Washington — Gross Receipts / Business Activity Tax

Washington imposes a Business & Occupation (B&O) tax on persons engaged in business activities in the state. The tax is levied on the act or privilege of engaging in business and is measured by the application of rates against the value of products, gross proceeds of sales, or gross income of the business. Unlike a net income tax, the B&O tax is a gross receipts tax with no deductions allowed for labor, materials, taxes, or other costs of doing business. Any person that has substantial nexus with Washington, as defined in RCW 82.04.067, is subject to the tax. Washington does not impose a separate corporate or personal income tax; the B&O tax serves as the state's primary business activity tax. Tax rates vary by business classification, ranging from 0.138% to over 2% depending on the type of activity.

Source: RCW 82.04.220; Washington Department of Revenue, Business & Occupation Tax

A person engaged in business has substantial nexus with Washington—and therefore B&O tax liability—if they meet one of three tests in the current or immediately preceding calendar year: (1) the person is a resident individual or is a business entity organized or commercially domiciled in Washington; (2) a nonresident individual or out-of-state entity has more than $100,000 of cumulative gross receipts from Washington (effective January 1, 2020); or (3) subject to certain limitations, a nonresident or out-of-state entity has physical presence in Washington that is demonstrably more than a slightest presence.

For businesses engaged in apportionable activities (certain services and royalty income) or making wholesale sales, nexus can be established through economic thresholds without any physical presence. Prior to 2020, different dollar thresholds applied to apportionable income, wholesale sales, and retail sales; these were unified effective January 1, 2020, to a single $100,000 receipts threshold that applies across all B&O tax classifications. Physical presence includes having property or employees in the state, or engaging in activities in Washington that are significantly associated with the person's ability to establish or maintain a market in the state, either directly or through an agent or representative.

Cumulative gross receipts include all of a person's gross income attributed to Washington under the sourcing provisions; for marketplace facilitators, the receipts threshold includes both the facilitator's own sales and the gross proceeds from all marketplace sellers' sales made through the facilitator's platform, even if those sellers lack nexus independently.

Source: RCW 82.04.067; WAC 458-20-19401; Washington Department of Revenue, Out-of-state businesses

Washington imposes B&O (Business & Occupation) tax at rates that vary by business classification, with recent changes and additional classifications effective 2026.

General B&O Classifications and Rates (remains current through 2026):

• Retailing: 0.471% of gross proceeds of sales.
• Wholesaling: 0.484% of gross proceeds of sales through December 31, 2026; increases to 0.5% beginning January 1, 2027. (See scheduled rate increases section)
• Manufacturing: 0.484% of gross receipts, increasing to 0.5% on January 1, 2027.

Service and Other Activities Classification (including Tiered Rates):

• For periods on or after October 1, 2025:
• 1.5% for gross income under $1 million
• 1.75% for $1 million to $4,999,999.99
• 2.1% for $5 million or more
• Hospitals (RCW 70.41.020) and select advanced computing businesses remain at 1.5% (RCW 82.04.290(2)(a)(ii)).

New Classification Effective January 1, 2026

• Payment Card Processing Activities: Taxed at a special rate of 3.1%. This new classification was added to reflect the 2024 legislative update; applies to businesses processing $1 billion or more in annual gross income from payment card processing activities.

Surcharge – High-Grossing Business Surcharge Effective January 1, 2026

• An additional 0.5% B&O surcharge applies to businesses with more than $250 million of taxable income attributable to Washington in a calendar year. Applies on the portion above that threshold. Scheduled to sunset on December 31, 2029.

Summary Table: | Classification | Rate (thru 12/31/2025) | Rate (2026) | Rate (2027+) | |---------------------------------|------------------------|---------------------|----------------------| | Retailing | 0.471% | 0.471% | 0.471% | | Wholesaling | 0.484% | 0.484% | 0.5% | | Manufacturing | 0.484% | 0.484% | 0.5% | | Services & Other (base/tiered) | 1.5% / 1.75% / 2.1% | see above | see above | | Payment Card Processing | n/a | 3.1% | 3.1% | | High-Grossing Bus. Surcharge* | n/a | 0.5% (add-on) | 0.5% (add-on) |

Services tiered rates change October 1, 2025. *On taxable income >$250 million, 2026–2029 only.

Practitioner note: Additional industry-specific and preferential rates exist. For full breakdown, refer to RCW Ch. 82.04 and DOR classification pages.

Source: RCW 82.04.250; RCW 82.04.260; RCW 82.04.270; RCW 82.04.290; RCW 82.04.299; RCW 82.04.288; WA DOR B&O Classifications; Special Notice: New payment card processing activities rate; Special Notice: Surcharge - High Grossing Businesses

B&O tax returns are filed monthly, quarterly, or annually depending on the filing frequency assigned by the Department of Revenue based on estimated annual tax liability. Monthly returns are due the 25th of the following month. Quarterly returns are due the last day of the month following the close of each quarter. Annual returns are due April 15. If a due date falls on a weekend or legal holiday, it is extended to the next business day.

Source: WAC 458-20-22801; Washington Department of Revenue, Filing frequencies & due dates

Washington allows a small business credit against B&O tax liability, providing substantial relief for lower-receipts taxpayers.

Maximum credit (through December 31, 2028):

• For most taxpayers, the maximum credit is $55 per month in each reporting period.
• For taxpayers reporting at least 50% of their taxable amount under RCW 82.04.255 (real estate brokers), RCW 82.04.290(2)(a) (service and other activities), or RCW 82.04.285 (contests of chance), the maximum credit is $160 per month in each reporting period.
• When the B&O tax due is equal to or less than the available credit for the period, the credit is equal to the full tax due (effectively eliminating B&O tax for that period).
• DOR publishes tables (by tax classification and frequency) to determine the precise credit for each taxpayer.

Statutory amendment: increased credit effective January 1, 2029

• Beginning January 1, 2029, under 2026 Wash. Leg. Sess. SB 6346, the maximum credit rises to $110 per month for taxpayers not reporting primarily under the service and other activities classification (i.e., most non-service businesses).
• For service businesses and those already eligible for the elevated amount, the maximum remains $160 per month.
• The core mechanics are otherwise unchanged: the credit fully eliminates liability when the period's tax does not exceed the maximum, and tables still prescribe credit for periods when tax exceeds zero but not the cap.

Summary:

• 2028 and prior: maximum $55/month general, $160/month service activities and select others.
• Starting 2029: maximum $110/month general, $160/month service activities.

Source: RCW 82.04.4451; WAC 458-20-104

Not yet human confirmed. This section was materially updated July 2024 to reflect the increases enacted by the 2026 legislative session, effective January 1, 2029.

Washington uses different sourcing methodologies to determine which gross receipts are subject to B&O tax, depending on the business classification. The sourcing framework determines where income is deemed to occur for tax purposes and directly affects whether receipts fall within Washington's taxing jurisdiction.

Retail sales sourcing

Retail sales are sourced under RCW 82.32.730, which follows a destination-based hierarchy. The sale is sourced to the location where the customer receives the product or service. For tangible personal property, the primary rule sources the sale to the location where the buyer receives the property. For retail services, the sale is sourced to where the purchaser receives the benefit of the service. If the benefit is received at the seller's place of business, the sale is sourced there; otherwise, it is sourced to the location where the purchaser receives the service if known to the seller. Telecommunications services follow separate sourcing rules under RCW 82.32.520.

Apportionable income attribution—single-factor receipts apportionment

Apportionable income—primarily service income and royalty income taxable under specific B&O classifications enumerated in RCW 82.04.460(4)(a)—is attributed to Washington using a single-factor receipts apportionment formula established in RCW 82.04.462, effective for periods after May 31, 2010. Only businesses that have substantial nexus with Washington and are also "taxable in another state" must apportion their income.

The receipts factor is calculated as:

Receipts Factor = Washington receipts / (Total worldwide receipts – Throwout income)

Washington taxable income equals apportionable income multiplied by this receipts factor. Throwout income consists of receipts attributed to a state where the taxpayer is not taxable (under RCW 82.04.067(1) nexus standards) and where at least some of the activity is performed in Washington.

Attribution methodology for apportionable activities

WAC 458-20-19402 establishes a cascading attribution hierarchy for determining where apportionable receipts (services and certain other activities) are deemed received. The primary rule attributes receipts to the state where the customer received the benefit of the service or, for royalties, where the customer used the intangible property.

If the benefit is received in multiple states and the Washington portion can be reasonably determined, the receipts must be proportionately attributed. If the taxpayer cannot reasonably determine where the benefit was received in multiple states, WAC 458-20-19402 provides fallback rules based on the location from which the service was ordered, the customer's billing address, or other reasonable methods.

Specific attribution rules vary by service type. Services relating to real property are attributed to the location of the property. Services relating to tangible personal property are attributed to where the property is located or intended to be located. Services relating to a customer's business activities are attributed to the location(s) where the customer's related business activities occur.

Royalty income attribution

Royalty income from granting the right to use intangible property is attributed under WAC 458-20-19403. Royalties are generally attributed based on where the customer uses the intangible property. The regulation distinguishes among different types of use, including use in the regular course of business operations and "marketing use" (where intangible property is used for marketing, displaying, or selling goods or services).

Wholesale sales sourcing

Wholesale sales are sourced under the same RCW 82.32.730 framework as retail sales, with the sale sourced to where the buyer receives the property.

Reconciliation requirement

Taxpayers reporting apportionable income using prior-year or estimated current-year data must file an annual reconciliation by October 31 of the following year to true up the receipts factor based on actual full-year data. Interest applies to any additional tax due or overpayment; penalties apply only if the reconciliation is not filed and additional tax not paid by the October 31 deadline.

Source: RCW 82.04.462; RCW 82.32.730; WAC 458-20-19402; WAC 458-20-19403

Direct answer: No. Washington law expressly prohibits stacking: receipts and taxpayers subject to the Workforce Education Investment Surcharge (the "advanced computing surcharge") under RCW 82.04.299 are excluded from the High-Grossing Business B&O surcharge (RCW 82.04.288), so the same receipts cannot be subject to both surcharges.

Why: RCW 82.04.288(5)(g), effective January 1, 2025, excludes from both the threshold and surcharge base "gross income of the business, gross proceeds of sales, or value of products for persons subject to the surcharge imposed under RCW 82.04.299." This means income subject to the advanced computing surcharge does not count toward the $1 billion high-grossing group threshold and is completely outside the surcharge calculation, regardless of whether the group would otherwise meet the threshold. Accordingly, there is no permissible "stacking" or double surcharging on the same receipts, and there is no hierarchy rule needed: the advanced computing/RCW 82.04.299 group is exempted outright from the high-grossing surcharge for its covered income. The advanced computing surcharge does not apply as a "credit": such receipts are simply excluded from the subsequent high-grossing surcharge base. The conclusion is affirmed in the DOR’s own Special Notice and legislative summaries, but is grounded in the plain language of RCW 82.04.288(5)(g).

Source support:

• RCW 82.04.288(5)(g): statutory exclusion for advanced computing surcharge amounts

Caution / review status: Not yet human confirmed. Text tracks statute verbatim; check for rulemaking or DOR FAQ updates after operational launch.

Source: RCW 82.04.288

Washington’s Workforce Education Investment Surcharge (the “advanced computing surcharge”) under RCW 82.04.299 is imposed in addition to the B&O tax for businesses primarily engaged in advanced computing that meet the statutory revenue threshold. Major amendments effective January 1, 2026, and subsequent clarifying legislation in 2026, substantially change the rate, the cap, and add new carve-outs.

Who is subject

• The surcharge applies to any person or affiliated group (RCW 82.32.655), with worldwide gross revenue over $25 billion in a calendar year.
• For affiliated or consolidated groups, all thresholds and caps are measured on a group-wide basis, with a single designated group member responsible for remitting under RCW 82.04.299(5).

Definition of advanced computing

• A group or person is “primarily engaged in advanced computing” if >50% of gross income is from activities classified under NAICS 518210 (data processing, hosting, and related services), and such income is taxable under the Service and Other B&O activities classification (RCW 82.04.290(2)(a)).

Rates, cap, and application mechanics

• For periods through December 31, 2025:
• Surcharge rate: 1.22% of gross income from advanced computing activities taxable under the relevant B&O classification.
• Annual cap: $9,000,000 per taxpayer/group.
• For periods beginning January 1, 2026 (per 2025 c 420 and further amended 2026):
• Surcharge rate: 7.5% of gross income from such advanced computing activities.
• Annual cap: $75,000,000 per taxpayer/group.
• If an affiliated group derives at least 50% of worldwide revenue from insurance premiums, the cap is limited to $25,000,000, and the group must proportionally allocate the cap among members. (NEW: Insurers as defined in RCW 48.01.050 are not subject to the surcharge, retroactive to January 1, 2022.)
• The cap covers all advanced computing surcharge liability, regardless of the number of group members, in each calendar year. Only a single group member remits; rules for administration and allocation are set by DOR.

Other statutory mechanics/clarifications

• The surcharge is not deductible or creditable against other B&O tax (RCW 82.04.299(7)).
• If an affiliated group fails to designate a reporting member, DOR is empowered to make determinations by rule.
• Attribution, group mechanics, and further implementation will be subject to DOR rulemaking as legislative changes are implemented.

Effective change summary

• 2026 and beyond: Marked increase in both surcharge rate (from 1.22% to 7.5%) and annual cap (from $9 million to $75 million), with a lower cap ($25 million) for insurance-heavy groups and an outright exemption for certain insurers. Legislative changes enacted 2025 & 2026.

Source: RCW 82.04.299 (current, including 2026 amendments)

Not yet human confirmed. Reader: review the official RCW text for up-to-date caps and definitions, as further DOR rulemaking and session-law clarifications may modify the operational mechanics.

Effective January 1, 2027, Washington's Business & Occupation (B&O) tax rates for the wholesaling, manufacturing, and—contrary to earlier guidance—the retailing classifications each increase to 0.5%. As of the July 2024 update, both RCW 82.04.260 (wholesaling and manufacturing) and RCW 82.04.250 (retailing) have been amended to set the post‑2026 rate for all three main classifications at 0.5%. This represents a material statutory change and corrects prior versions that stated the retailing rate would remain at 0.471% beyond 2026.

Authority and statutory cross-reference

• Wholesaling and manufacturing: RCW 82.04.260(1)(a) and (b) now state explicitly that the rate for both classifications is 0.484% through December 31, 2026, and 0.5% for tax due January 1, 2027, and thereafter.
• Retailing: RCW 82.04.250 specifies the retailing classification rate rises from 0.471% (thru December 31, 2026) to 0.5% for all periods beginning on or after January 1, 2027.

Classification distinction:

• This aligns all three core B&O rates—wholesaling, manufacturing, and retailing—at the 0.5% level effective for tax periods beginning January 1, 2027. Rates for specialized sub-classifications or preferential rates are not affected by these general changes; practitioners should verify separate provisions where applicable.

Summary table: | B&O Classification | Rate through 12/31/2026 | Rate on/after 1/1/2027 | |----------------------------|-------------------------|------------------------| | Manufacturing | 0.484% | 0.5% | | Wholesaling | 0.484% | 0.5% | | Retailing | 0.471% | 0.5% |

Source:

• RCW 82.04.260 (2024, amended for 2027 rates)
• RCW 82.04.250 (2024, amended for 2027 rates)
• 2025-26 House Bill Analysis showing universal 0.5% rate post‑2026 (PDF)

Material update July 2024 to reflect the retailing rate increase for 2027. Not yet human confirmed.

Registration-exemption (no registration certificate required)

Under RCW 82.32.030(2)(a), a person is not required to register for B&O (i.e., no tax registration certificate) if all of the following are met:

• The value of products, gross proceeds of sales, or gross income from all activities taxable under the B&O tax chapter (chapter 82.04 RCW) is less than $12,000 per year;
• The person is not required to collect or pay any other tax or fee administered by the DOR;
• The person does not otherwise require a business license per chapter 19.02 RCW.

This registration exemption is distinct from active non-reporting: it applies only to tiny businesses under $12,000/year with no other tax obligations.

Active non-reporting (no returns required)

DOR policy (via its “Active non-reporting” page and clarified in WAC 458-20-101) provides that a business may be placed on active non-reporting status—meaning it is not required to file any excise tax returns—if:

• Gross proceeds of sales, gross income, or value of products/services for all B&O tax classifications is less than $125,000 per year for calendar years beginning January 1, 2023 or later;
• For calendar years before January 1, 2023, the threshold was less than $28,000 per year, or $46,667 per year if 50% or more of gross income was from activities taxable under RCW 82.04.255, 82.04.290(2)(a), and 82.04.285;
• The business is not required to collect or pay any other tax or fee administered by the DOR.

Important statutory change effective April 1, 2026:

• Businesses deriving income from self-service storage rentals will, from April 1, 2026 onward, have such income subject to B&O tax, and businesses with over $125,000 per year in self-service storage rental receipts will no longer qualify for active non-reporting regardless of whether they make retail sales. This is a material change in DOR policy in line with 2024 legislative updates and DOR Special Notice. Practitioners should check whether this exception applies for periods after April 1, 2026.

WAC 458-20-101 makes clear that assignment to active non-reporting is at the discretion of the DOR, not an automatic right. Once a business exceeds these thresholds, it must begin filing returns for the first period in which it exceeds the threshold and any tax owed.

Key distinctions and practitioner points

• A business under $12,000/year with no other tax obligations does not even need to register with DOR.
• A business with gross income below $125,000/year (2023 and later) that also does not owe other DOR-administered taxes may register but request active non-reporting, thereby not filing returns until the threshold is exceeded. Assignment is at DOR discretion.
• The thresholds differ based on time period and classification mix; verify which applies for the calendar year in question.
• Self-service storage businesses should note possible disqualification from active non-reporting effective April 1, 2026.

Source: RCW 82.32.030 Registration exemption for gross income under $12,000 Source: DOR “Active non-reporting” thresholds: < $125,000 (2023+); <$28,000 or <$46,667 (pre‑2023) Source: WAC 458-20-101, illustrative examples of active non-reporting and registration thresholds Source: DOR Special Notice: Self-storage businesses now subject to B&O tax and excluded from active non-reporting (April 2026)

Not yet human confirmed. This section was updated July 2024 to reflect 2026 disqualification of self-storage businesses from active non-reporting, per DOR Special Notice and legislative change.

Washington applies specific penalties and interest if a taxpayer fails to timely file or pay the annual reconciliation for apportionable B&O tax (Annual Reconciliation of Apportionable Income, or ARAI), with abatement governed strictly by statute and regulation.

Delinquent penalties:

• Under RCW 82.32.090(1), for late payment of taxes, a penalty of 9% of the tax due is added if not paid by the due date. If the tax remains unpaid by the last day of the month following the due date, the penalty becomes 19%. If unpaid by the end of the second month, the penalty escalates to 29%. These penalty rates and escalation dates are set by statute, though DOR guidance schedules them for the ARAI as October 31 (9%), November 30 (19%), and December 31 (29%), since ARAI is due October 31. The statutory minimum penalty is $5 per RCW 82.32.090(7). (See official DOR ARAI instructions for application dates.)

Substantial underpayment penalty:

• Under RCW 82.32.090(2), a 5% penalty applies if less than 80% of the B&O tax due is paid for the year, and the underpayment is at least $1,000, as determined at reconciliation. This is in addition to other penalties, if applicable.

Interest on underpayments:

• Interest accrues from the original due date of the period being reconciled (generally the due date of the monthly, quarterly, or annual B&O returns for the year) until payment is made, under RCW 82.32.050(2).

Order of payment application:

• When a payment is received, WAC 458-20-228(14) states it is applied first to interest, then penalties, then tax liability.

Abatement and relief:

• Penalties may be waived or canceled by DOR only if (a) the failure to file or pay was due to circumstances beyond the taxpayer's control, or (b) for certain return types, if the taxpayer has timely filed and paid all taxes for 24 months prior to the period at issue. (RCW 82.32.105(2)-(3); WAC 458-20-228(10)-(12).)
• Interest may be waived if it was the result of written DOR instructions or a due date extension for departmental convenience (RCW 82.32.105(4); WAC 458-20-228(13)).
• No automatic abatement applies for overpayments or good-faith mistakes; statutory relief must be demonstrated.

Source: RCW 82.04.462; RCW 82.32.090; RCW 82.32.050; RCW 82.32.105; WAC 458-20-228

Not yet human confirmed.

Washington law establishes preferential B&O tax rates, credits, and exemptions for specific industries under detailed statutory and regulatory provisions. Key areas include:

Aerospace Industry (Manufacturing, Tooling, Product Development, Repair Stations)

• RCW 82.04.260(11) provides a preferential B&O rate of 0.357% for manufacturers and processors for hire of commercial airplanes, components, and tooling. A qualifying activity is defined explicitly in RCW 82.04.260(11)(a), requiring at least 1,000 full-time employees worldwide and significant in-state activity.
• Rate eligibility is subject to compliance with apprenticeship utilization requirements in RCW 49.04.220 (referenced in RCW 82.04.260(11)(k)), and the rate for manufacturing, tooling, and product development expires after June 30, 2040 (see RCW 82.04.260(11)(d)). If final assembly is relocated outside Washington, the rate ceases immediately.
• Aerospace product development credits are authorized in RCW 82.04.4463, with further detail and documentation procedures in WAC 458-20-267.

Newspaper and Digital Publisher B&O Exemption

• RCW 82.04.759 entirely exempts from B&O tax, from January 1, 2024 through January 1, 2034, income from printing or publishing newspapers and qualifying digital content. Taxpayers claiming the exemption must file an Annual Tax Performance Report by May 31 each year (RCW 82.04.759(6)); failure to file results in forfeiting the preference for that period (RCW 82.04.759(7)). Prior to 2024, RCW 82.04.260(14) imposed a preferential rate of 0.35% for these activities, which was repealed.

Agriculture/Farming Exemptions

• RCW 82.04.330 exempts wholesale sales of agricultural products by farmers, provided the sale is to a manufacturer or processor for resale, or to purchasers using the products as ingredients or feed. RCW 82.04.332 exempts wholesale sales and custom storage of wheat, oats, dry peas, dry beans, lentils, field corn, rye, triticale, and barley.
• RCW 82.04.410 exempts hatching eggs; RCW 82.04.4287 (see WAC 458-20-13501) details exemption for packing and related horticultural services, limited to sales or services provided to qualified recipients. The exemption applies only to specific products or services enumerated in the statute and does not generally apply to retail sales by farmers or to services outside the scope defined.

Stevedoring and International Charter Freight

• RCW 82.04.260(7) and the DOR's B&O classification table apply a 0.275% preferential rate for stevedoring and related international charter cargo/freight brokering, limited to activities defined in the statute and not applicable to all port-related work.

Locating and Verifying Current Rules

• Up-to-date statutory references are in RCW 82.04: see 82.04.259–260 (rates by activity), 82.04.330–332 (agriculture), 82.04.759 (publishing), and 82.04.4463 (aerospace credits).
• DOR industry guides, B&O tax classification pages, and published Special Notices provide interpretive help but are not primary legal authority.
• For all B&O tax preferences, note that many have explicit sunset dates; exemptions without a sunset may be subject to expiration by operation of Chapter 82.32 RCW or as provided in the originating session law.

Source: RCW 82.04.260; RCW 82.04.330; RCW 82.04.759; RCW 82.04.4463; WAC 458-20-267; WAC 458-20-13501

Washington sources gross receipts from digital products, digital codes, and digital automated services for Business & Occupation (B&O) tax purposes under the general destination-based sourcing hierarchy set out in RCW 82.32.730. A sale of a digital good, code, or automated service is sourced to Washington for B&O tax if the customer receives the product in Washington, regardless of the seller’s location.

Key Frameworks for Sourcing Digital Products and Remotely Delivered Services:

• RCW 82.04.257 imposes B&O tax on the gross proceeds of sales of digital goods, digital codes, digital automated services, or certain related services when those sales are sourced to Washington under RCW 82.32.730 (or would have been sourced here if taxable). The current tax rate is 0.471 percent for retail sales (0.484 percent for wholesale sales). However, effective January 1, 2027, the rate will increase to a flat 0.5 percent on both retail and wholesale digital product sales.
• WAC 458‑20‑15503 (amended effective February 23, 2024) provides detailed guidance on sourcing digital products: if a customer receives the digital product at the seller's business location, it's sourced there; otherwise, it's sourced based on the purchaser's location as known to the seller, employing the hierarchy in RCW 82.32.730 when direct receipt location is unavailable.
• RCW 82.04.258 governs apportionment for sellers with both in-state and out-of-state digital product receipts, using single-factor receipts apportionment if the sales are sourced to Washington under RCW 82.32.730.

Attribution for Marketplace Facilitators and Sellers:

• Washington law imposes detailed B&O and sales-tax obligations on marketplace facilitators (see RCW 82.08.010(15); RCW 82.08.0531). As of June 2026, there are no digital-specific sourcing or attribution rules for marketplace-facilitated digital products or services. Marketplace facilitators and sellers must apply the general sourcing framework under RCW 82.32.730 and WAC 458‑20‑15503.
• Commission income earned by a facilitator on sales sourced to Washington is subject to B&O tax under the Service and Other Activities classification, sourced to where the customer (the seller) receives the benefit—refer to WAC 458‑20‑19402.

Summary:

• Digital products, digital codes, and digital automated services sold directly or via a marketplace are sourced to Washington under the destination-based framework in RCW 82.32.730 and WAC 458‑20‑15503.
• The current B&O tax rate under RCW 82.04.257 is 0.471 percent (retail) and 0.484 percent (wholesale), rising to a flat 0.5 percent on January 1, 2027.
• No digital or marketplace-specific sourcing or attribution rules have been enacted beyond the general framework.

Source: RCW 82.04.257 (current and amended rates) Source: WAC 458‑20‑15503 (amended effective February 23, 2024) Source: RCW 82.32.730 (sourcing hierarchy)

Trailing nexus and termination of B&O filing obligations

If a business exceeds Washington’s substantial nexus threshold in a calendar year, it is subject to B&O tax filing obligations for that year and the entirety of the following calendar year (the "trailing nexus" period), even if its Washington receipts later fall below the threshold or it ceases activity in the state. After the entire trailing nexus year ends, the business may close its B&O account or request to be placed on active non-reporting status if eligible.

Trailing nexus rule framework

• Washington applies a one-year trailing nexus provision by DOR administrative rule: once B&O nexus is triggered in any year (by receipts, property, payroll, or other business presence per RCW 82.04.067), the business is considered to have nexus—and must report B&O—through the rest of that calendar year plus the full next calendar year. Falling below the threshold or ceasing in-state activity does not terminate obligations before this period ends.
• The trailing nexus rule is effective for all B&O taxpayers, including remote sellers and marketplace facilitators, and is confirmed in the DOR’s long-standing special notice.

Filing obligation termination mechanics

• After the trailing nexus year, a business may formally close its tax registration using the My DOR portal or by filing the account closure form. The B&O tax remains applicable for all periods through the end of the calendar year after activity ceases, so final returns must be filed through the required date.
• If the business is not fully closing, but grosses less than $125,000 per year (2023 and later) in worldwide gross income and meets other eligibility requirements, it may request active non-reporting status instead of filing recurring returns. This is not automatic—assignment is at DOR discretion and must be requested.

Source: Washington DOR Special Notice: Trailing Nexus Source: Washington DOR, Close My Account Source: Washington DOR, Active Non-reporting

Not yet human confirmed.