The 2025 legislative session introduced substantial changes to Washington’s Business & Occupation (B&O) tax, excise taxes, and tax preference programs. Whether you own a small LLC or operate a large enterprise, these new laws could directly affect your margins, tax obligations, and long-term planning.
At the Law Office of Theresa Nguyen, PLLC, we break down the updates and help business owners make sense of the numbers—so you can focus on growth.
Effective October 1, 2025 and January 1, 2026
Service & Other Activities B&O Rate now operates under a progressive structure:
Revenue under $1M: 1.5%
$1M–$5M: 1.75%
Over $5M: 2.1%
Manufacturing, Wholesaling, Retailing B&O Rates increase to 0.5% across the board starting January 1, 2027.
⚠️ Service businesses—especially law firms, consultants, and professional services—should expect to pay more under the new progressive rates.
High Gross Receipts Surcharge: 0.5% for businesses with $250M+ in WA taxable income.
Financial Institutions Surcharge: Increased from 1.2% to 1.5% for banks with $1B+ in net income.
Advanced Computing Surcharge: Skyrockets from 1.22% to 7.5% for global tech companies with $25B+ revenue (e.g., Amazon, Microsoft).
💼 Only the largest businesses are impacted, but these changes signal a continued shift toward progressive corporate taxation.
Effective January 1, 2026
New B&O category for payment processors (e.g., Stripe, Square, etc.).
Taxed at a rate of 3.1%.
Eligible deductions for interchange and network fees passed through to others.
🧾 Payment service providers must separate qualifying income and prepare for specialized reporting.
The B&O tax exemption for credit unions is limited to smaller, member-based institutions.
Larger credit unions may now be subject to B&O tax on gross income.
Eliminates credits for:
Precious metal bullion sales
Utility providers
International hiring in certain census tracts
Public safety product testing labs
The rental of self-storage units is explicitly added to the list of taxable services under the Service & Other Activities B&O category.
Effective April 1, 2026, operators will need to pay B&O tax on rental income.
🏢 Self-storage facilities should prepare for increased tax liability and reporting.
Duty-free shops must pay a new concession fee beginning January 1, 2026.
Applies to airport and international border sales.
Radio and TV broadcasters moved to a dedicated B&O category with updated definitions.
Provides more certainty and tailored tax treatment for digital and traditional broadcasters.
The Customized Employment Training Credit Program is now extended through July 1, 2033.
Businesses that invest in employee training at approved WA institutions may continue to receive B&O tax credits.
📚 Great incentive for companies focused on workforce development.
Re-evaluate your gross receipts and projected 2026–2027 income.
Prepare for rate increases and B&O surcharge eligibility.
Update accounting systems to track income by B&O category.
Plan now for tax preference eliminations and new deduction opportunities.
Consult a tax advisor about the timing of income and expense recognition.
We help businesses across King County and Washington State:
Navigate B&O tax changes and surcharges
Ensure compliance with state reporting
Strategize deductions and entity structuring
Defend against audits and plan for multi-year liabilities
📍 Located in Renton, WA
📞 Contact us today for a tax consultation tailored to your industry and revenue level.
Washington State 2025 Tax Legislation Updates: General Taxes (Sales, Use, and Excise)
Washington State 2025 Tax Legislation Updates: What Individuals Need to Know
Washington State 2025 Tax Legislation Updates: Estate and Gift Tax Changes
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