Taxation in Washington
Updated on Thursday 18th April 2019
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Washington is among fewer American states that do not impose a corporate income tax, letting entrepreneurs focus on company investments among many other things. However, investors in Washington will have to observe and consider the business and occupation tax or the B&O tax as it is known. In-depth information about this kind of tax plus about many others can be offered by our team of company incorporation specialists in USA. The same team can be at your service if you would like to open a company in USA, including Washington.
What is the business and occupation tax in Washington?
B&O is the business and occupation tax imposed on the gross receipts of most of the companies in Washington. For example, companies activating in the retail sector are subject to a B&O tax of 0.471%. As for the ones operating in the manufacturing and wholesale sectors, a B&O tax of 0.484% is imposed. The Department of Revenue in Washington offers information about the B&O tax rates for varied business types in Washington, plus details about the specific companies like the ones activating in the food sector that are exempt from such taxation. Depending on the business estimated tax liability, the B&O tax returns can be made on a monthly, quarterly or annually basis. Small businesses can be qualified for credits if the company’s B&O tax liability is below a specific amount. Let our team of consultants tell you more about the taxation for your business in Washington.
What is the personal income tax in Washington?
There are five tax brackets imposed on specific taxable incomes as follows in the table bellow:
|For the first $10,000||4%|
|Between $10,001 and $40,000||6%|
|Between $40,001 and $60,000||7%|
|Between $60,001 and $350,000||8.5%|
|For more than $350,001||8.95%|
The sales tax in Washington
The standard sales tax in Washington is set at 6.5% and municipalities can impose their own sales tax rates not exceeding 3.9%. This kind of tax is imposed for companies dealing with products and services for sale purposes in this state. As for the registration for such tax, the Washington Department of Revenue is the institution that issues the certificate of registration once the company documents are provided, including the business license. Even if the online registration for sales tax is available, we recommend you address your inquiries to our team of consultants and solicit complete guidance, particularly if you are an investor from overseas looking for a business in Washington. We remind that selling taxable goods and services in Washington can only be made if you registered your company for tax purposes in this state. It is important to know that there are also exemptions from this kind of tax applicable to specific food products, newspapers, magazines and prescription medicine.
Do I have nexus in Washington?
If you decide running companies in other American states, but generate incomes in Washington, your business might be subject to nexus. This means that you have to consider the taxes in the states your business is registered, besides the ones in Washington. If you would like to know more about the company formation in Washington, we recommend you to read the general guide to company incorporation in Washington.
Other tax facts in Washington
The local property taxes should be in your attention if you would like to buy a property in Washington. The average property tax rate is set at 1% calculated on the value of the property and paid annually. As for the estate tax in Washington, this varies from 10% to 20% and it is applicable only to gross estates above USD 2,193,000. You might want to consider the following taxes in Washington:
- The sales tax of 20.5% for alcohol sales and retail.
- The sales tax of 13.7% for alcohol sales in bars and restaurants.
- The spirit liter tax ranging from USD 2.4408 to USD 3.7708/liter for sold alcohol in bars and restaurants.
- There is no inheritance tax imposed in the state of Washington.
Instead of dealing with harsh formalities as a foreigner looking for business in Washington, it is recommended to get in touch with a team of specialists who can be in charge of tax registration for your company in this state, in respect with the Washington Department of Revenue. Also, if you are a foreign entrepreneur for the first time in Washington, it is recommended to solicit the support of our team of experts who can guide you throughout the entire company registration in USA, including in this state.
We kindly invite you to contact our company incorporation agents in USA and find out complete information about the taxation in Washington.