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Intended audience: Businesses that report under the Service and Other Activities B&O tax classification.
Effective October 1, 2025, the business and occupation (B&O) tax has three tax rates under the Service and Other Activities classification.
If you (or your affiliated group) had taxable income subject to the Service and Other Activities B&O tax classification in the prior calendar year, use the table below to determine the applicable tax rate for your business.
| Taxable Income | Line Name as of 10/1/25 | Line Name as of 1/1/26 | Rate |
|---|---|---|---|
| Less than $1 million | Service and Other Activities | Service and Other Activities (Less Than $1,000,000 in the prior year) | 1.5% |
| $1 million to $4,999,999.99 | Service and Other Activities ($1 million or greater in prior year) | Service and Other Activities ($1,000,000 to $4,999,999.99 in the prior year) | 1.75% |
| $5 million or more | Service and Other Activities ($5,000,000 or More in the prior year) | No change | 2.1% |
Exceptions to the higher tax rates
The above table does not apply to the following:
- Hospitals.
- Select advanced computing businesses.
These businesses continue to pay the 1.5% rate on gross income subject to the Service and Other Activities B&O tax classification.
Definitions
Affiliate and affiliated means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person.
Control means possession, directly or indirectly, of more than 80% of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise.
Affiliated group means a group of two or more persons that are affiliated with each other.
More information
ESSB 2081 Chapter 240, Laws of 2025, Sec 109
Workforce education webpage
Select advanced computing businesses webpage
New B&O tax classification for real estate commissions special notice
Questions?
Call 360-705-6705 or you may request a ruling.
