Other Washington Business Taxes
Besides the B&O tax, sales/use tax, and property tax, there are several other state and local taxes that businesses operating in Washington may encounter. The most prevalent and noteworthy of these are the following:
City B&O Taxes. Approximately 40 Washington cities impose a city-level B&O tax modeled after the Washington B&O tax described above. This includes several of the larger cities in the state such as Seattle, Tacoma, Bellevue, and Everett. The city B&O tax rates are lower than the state rates (Seattle’s rates are the highest among the larger cities, at 0.215 percent for manufacturing, wholesaling and retailing, and 0.415 percent for services). However, businesses should be aware of these requirements for the cities in which they operate or have a substantial customer base.
Employment Taxes. Businesses that have employees based at a location within Washington are required to register with the state Employment Security Department (ESD) and Department of Labor & Industries (L&I). ESD administers the state’s unemployment insurance fund. Employers are required to make quarterly payments to this fund according to the amount of compensation paid to each employee. L&I administers the state’s industrial insurance (workers’ compensation) fund, which provides medical care and disability payments to workers who sustain on-the-job injuries or illnesses. Employers must file quarterly reports and make payments to the industrial insurance fund, based in part on employee compensation, and also on the industry and the company’s own claims history.
Other Miscellaneous Taxes. Like most states, Washington imposes taxes on a variety of specific items or activities. These include leasehold excise tax (imposed on lease payments for government-owned property), aircraft and watercraft excise taxes, petroleum products and hazardous substance taxes, public utility taxes, timber taxes, and alcohol and tobacco taxes. Washington also imposes an estate tax on individuals who reside or own property in Washington at the time of death. There is an exemption for the first $2 million of each individual's taxable estate, so estates valued above that amount are taxed at graduated rates from 10 percent to 19 percent.
City B&O Taxes. Approximately 40 Washington cities impose a city-level B&O tax modeled after the Washington B&O tax described above. This includes several of the larger cities in the state such as Seattle, Tacoma, Bellevue, and Everett. The city B&O tax rates are lower than the state rates (Seattle’s rates are the highest among the larger cities, at 0.215 percent for manufacturing, wholesaling and retailing, and 0.415 percent for services). However, businesses should be aware of these requirements for the cities in which they operate or have a substantial customer base.
Employment Taxes. Businesses that have employees based at a location within Washington are required to register with the state Employment Security Department (ESD) and Department of Labor & Industries (L&I). ESD administers the state’s unemployment insurance fund. Employers are required to make quarterly payments to this fund according to the amount of compensation paid to each employee. L&I administers the state’s industrial insurance (workers’ compensation) fund, which provides medical care and disability payments to workers who sustain on-the-job injuries or illnesses. Employers must file quarterly reports and make payments to the industrial insurance fund, based in part on employee compensation, and also on the industry and the company’s own claims history.
Other Miscellaneous Taxes. Like most states, Washington imposes taxes on a variety of specific items or activities. These include leasehold excise tax (imposed on lease payments for government-owned property), aircraft and watercraft excise taxes, petroleum products and hazardous substance taxes, public utility taxes, timber taxes, and alcohol and tobacco taxes. Washington also imposes an estate tax on individuals who reside or own property in Washington at the time of death. There is an exemption for the first $2 million of each individual's taxable estate, so estates valued above that amount are taxed at graduated rates from 10 percent to 19 percent.