Washington state B&O tax is a gross receipts tax measured
on the value of products, gross proceeds of sale, or gross
income of the business.
Unlike many other states, Washington does not have an
income tax. Washington's B&O tax is calculated on gross income
from activities. There are no deductions from the B&O
tax for labour, materials, taxes or other costs of doing
business.
In addition to the state B&O tax, many Washington cities
assess a local B&O tax. There is no connection between
the state and local B&O taxes.
B&O
Classifications and Rates
The classification and rate of the B&O tax are based
on the type of business activity conducted in the state.
A business may perform more than one type of activity.
Businesses performing multiple activities may be subject
to tax under one or more B&O tax classifications as
follows:
- Manufacturing – This classification is used by firms
that manufacture items in this state, regardless of where
the product is sold. The Manufacturing B&O tax is based
on the value of the products, which is generally determined
by the selling price. If the producer sells and delivers
the manufactured products within this state, the income
is also reported under the Wholesaling and/or Retailing
B&O tax classification.
- Retailing – Sales of goods and certain services to
consumers are retail sales. Businesses making retail sales
are subject to the B&O tax under the Retailing classification,
even when the sales are not subject to retail sales tax.
For example, most prepackaged food products are exempt
from retail sales tax, but the income from these sales
is taxable under the Retailing B&O tax classification.
- Wholesaling – Wholesalers sell goods and certain
services to persons who resell them to others in the regular
course of business. The B&O tax is calculated on the
wholesale selling price. Retail sales tax is not collected
on wholesale transactions.
What
are the B&O tax rates?
B&O tax rates and classifications vary according to
the type of business activity. Businesses may report under
one or more tax classifications with varying tax rates. For instance, a floor covering store may sell carpet directly
to a homeowner or speculative builder for their own use (taxed
under Retailing) and may also sell carpet to a custom contractor,
who will then resell it to the home buyer (taxed under Wholesaling).
B&O
tax rates are as follows:
B&O
Tax Classification
|
Tax
Rate
|
| Retailing |
0.00471 |
| Wholesaling |
0.00484 |
| Manufacturing |
0.00484 |
| Service
and Other Activities |
0.015 |
|
|
Disclaimer
|
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