Washington State Incentives and Taxes

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Incentive Programs Deferrals, Exemptions, and Credits 


Washington State Incentives

  • No corporate income tax
  • No personal income tax
  • No unitary tax (VAT)
  • No inventory tax
  • No tax on interest, dividends or capital gains

Washington State has an assortment of tax incentives. Those most frequently implemented by Snohomish County businesses are highlighted and listed below. For a complete overview of State incentives, please visit Washington State Department of Revenue.
 

All manufacturing equipment is exempt from the Sales and Use Tax.

 

Aerospace firms incentives:

  • 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.

High technology firms incentives:

  • Manufacturers of solar energy systems/components have a reduced B&O Tax rate. Additionally, installed equipment for the generation of alternative energy is exempt from the Sales Tax.

Agriculture & food processing incentives:

  • B&O Tax exemption/deduction for manufacturers of fresh fruits and vegetables, seafood, and dairy products.

Job training financial support:

  • 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.

 


Local Tax Incentives

City of Everett

The City offers a credit of $1000 per job created to be taken against the City B&O Tax.  The program requires a minimum of 50 new jobs and has a lifetime cap of $500,000.

Cities of Arlington, Marysville and Lake Stevens

Manufacturers located in these three cities are exempt from property tax on the construction of a new manufacturing buildings for ten years; property tax on the land continues to be paid.  The building must be a minimum of 10,000 SF and the operation must create a minimum of 25 new jobs paying $18.00/hour or higher.

Property Tax

Property taxes are assessed and collected by the Snohomish County government. Taxes are distributed to the County, cities, school/hospital/library districts and the State.
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Real Property Tax Rate

$11.20 per $1000 of assessed value at 100% of market value.

Personal Property Tax Rate

$11.20 per $1000 of assessed value at 100% of market value.

Tax rates ranged from $ 7.6242 to $14.3786 depending on where you live in the County.

Detailed property tax information is available through the Snohomish County Assessor.


Retail Sales and Use Tax

The Sales and Use Tax is Washington’s principal revenue source. It is comprised of a state component at 6.5% and a local component at 1.2% – 3.8%; total  7.7% – 10.3%.  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 and brought to Washington 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.


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:

Classification Rate
Manufacturing (general) 0.484%
Manufacturing (aerospace – incl. parts, assemblies, and tooling) 0.2904%
Wholesaling 0.484%
Retailing 0.471%
Aerospace Product Development 0.9%
Services 1.5%

Complete information on the B&O tax and additional rate categories can be found through the Department of Revenue.
 

Local Taxes

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 a formula that can include number of employees, type of business and size of facility  The City of Everett uses the local option Business and Occupation Tax. There is no license required on businesses located in unincorporated Snohomish County. Please refer to the local cities for tax information.

 

Request Additional Information

Please contact Matt Smith for additional information about Washington State incentives and taxes.