Business & occupation tax

Washington has a unique business tax structure. Most businesses in Washington are subject to a gross receipts tax known as business and occupation (B&O) tax.

What is the B&O tax?

The B&O tax is a gross receipts tax in Washington state. It is calculated on the total value of products sold or the total income the business earns. Because it is based on gross income, businesses cannot deduct expenses such as labor, materials, taxes, or other costs of doing business.

The B&O tax is not collected from customers. It is paid by the individual or business that conducts business in Washington.

What is the B&O tax rate?

The B&O tax rate depends on the type of business activity. There are more than 50 different B&O tax classifications. A business must report under the classification that matches the activities it performs in Washington. If a business performs more than one type of activity, it may owe tax under more than one B&O tax classification.

Businesses can find the tax rate that applies to the appropriate tax classification on our list of B&O tax rates. If you do not know which tax classification to report under, see our tax classifications for common business activities page or our list of tax classification definitions.

What credits are allowed?

Businesses subject to B&O tax may qualify for a credit that reduces the amount of B&O tax due.

The most common B&O tax credits are:

• Small Business B&O Tax Credit
• Multiple Activities Tax Credit (MATC)

How do I report and pay the B&O tax?

You must report and pay B&O tax on the Excise Tax Return using MyDOR, the department’s online filing tool.

If you need assistance filing your return, contact us at 360-705-6705.