Washington State's tax system features:
- No corporate income tax
- No unitary tax
- No inventory tax
- No personal income tax
- No tax on interest, dividends or capital gains
Businesses are subject to three major taxes: business and occupation (B&O) tax, sales/use tax, and property tax. In addition, businesses pay unemployment insurance premiums and industrial insurance (workers’ compensation) premiums.
Business & Occupation Tax (B&O): Washington’s B&O tax is based on gross receipts generated within the state, not corporate profits. Therefore, the tax rates are much lower than those of traditional corporate income taxes and reduced rates have been established for businesses with low profit margins or special competitive problems. There are several classifications for the B&O tax based on the type of business activity.
|Selected Business Activity
||State B&O Tax Rate|
|Service & other activities
Retail Sales and Use Tax: Businesses in Washington collect and remit a retail sales tax on the retail sale of tangible personal property and certain services within the state. The state base sales tax is 6.5 percent. Local governments also levy the sales tax, adding from 0.5 to 2.2 percent to the base rate.
The sales and use tax rate in Chelan County and Douglas County is 8.0%.
Services subject to the retail sales tax include: cleaning, repairing, altering, or improving real property and landscaping. Use tax is due on the value of tangible property used in the state on which retail sales tax has not been paid. Exemptions to retail sales taxes include: groceries, prescription drugs, free hospitals, certain government activities, and newspapers. Businesses do not pay sales and use tax on the purchase of materials that are to become components of finished products for sale.
Qualified manufacturing firms are allowed to exempt payments of sales tax on qualified building and construction costs and machinery and equipment used directly in manufacturing operations (see INCENTIVES).
Property Tax: Property taxes are essentially local taxes; all revenues are devoted to schools, libraries, and other local programs. Rates vary by location and taxes are based on the assessed value of property. The current range of rates assessed per $1,000 in North Central Washington are:
Chelan County: $8.40 - $15.68 Douglas County: $9.43 - $15.02
Some categories of property exempt from the tax include: business inventories; intangibles, currency, bank deposits, stocks and bonds; household goods and personal items; and certain agriculture, timber, mineral or metallic products manufactured in other states to be transported out of Washington State.
Additional Information: Select this links to visit the Washington State Department of Revenue; and Department of Community, Trade and Economic Development for information on taxes and other business/employment expenses including: State Unemployment Insurance, Unemployment Compensation, Industrial Insurance (Worker's Compensation) and more.
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