Business and Occupation (B&O) tax

Classification: Retailing B&O tax

This tax classification applies to you if there are sales (or rental) of goods and certain services to customers. You need to report the income of such sales under this classification. The Retailing B&O tax rate is 0.471 percent (.00471) of your gross receipts.

In addition, retail sales tax must also be collected on all sales subject to the retailing classification of the B&O tax, unless a specific retail sales tax deduction or exemption applies.

To see a more specific list of activities and tangible items that apply to this tax classification, visit the Retail Sales Tax section.


Classification: Wholesaling B&O tax

This tax classification applies to you if there are sales of goods and certain services to a person who will resell to others. You need to report the income of such sales under this classification. The Wholesaling B&O tax rate is 0.484 percent (0.00484) of your gross receipts.

If you are selling items at wholesale you must receive a reseller permit from the buyer. Keep the reseller permit in your records for five years.

Example: A private mailbox business runs out of shipping boxes (packaging). You can sell a portion of your supply at wholesale if the business owner gives you a reseller permit.


Classification: Manufacturing B&O tax

This tax classification applies if you manufacture products in Washington, whether for your own use or for sale (as tangible property) to another person. The tax amount is based on the value of the manufactured products or by-products. The Manufacturing B&O tax rate is 0.484 percent (0.00484) of your gross receipts.

For products manufactured and sold in Washington, a business owner is subject to both the Manufacturing B&O Tax and the Wholesaling or Retailing B&O Tax. However, you may be entitled to the Multiple Activities Tax Credit (MATC). The MATC is also known as Schedule C. Basically, you can take a credit against the Manufacturing B&O tax in an amount equal to the Wholesaling or Retailing B&O tax due on the selling activity. When you use the MATC, it eliminates the duplicate B&O tax paid on goods that are manufactured and sold in Washington.

Example: Annie’s Mail Store has an area, operated by Annie or her employees (separate from the self-service copy machines), where special order copies are made for customers. Income from sales of the copies is reported under the Manufacturing B&O tax classification, as well as the Retailing and/or Wholesaling tax classifications. A MATC is completed when Annie’s business tax return is prepared.

Visit the department’s website for a copy of the MATC form. WAC 458-20-19301 gives more information on reporting requirements. People involved in the business of printing activities can also refer to WAC 458-20-144 (Printing industry).


Classification: Service and other activities B&O tax

Basic information

Generally, when a business provides professional or personal services (including being an agent to third parties) the income (including commissions) from the activity is reported under the Service and Other Activities B&O tax classification. Income that isn’t classified anywhere else is also taxable under this classification. The Service and Other Activities B&O tax rate is 1.5 percent (0.015). Sales tax does not apply to this income.

Amounts received from the following service activities are reported under the Service and Other Activities B&O Tax Classification:

  • Postage stamps, government postage, or stamped envelopes sales – This is based on the selling price that exceeds the face value of the product. Example: You sell a book of stamps for $8 and the face value of the book of stamps sold totals $7. The amount taxable is $1.
  • Notary fee – The fee received for notarizing a document.
    • Money order fees, Western Union money transfers, travelers check fees – Fees received for the sale of money orders, traveler’s checks, and money transfers.
  • Mailbox rentals – Rental income received for mailbox rental (rented or leased for more than 30 days). Mailbox rentals are considered a “license to use real estate.” A license grants the right to use the real property of another but does not give exclusive control over the property.
  • Internet access and computer usage – The income from such activity is reported. (A customer’s temporary use of a computer and Internet access is not subject to retail sales tax.)
  • Late fees – Income from late fees.


Custom or commercial packaging

Packaging services are taxed on the activity you perform for the customer. The income received is generally reported under the Service and Other Activities B&O tax classification. The amount for packaging services (labor) must be stated separately from the cost of shipping supplies or materials.

Sales of shipping supplies or materials to customers are subject to retail sales tax. Items include boxes, crates, labels, and packaging materials. Shipping items that will be resold may be purchased with a reseller permit.


Shipping service

Generally, a private mailing business arranges to ship a customer’s goods through a commercial carrier. The compensation (fee or commission) that your business receives for arranging the shipping is reported under the Service and Other Activities B&O tax.