Cash and Trade Discounts
The amount of the discount may be deducted from the gross proceeds of sales if such amount was previously reported. Discounts are typically used as incentives for early payment. WAC 458-20-108

Casual Sales/Accommodation Sales
Casual sales consist of amounts received for sales of tangible personal property by persons not usually selling such items. Note: The seller must collect and remit the sales tax. Accommodation sales are amounts received by a business for selling goods at cost to a like business to fill an existing order. WA C 458-20-106; 458-20-208

Certain Initiation Fees/Dues/Contributions
Bona fide initiation fees and membership dues received by a business for which no goods or services are received and only give the payee the right to be a member. Contributions that are given as outright gifts for which no goods or services are received can also be deducted. WAC 458-20-183

Certain Network Telephone Service
Amounts for network telephone service, other than toll service, for residential customers and network telephone service paid for by using coins in a coin-operated telephone. WAC 458-20-245

Conservation Expenditure
Water distribution businesses with a water system plan that includes plans for water conservation may deduct 75 percent of the amounts expended for water conservation. The plan must be filed with the Department of Health. (ESHB 1832, Chapter 237, Laws of 2001)

Consignment Sales
Sales of consigned goods when the seller collects and remits the retail sales tax. WAC 458-20-159

Dairy and Seafood Processors
Selling manufactured dairy products to purchasers who transport in the ordinary course of business the goods out of this state. A person taking an exemption under this subsection (1)(b) must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state. (Engrossed House Bill 3159, Chapter 354, Laws of 2006)

Direct Pay Permits
The Department of Revenue allows certain purchasers to pay use tax directly to the Department rather than to their vendors at the time of purchase.  Businesses must present a copy of the Direct Pay Permit to the vendor. Vendors must retain a copy of the permit in their files to document the exempt sale.  Sales should be reported under the Retailing and Retail Sales Tax classification. Identify the retail sales tax deduction on the deduction detail page of the tax return as "Direct Pay Permits."  Not allowed against Retailing B&O.  See our Special Notice – Certain Taxpayers To Pay Use Tax Directly to the Department of Revenue (pdf) .

Exempt Food Sales
Sales of food and food ingredients are exempt from retail sales tax. However, prepared foods, dietary supplements, and soft drinks are taxable. To review food definitions see Special Notices. RCW 82.08.0293; WAC 458-20-244

Freight on Out-of-State Deliveries
Freight and delivery costs incurred by a Washington manufacturer for out-of-state shipments. WAC 458-20-136

Gambling/Prizes/Cash Pay-Outs
Amounts paid out or value of merchandise given as prizes in games of chance. WAC 458-20-131

Government Funded Mental Health Services
This deduction is only available to a Regional Support Network (RSN) or to health or social welfare organizations. RSNs may deduct amounts received from the state for distribution to a health or social welfare organization for mental health services provided under a government-funded program. Health or social welfare organizations may deduct amounts received as compensation for mental health services provided under a government-funded program.

This deduction is for amounts received on or after August 1, 2011 and it expires August 1, 2016. Taxpayers claiming this deduction must file an annual report with the Department of Revenue. The report must be submitted by April 30th of each year. See Special Notice - B&O Deduction for Amounts Received for Providing Mental Health Services.

Interest on Certain Investments, Loans, and/or Obligations
Interest received on investments or loans primarily secured by first mortgages or trust deeds on nontransient residential properties. Interest received on obligations of the state of Washington, its political subdivisions, and municipal corporations. Interest received on direct obligations of the federal government. (Interest attributable to loans or other financial obligations on which the federal government is merely a guarantor or insurer does not qualify.) WAC 458-20-146; 458-20-14601

Interstate and Foreign Sales
Goods sold and delivered to customers outside of Washington or transportation of persons or goods across state or international boundaries. Documentation is necessary. Note: Manufacturers and extractors who sell outside of Washington must report under manufacturing [07], or extracting classifications [16]; this deduction is not valid for those classifications. WAC 458-20-193; 458-20-193C

Low Density/Wholesale Power Costs
This applies only to those light and power businesses with retail power rates exceeding the state average power rates. RCW 82.16.053

Motor Vehicle Fuel Tax
The selling price of motor vehicle fuel includes state and federal fuel taxes. B&O tax does not apply to these taxes. This deduction allows the wholesaler or retailer to exclude fuel taxes. Note: Only sellers of fuel may take this deduction. Fuel tax rates. WAC 458-20-126

Motor Vehicle Fuel Sales
Sales of gasoline, diesel, and other fuels. Note: Only sellers of fuel may take this deduction. WAC 458-20-126

Newspapers
Sales of newspapers are not subject to sales tax. This does not include publications that are bound and/or stapled. WAC 458-20-143

No Local Activity
Sales made in Washington by an out-of-state seller without activities in Washington, which establish, maintain or facilitate a market for its products or services. This also includes sales of consumer products made to or through a direct seller's representative. WAC 458-20-193; 458-20-246

Other
Most allowable deductions are listed on the Deduction Detail sheet. Your business, however, may have a specific deduction allowed by law that is not listed. Please refer to the statute governing your type of business, or call your local Revenue office to ensure the deduction is valid. Invalid deductions will be disallowed. Use of the Other deduction line requires appropriate documentation or explanation. A 'resale' deduction is not valid under retail sales tax. Report amounts sold for resale under the wholesaling classification of the B&O tax. Also, there are no deductions for labor, materials, or any other costs of doing business.

Prescription Drugs/Hearing Aids/Lenses/Etc.
Sales of the above items for human use are exempt from sales tax when the buyer presents a prescription. WAC 458-20-18801

Prescription Drugs Sold by Publicly Operated or Nonprofit Hospitals
Sales of prescription drugs by religious or charitable nonprofit organizations operating kidney dialysis facilities, certain nursing homes, and homes for unwed mothers. WAC 458-20-168)

Purebred Livestock for Breeding
Sales of purebred livestock for breeding purposes where the animals are registered with a nationally recognized breed association. Sellers must receive and retain an exemption certificate from the buyer. See the Buyers Retail Sales Tax Exemption Certificate(pdf) . WAC 458-20-210

Qualified Nonresident Sales
Sales of tangible personal property for use outside of Washington by residents of: Alaska, Colorado, Delaware, Montana, New Hampshire, Oregon, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands, Alberta, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, Quebec, and the Yukon Territory. Tax exempt sales to these residents are at the discretion of the seller. Note: When making tax exempt sales, the seller must see photo identification, such as a driver's license, issued by the buyer's state of residence. The seller must also record certain information. This exemption only applies to sales of goods which will not be used in Washington. It does not apply to lodging, restaurant meals, or other sales which involve consumption in Washington. See Excise Tax Advisory (ETA) 3054 the Buyers Retail Sales Tax Exemption Certificate (pdf). Update, March 14, 2011 – Legislation signed into law today permanently bars residents from the Canadian provinces of British Columbia, Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Quebec. These provinces already are barred from using the exemption by a court injunction issued in July 2010. This legislation permanently disqualifies them from the tax exemption (SB 5763)

Radio/TV Advertising
Network, national, or regional advertising income received by an individual broadcasting station. WAC 458-20-241

Reclaimed Water
Municipalities and businesses operating with permits filed with the Department of Ecology for reclaimed water may deduct 75 percent of their gross income. (ESHB 1832, Chapter 237, Laws of 2001)

Returns and Allowances
Amount of the sales price on which sales tax has been returned or credited to the purchaser. WAC 458-20-108

Ride Sharing Vans
Sales of passenger motor vehicles which are to be used as ride-sharing vehicles. RCW 82.08.0287

Sales of Feed to Fish Farmers
Sales of feed to fish farmers. Sellers must receive a resale certificate from the buyer. WAC 458-20-102; 458-20-210

Sales of Manufacturing Machinery/Equipment and Installation Labor
Sales and leases of machinery and equipment, including repair and replacement parts with a useful life in excess of one year, to manufacturers and processors for hire for direct use in manufacturing operations. This exemption includes charges for installation, labor and services. Sellers must obtain a Manufacturer's Sales and Use Tax Exemption Certificate for Manufacturing Machinery and Equipment from the buyer. WAC 458-20-13601

Sales of Spirits
The general retail sales tax imposed under RCW 82.08.020 does not apply to the sale of spirits in their original container. RCW 82.08.150(8)

This deduction is limited to the sale of spirits in their original container. This is not a valid deduction for sales of poured drinks containing spirits for on-premises consumption. Poured drink spirits sales are subject to the retail sales tax under RCW 82.08.020.

The amount reported under this deduction classification should not be included in other Retail Sales tax deductions.

Sales to Nonprofit Organizations of Artistic/Cultural Art Objects for Displays
Purchases of art objects or property by artistic or cultural organizations for use in displaying art objects or providing exhibitions are exempt from sales tax. The seller must obtain a Buyers Retail Sales Tax Exemption Certificate from the buyer. WAC 458-20-249

Sales to Enrolled Indian Tribal Members with Delivery on the Reservation
Sales delivered on Indian reservations or trust lands to an enrolled member of that tribe. Every member of a recognized tribe has an enrollment document. A seller making a tax exempt sale to a Native American must copy the information. Records must show that the seller, its employees, or a for-hire carrier acting as the vendor's agent, delivered the goods to, or performed services on, the reservation or trust land of the tribe in which the purchaser is enrolled. Note: A Buyers' Retail Sales Tax Exemption Certificate is necessary for sales of automobiles delivered on the reservation or trust land. Copies should be kept by the buyer seller. WAC 458-20-192

Sales to Other Refuse Collectors
Persons who collect the refuse collection tax and who, themselves, use the services of others for the transfer, storage, or disposal of the waste collected are not required to again pay the tax to such other service providers. The refuse collection business must provide the other refuse service provider with a refuse collector's exemption certificate. WAC 458-20-250

Sales to US Government
Sales of tangible personal property or labor to repair or install tangible personal property for the U.S. Government, its institutions, departments, and industries.WAC 458-20-190; 458-20-250

Small Timber Harvester
Timber harvesters who extract or extract for others less than two million board feet of timber for sale or for commercial or industrial use may deduct up to one hundred thousand dollars per tax year from their gross receipts or value of products proceeding or accruing from timber harvested. Amounts above the one hundred thousand dollars remain subject to B&O tax. This deduction is allowed under the Extracting B&O tax classification, under the "Other" deduction. Write Small Timber Harvester. WAC 458-20-13501

Tax Deferral Investment Certificate Number
Sales to persons approved for sales tax deferral by the Department of Revenue. Sellers must keep a copy of the purchaser's deferral certificate. RCW 82.60; 82.61; 82.63

Tax in Gross
Used to "back out" the amount of retail sales tax included in the gross amount reported on Retailing [02] and Retail Sales [01] only if the gross amount includes retail sales tax.

Taxable Amount for Tax Paid at Source
Amount on which sales tax was previously paid on goods purchased for resale without intervening use. WAC 458-20-102

Trade-In Allowance
Sales tax does not apply to the value of property traded in on the purchase of property of the same kind. B&O tax does apply to that value. WAC 458-20-247