Business and occupation (B&O) taxes are levied at a percentage rate on the gross receipts of the business, less some deductions. Businesses are put in different classes such as manufacturing, wholesaling, retailing, and services. Within each class, the rate must be the same, but it may differ among classes.
Effective April 20, 1982, the legislature set the maximum tax rate that can be imposed by a city's legislative body at 0.2percent (0.002), but grandfathered in any higher rates that existed on January 1, 1982. RCW 35.21.710. All ordinances that impose this tax for the first time or raise rates must provide for a referendum procedure RCW 35.21.706. Any city may levy a rate higher than 0.2 percent, if it is approved by a majority of the voters. RCW 35.21.711. Currently, 40 of Washington's 281 cities levy this tax.
In 2003, the legislature passed a bill that required the Association of Washington Cities (AWC) to convene a committee to develop a model ordinance that must be adopted by all cities imposing a B&O tax. The legislature was concerned about the lack of uniformity of the cities' B&O tax ordinances and about allegations that some business income was subject to multiple taxation. Beginning January 1, 2008, cities that levy the B&O tax must allow for allocation and apportionment, as set out in RCW 35.102.130.
- RCW 35.21.706: Referendum procedure. An ordinance that imposes the tax or increases the tax rate must include a provision for a referendum procedure.
- RCW 35.21.710: Maximum B&O tax rates established.
- RCW 35.21.711: Voter approval for higher rates.
- RCW 35.22.280(32): Authority for first class cities to levy a B&O tax.
- RCW 35.23440(8): Authority for second class cities to levy a B&O tax.
- RCW 35.27.370(9): Authority for towns to levy a B&O tax.
- RCW 35A.82.020: Authority for code cities to levy a B&O tax.
- Ch.35.102 RCW: Municipal business and occupation tax.
Model B & O Tax Documents
2012 B&O Tax Model Ordinance (from the Association of Washington Cities website)
B & O Tax Rates
B & O Tax Studies
Cities with B&O Tax Code Deviations from Core Model Ordinance
RCW 35.102.040(4) provides: Any city that adopts an ordinance that deviates from the nonmandatory provisions of the model ordinance shall make a description of such differences available to the public, in written and electronic form.
Tax Sharing Agreement
The City of Seattle is currently the host of a tax sharing agreement that allows participating cities to share tax data. The purpose of the tax sharing agreement is to provide Washington cities the opportunity to share tax information with each other without breaching the tax confidentiality provision of the municipal tax ordinances. Any city that obtains tax information from another city is responsible for maintaining the confidentiality and security of that information in accordance with the agreement.
- Agreement for Sharing Taxpayer Information between Cities
- Contact for taxpayer sharing agreement
City of Seattle
Joseph A. Cunha, City Tax Administrator
Department of Finance and Administrative Services
License and Tax Administration
700 5th Ave., Suite 4250
P.O. Box 34214
Seattle, WA 98124
Tel: (206) 233-7820
Fax: (206) 684-5170
Email: Joseph Cunha
- Participating Washington Cities (agreement requires participating cities to maintain a copy of this agreement with all amendments at MRSC)
- Lake Forest Park
- North Bend