High grossing business surcharge 

What is the high-grossing business surcharge?

Starting Jan. 1, 2026, there is an additional .5% surcharge on some Washington taxable gross income exceeding $250,000,000 in a calendar year. This surcharge is in addition to the business and occupation (B&O) tax.

This surcharge expires Dec. 31, 2029.

How do I report the tax?

You will begin reporting the surcharge each calendar year, starting in the reporting period when you exceed the threshold using the “Taxable Income Over $250 Million per Year Surcharge” B&O tax classification.

Are there any exemptions?

Yes. The following are exempt from the surcharge and excluded from the calculation of income subject to the surcharge: 

• Income subject to the financial institution surcharge.
• Income subject to any manufacturing B&O tax classification, including wholesale and retail sales of these products by a person subject to that manufacturing B&O tax classification.
• Retail sales of exempt food and food ingredients, including food purchased under the Supplemental Nutrition Assistance Program (SNAP).
• Retail sales of prescription drugs.
• Income subject to the preferential B&O tax rates for timber or wood products.
• Income from the wholesale or retail sale of petroleum products owned by a person not located in Washington and processed for hire in Washington by an affiliated entity.
• Income for which the multiple activities tax credit (MATC) is allowed.
• Income earned by persons engaged in business primarily as a farmer or eligible apiarist.
• Income earned by persons subject to the workforce education surcharge (commonly referred to as the advanced computing surcharge).
• Income from the wholesale or retail sale of motor vehicles or special fuel.
• Income from wholesale sales of food and food ingredients by a wholesaler that is not affiliated with the retailer and/or manufacturer of the products. This exemption does not apply to wholesale sales of soft drinks, bottled water, or dietary supplements. (Effective July 1, 2026)