scenic picture from Washington state
SubjectsFinance › Business and Occupation Taxes
Updated 03/2014

Business and Occupation Taxes



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 0.2 percent (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, 39 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.

Legal References


2012 B&O Tax Model Ordinance

The following documents are from the Association of Washington Cities website

Other City B&O Documents

Comparison of B&O Tax Code Deviations from Core Model Ordinance Provisions

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 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

Participating Washington Cities

  • Aberdeen
  • Bellevue
  • Bellingham
  • Bremerton
  • Burien
  • DuPont
  • Everett
  • Issaquah
  • Kelso
  • Kent
  • Lake Forest Park
  • Longview
  • North Bend
  • Olympia
  • Pacific
  • Renton
  • Seattle
  • Shelton
  • Tacoma
  • Westport

Need more information?

Feel free to Ask MRSC. Washington cities, counties, and our contract partners can call or email MRSC for more information and advice - free of charge.