Where Do Our Sales Taxes Go?
April 9, 2018
by
Steve Hawley
Category:
Sales and Use Taxes
Local sales tax rates in Washington currently range from 7.0% in unincorporated Klickitat County up to 10.4% in Lynnwood, Mill Creek, and Mukilteo. But have you ever wondered exactly where those sales taxes go, or why your jurisdiction’s rate is so low or so high compared to others? A new feature on our Tax and Population Data page provides the answers!
You can download two spreadsheets — one for cities/towns and one for counties — showing not only the total sales tax rate for every jurisdiction in the state, but also the individual rate components, their statutory authority, and which jurisdiction (city, county, transit district, public facilities district, or state) imposes them.
The numbers come from the Department of Revenue, and we just updated these to include the new rates effective April 1. We will continue to update these files three times per year as rates change. (Note that sales tax rate changes may only take effect on January 1, April 1, or July 1 of each year. Beginning with 2017, sales tax rates no longer change on October 1.)
First 7.5% is the Same for (Almost) Everyone
The first 6.5% is the same for all cities and counties and goes to the State of Washington general fund as part of the revenues used to support human services, education, and other general services programs provided by state.
The next 0.5% is also the same for everyone — this is the “first half” sales tax under RCW 82.14.030(1) that has been enacted by every city and county and goes into the city or county general fund for appropriation according to local budget policy.
The subsequent 0.5% — the optional “second half” sales tax under RCW 82.14.030(2) — is the same for almost everyone. These revenues also go to the city/county general fund and have been enacted by almost all jurisdictions. However, there are a few exceptions:
- Asotin and Clarkston only levy 0.3% of the second half sales tax, not the full 0.5%.
- Asotin County only levies 0.3% of the second half, while Klickitat County does not impose the second half sales tax at all.
Both the first half and second half of the local sales tax may be used for any purpose and are implemented legislatively (by the council/commission) without a public vote. However, any changes to the second half tax rate are subject to referendum, even if your jurisdiction does not otherwise have powers of initiative and referendum.
Everything Above That Depends on Local (Mostly Voted) Tax Options
So the state, first half, and second half sales taxes get everyone up to a minimum rate between 7.0% and 7.5%. Everything beyond that initial level depends on various local sales tax options, most of which require a public vote and must be used for specific purposes spelled out in statute.
Let’s take a look at a few examples.
| City Sales Tax Rates & Components effective April 1, 2018 | ||||
|---|---|---|---|---|
| Component | Imposed By | Clarkston | Ellensburg | Mill Creek |
| State | State | 6.5% | 6.5% | 6.5% |
| First Half | City | 0.5% | 0.5% | 0.5% |
| Second Half | City | 0.3% | 0.5% | 0.5% |
| Transportation Benefit District | City | 0.2% | 0.2% | -- |
| Affordable Housing | City | -- | 0.1% | -- |
| Public Safety, City | City | -- | -- | 0.1% |
| Public Safety, County | County | -- | 0.3% | -- |
| Criminal Justice | County | -- | 0.1% | 0.1% |
| Mental Health & Drugs | County | -- | -- | 0.1% |
| Juvenile Detention | County | -- | 0.1% | -- |
| Transit | Transit District | 0.2% | -- | 1.2% |
| High-Capacity Transit | Transit District | -- | -- | 1.4% |
| Public Facilities | Public Facilities | 0.2% | -- | -- |
| STATE SUBTOTAL | 6.5% | 6.5% | 6.5% | |
| CITY SUBTOTAL | 1.0% | 1.3% | 1.1% | |
| OTHER TAXING DISTRICT SUBTOTAL | 0.4% | 0.5% | 2.8% | |
| TOTAL SALES TAX RATE | 7.9% | 8.3% | 10.4% | |
As you can see above, Clarkston and Ellensburg have fairly close tax rates, but Clarkston does not impose the full second half and some of the other sales taxes are going toward different purposes. Meanwhile, relatively little of Mill Creek’s sales tax rate is actually going to the city, with much of the high tax rate due to two transit districts (both Community Transit and Sound Transit).
| County Sales Tax Rates & Components effective April 1, 2018 | ||||
|---|---|---|---|---|
| Component | Imposed By | Clallam County | Klickitat County | Lincoln County |
| State | State | 6.5% | 6.5% | 6.5% |
| First Half | County | 0.5% | 0.5% | 0.5% |
| Second Half | County | 0.5% | -- | 0.5% |
| Public Safety | County | -- | -- | 0.3% |
| E911 | County | 0.1% | -- | 0.1% |
| Criminal Justice | County | 0.1% | -- | 0.1% |
| Mental Health & Drugs | County | 0.1% | -- | -- |
| Juvenile Detention | County | 0.1% | -- | -- |
| Transit | Transit District | 0.6% | -- | -- |
| STATE SUBTOTAL | 6.5% | 6.5% | 6.5% | |
| COUNTY SUBTOTAL | 1.4% | 0.5% | 1.5% | |
| OTHER TAXING DISTRICT SUBTOTAL | 0.6% | -- | -- | |
| TOTAL SALES TAX RATE | 8.5% | 7.0% | 8.0% | |
Here you can see that Klickitat County has not imposed the second half, or any other sales taxes for that matter, while Clallam and Lincoln counties have imposed a variety of taxes for different purposes. You can also see that Clallam County has a 0.6% transit sales tax that goes to Clallam Transit, not the county budget.
Final Thoughts
In the spreadsheets, some cities and counties have multiple entries because they have multiple sales tax rates. When this happens, it’s due to the impact of other taxing jurisdictions. For instance, some cities are located within multiple counties, and each county imposes a different set of sales taxes on top of the city sales taxes. Meanwhile, other cities or counties lie partially within a transit district — a public transportation benefit area (PTBA) or regional transit authority (RTA) that has imposed an additional sales tax — and partially outside the district. This information is indicated by notations such as PTBA and non-PTBA, or Bothell (King) and Bothell (Snohomish).
And of course, each of these sales taxes has its own statutory requirements regarding how the money must be used, what jurisdictions are eligible, the expiration date (if any), revenue distribution, and more. Make sure you understand the fine print.
Download these datasets and more at our Tax and Population Data page.
You can also find more information about the different sales tax mechanisms in MRSC’s City Revenue Guide and County Revenue Guide. While we have made some recent updates to these publications, please note that we are starting a comprehensive review and re-write of both publications, to be released this coming winter.
Questions? Comments?
If you have comments about this blog post, please leave a comment below or email me at shawley@mrsc.org. If you have any questions about other local government finance issues, please use our Ask MRSC form or call us at (206) 625-1300 or (800) 933-6772.
MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.
