taxes have state and local tax components. Rates vary by location and taxes are based on the assessed value of property. Properties 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.

 
Worker's Compensation and Unemployment Insurance

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

Unemployment Insurance
Unemployment premium rates are based on the company's or industries 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 reviewed after three years.