This brief overview summarizes the various taxation issues within state, county and local governments.
• The State of Washington does NOT have a corporate income tax. This means that regardless of the profitability of the company or the personal wealth of the employees, the company will only be taxed on its gross receipts. In neighboring states, such as Oregon, Idaho and California, as the profitability of the company grows so do the taxes a company pays.
• Business and Occupation Tax – Persons that engage in business in Washington are subject to Business and Occupation Tax and/or public utility tax (B&O). The tax is based on gross receipts and the rates vary according to fifteen classification categories ranging from 0.138% to 1.5%. The B&O is administered by the Department of Revenue. Visit the Department of Revenue’s site here for more information about the Business and Occupation Tax and specific industry tax rates.
• The State of Washington is one of only seven states that do NOT levy a personal income tax. Washington also does not impose a tax on intangible assets such as bank accounts, stocks, or bonds. Additionally, Washington does not tax retirement income earned and received from another state. There is no current legislation in the works to create an income tax.
• Sales and Use Tax: Washington State relies on consumer taxes rather than personal income taxes; the most significant of these taxes is the retail sales tax. Sales tax does not apply to food products, prescription drugs, or professional and personal services. Manufacturers are exempt from sales tax on machinery and equipment used in their production or research operations, but consumers purchasing construction services and building materials are subject to sales tax. The combined state and local retail sales tax rates range from 8.1% to 8.7% in Spokane County. Click here for more information on Sales and Use Tax.
• Washington State Property Taxes vary due to voter-approved special levies. The average property tax in Spokane County is approximately $13 per $1000 of the assessed value.
• The State of Washington has put out an easy-to-understand video about the basics on how to plan for, prepare, and pay state business taxes and insurance premiums. This video provides a step-by-step process on how to properly file a tax report.
For more information or general questions contact a local or state representative.