Washington State takes an atypical approach to taxation. Businesses in Washington (and Snohomish County) will pay:
- No corporate income tax
- No personal income tax
- No unitary tax (VAT)
- No inventory tax
- No tax on interest, dividends or capital gains
Business and Occupation Tax (B&O)
In place of a corporate income tax, Washington levies a B&O tax on the gross receipts of business activity occurring in the State. The primary rate classifications are:
Complete information on the B&O tax and additional rate categories can be found through the Department of Revenue.
|Classification||Rate (applied to receipts)|
Property taxes are assessed and collected by the County government. Taxes are distributed to the County, cities, school districts, hospital district, libraries and the State. Real Property Tax Rate
– 2012 county average
$12.37 per $1000 of assessed value, at 100% of market value.Personal Property Tax Rate
– 2012 county average
$12.37 per $1000 of assessed value, at 100% of market value. Detailed property tax information is available through the Snohomish County Assessor
Businesses operating on public property (e.g. airport property, municipal property) pay a leasehold tax in lieu of property tax. The tax rate is 12.84% of the rent paid.
Retail Sales and Use Tax
The Retail Sales Tax is Washington’s principal tax source. Businesses making retail sales in Washington collect sales tax from their customer. A retail sale is the sale of tangible personal property. It is also the sale of services such as installation, repair, cleaning, altering, improving, construction, and decorating. Major exemptions to the sales tax include purchases for resale, groceries and prescription drugs, interstate and foreign sales, and manufacturing/processing equipment.
The Use Tax is applied on taxable items purchased in another state if that state did not collect sales tax. Use Tax rates are the same as Sales Tax.
Complete information on the Sales and Use Tax can be found through the Department of Revenue.
|Local Tax||1.2% - 3.0%|
|Total||7.7% - 9.5%|
Snohomish County cities use the issuance of the business license as their taxing vehicle. These license fees are not consistent from city to city. Some are a flat fee, some are assessed based on the number of employees or employee hours worked during the calendar year. The City of Everett uses the local option Business and Occupation Tax, assessed on gross revenues earned at the rate of 0.10%. Please contact EASC for additional information or refer to specific City websites
State Tax Incentive Programs - Deferrals, Exemptions, and Credits
Washington State has an extensive assortment of tax incentives which are difficult to present here. We highlight below those that are most frequently of interest to business located in Snohomish County. This link directs you to a pdf with a complete overview of what is available at the Washington State Department of Revenue
.There is a package of incentives available to aerospace firms, including:
High Technology firms can use the following:
- Reduced B&O Tax rate for aerospace manufacturing.
- Credit against the B&O Tax for preproduction development expenditures.
- Credit against the B&O Tax for property/leasehold taxes paid on aerospace manufacturing facilities.
- Sales & Use Tax exemption for computer hardware/software and peripherals.
There are two primary programs providing financial support for job training:
- Credit against the B&O Tax for R&D expenditures.
- Deferral/waiver of the Sales and Use Tax for plant and equipment for biomedical manufacturing facilities and facilities used for R & D and pilot scale manufacturing.
- The Job Skills Program offers customized training through the Community College system with 50% cost share by the State.
- The Customized Employment Training Program provides a credit against the B&O Tax for 50% of training costs.
Manufacturers of solar energy systems/components can take advantage of a reduced B&O Tax rate. Additionally, installed equipment for the generation of alternative energy is exempt from the Sales Tax.
All manufacturing equipment is exempt from Sales Tax.
Project Financing Incentives
Snohomish County can use Industrial Revenue Bonds (IRB) issued through the Washington
Economic Development Finance Authority (WEDFA). Purchasers of IRB’s pay no
federal tax on income from the bonds. As
such, they are willing to accept a lower interest rate. Manufacturers can issue tax-exempt bonds up
to $10 million with a project cap of $20 million. Details are available at the WEDFA website
Economic Revitalization Board (CERB) is a State of Washington program which
provides low interest rate loans and grants to finance public infrastructure,
encouraging new development and expansion in targeted areas. Project examples include water/sewer line
extensions and road improvements. Program
details may be found at www.choosewashington.com