Washington taxes

Washington has no personal income tax. It taxes businesses on revenue instead, through the business and occupation (B&O) tax. Nothing is deducted first, not wages, materials or rent, so a business that lost money can still owe it. It reaches sole proprietors, LLCs, partnerships and corporations alike, and the rate depends on which of more than fifty activity classes the business falls in.

Personal income tax

Washington does not tax the income of individuals, so there is no Washington income tax return to file. Wages, business profit and retirement income are not taxed by the state.

One thing to check: Washington charges a separate excise tax on long-term capital gains above a high yearly threshold. It is not an income tax, and it has its own return, filed by the federal deadline. Real estate and sales inside a retirement account are excluded, so most people never owe it.

Sole proprietor

Washington charges the B&O tax to any individual or business doing business in Washington, so having no company does not put a sole proprietor outside it. You report it on an Excise Tax Return, filed through MyDOR.

It is charged on revenue with no deduction for costs, so it can be owed in a year the business lost money. Washington has no personal income tax, so your profit is not taxed on a personal return.

Single-member LLC

An LLC owes the B&O tax on its revenue, with nothing deducted first, and reports it on an Excise Tax Return, filed through MyDOR. The return is filed even in a period where the small business credit brings the tax to nothing.

Washington has no personal income tax, so the LLC's profit is not taxed on your personal return.

Partnership

A partnership pays the B&O tax on its gross receipts and reports it on the Washington excise tax return (B&O). Nothing comes off first, so a partnership making a loss still pays it on every dollar it takes in.

A business below a set level of yearly gross income that has nothing else to report does not have to file. Washington has no personal income tax, so the partners owe nothing on their share of the profit.

S corporation

An S corporation pays the B&O tax on its gross receipts and reports it on the Washington excise tax return (B&O). Nothing comes off first, so it is owed even in a year with a loss.

A business below a set level of yearly gross income that has nothing else to report does not have to file. Washington has no personal income tax, so the shareholders owe nothing on their share of the profit.

C corporation

A corporation pays the B&O tax on its gross receipts and reports it on the Washington excise tax return (B&O). Washington does not tax the corporation's profit. It taxes revenue instead, with nothing deducted first, so the tax is owed even in a year with a loss.

The rate depends on which activity class the business falls in, such as retailing, wholesaling, services or manufacturing. A business below a set level of yearly gross income that has nothing else to report does not have to file.

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax Washington charges. It assumes all your sales are in Washington.

An estimate for planning, not tax advice.

Sources

• Revised Code of Washington, chapter 82.87 (capital gains excise tax)
• Quinn v. State, Washington Supreme Court, 2023
• dor.wa.gov Business & occupation tax
• dor.wa.gov Out of state businesses reporting thresholds and nexus

Last reviewed August 2026.