This incentive program provides B&O tax credits for qualifying employers (including wine manufacturers), located in rural counties or community empowerment zones (CEZs). To be eligible, current businesses must increase their workforce by 15%, new businesses receive a credit for all new positions at the facility.
Who qualifies for the B&O tax credit?
Manufacturers that locate or expand their operations in rural counties or CEZs.
The Office of Financial Management determines yearly which counties qualify as rural and publishes the list of rural counties. CEZs are located in: Bremerton, Duwamish, Spokane, Tacoma, White Center, and Yakima. Links to the maps are located on our Tax incentive program resources page.
How much is the B&O tax credit?
- $2,000 for each qualified employment position with annual wages/benefits less than or equal to $40,000; or
- $4,000 for each qualified employment position with annual wages/benefits greater than $40,000.
Is there a limit on how much credit I can take?
No, not on individual employers. However, the state-wide cap for all credits under this program is $7.5 million per fiscal year (July 1 through June 30). Any credits disallowed because the state-wide credit has been met can be carried over and taken in the next fiscal year.
What are the reporting/documentation requirements?
The number of average full-time qualified employment positions at the manufacturing facility (including seasonal or temporarily vacant positions) must be at least 15% greater in the four consecutive calendar quarters during which the credit is sought than the number of positions at the same facility in the immediately preceding four consecutive calendar quarters.
All positions created by a new business will qualify for the credit for the four consecutive quarters following the quarter in which the positions are filled.
- You must submit the Rural Area Application for B&O Tax Credit on New Employees to the Department of Revenue within 90 days of hiring a qualified employee.
- You must submit the New Employee B&O Tax Credit Annual Report and worksheet to the Department. The report is due by the last day of the month immediately following the end of the four consecutive calendar quarter period for which the credit is earned.
How do I take the B&O tax credit?
Once your program application is approved, the Department will notify you of your approved credit. The credit will appear in My DOR on the Business & Occupation (B&O) tax page of the return. Once the positions have been filled, you may take a credit against your B&O tax liability on your excise tax return. The credit cannot exceed the B&O tax owed on the tax return. The credit may be carried forward until used.
For more details on the B&O tax credit, see our brochure, Rural County Business & Occupation Tax Credit for New Employees and our Tax Incentive Programs page.