Doing business in Seattle: city taxes on top of state filings

The stack

• Seattle’s B&O threshold rose from $100,000 to $2 million in 2026, with a $2 million standard deduction above it.
• New Seattle rates for 2026–2032: 0.342% for retail, wholesale, and manufacturing; 0.658% for services.
• Large employers also pay the JumpStart payroll expense tax.

Seattle B&O after the 2026 changes

Seattle voters approved changes that took effect January 1, 2026. Businesses with less than $2 million of taxable Seattle revenue generally owe no city B&O tax, and those above it take a $2 million standard deduction. In exchange, rates rose for 2026–2032: classifications formerly at 0.222% (retail, wholesale, manufacturing) now pay 0.342%, and those formerly at 0.427% (services and other activities) pay 0.658%. Every business still holds a Seattle business license tax certificate, with a fee based on revenue before the deduction.

Washington State B&O

Separately, Washington State’s own B&O tax applies to gross receipts statewide, with rates by activity and a small-business credit for low-revenue businesses. Washington has no corporate or personal income tax, so B&O and sales tax are the main business taxes. Like California’s LLC fee, B&O tax is owed on revenue even in a loss year.

JumpStart payroll expense tax

Employers with more than about $9 million of Seattle payroll in the prior year pay the JumpStart tax on employees earning above an annual pay threshold (about $194,000 for 2026), at rates from roughly 0.75% to 2.56%. Most startups are below it.

Worked example

A Seattle consultancy with $1.5 million of revenue owes no city B&O tax in 2026 (under $2 million) but still renews its business license and pays Washington State B&O on its receipts. At $3 million of Seattle revenue it would owe city tax on $1 million at 0.658%, or about $6,580.

The state layer underneath

City taxes sit on top of state obligations, never instead of them. For the WA side, see remote workers and nexus, and check whether a hire or customer in Seattle creates a filing duty in the nexus checker.