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Businesses in the aerospace industry may be eligible for one or more of Washington’s aerospace tax incentives.

Qualifying activities

Tax incentives are available for the following activities:  

  • Manufacturers and processors for hire of commercial airplanes or their component parts
  • Non-manufacturers engaged in aerospace product development
  • Certificated FAR repair stations making retail sales
  • Aerospace tooling manufacturers

Available incentives

Some of the available incentives include:

  • Reduced business and occupation (B&O) tax rate for aerospace businesses
  • B&O tax credit for preproduction development expenditures
  • B&O tax credit for property/leasehold taxes paid on qualified buildings and equipment
  • Sales and use tax exemption on computer hardware, software and peripherals


The B&O tax incentives require that you file:

  • State excise taxes electronically (E-file)
  • An Annual Tax Incentive Report for Aerospace

Refunds will not be allowed for years in which no annual report was filed. Up through 2009, annual reports must have been filed by March 31 of the following year. Beginning 2010, annual reports are due by April 30 of the following year.

More information

For more information regarding each of these programs and any forms you may need, visit our Tax Incentive Programs page.


We are here to help. If you are unsure that your business qualifies for these incentives, or if you want information on how to take advantage of them, please contact Beth Mills, tax information specialist, at bethm@dor.wa.gov or (360) 705-6642.

Please complete our short survey

To help us better understand why some businesses that qualify for these incentives are not taking them, please complete our short survey at http://dor.wa.gov/aerospacesurvey.