State business and occupation tax for 2026, with the small business B&O tax credit.
Gross income for this filing period only, after any deductions you are allowed to take.
| Classification | Rate | Gross | Tax |
|---|
Estimate only, check with the Washington Department of Revenue. Uses the statutory credit formula, so it can differ by a few dollars from the DOR credit tables. City B&O taxes and other classifications are not included.
This Washington B&O tax calculator shows small business owners and freelancers in Washington State how much business and occupation tax they owe for 2026 returns, after the small business B&O tax credit. B&O is a gross receipts tax charged on income before costs, so even a loss making business can owe it, and the tool uses the rates and credit rules published by the Washington Department of Revenue. Figures checked October 2026.
Quick answer: Multiply gross income in each classification by its rate, such as 0.471% for retailing or 1.5% for most services, and add the results. The Washington B&O tax calculator then takes off the small business credit, worth up to $55 a month, or $160 a month for service businesses.
In This Guide
What Is Washington B&O Tax?
Washington's business and occupation (B&O) tax is a state tax on the gross income of businesses operating in Washington, charged at a different rate for each type of activity. There is no deduction for wages, rent or the cost of goods, which is why the rates look small.
In plain words: tax before credit = gross income in each classification × its rate, added together. Then credit = the full tax if it is at or below the maximum credit, otherwise twice the maximum credit minus the tax, never below zero. That credit formula comes from RCW 82.04.4451. The maximum is $55 for each month in the filing period, or $160 a month if at least 50% of your taxable income is reported under service and other activities or a few similar classifications.
What Are the B&O Tax Rates for 2026?
For 2026 the main rates are 0.471% for retailing, 0.484% for wholesaling and manufacturing, and 1.5% for service and other activities. Since 1 October 2025 the service rate rises to 1.75% for businesses with $1 million to $4,999,999.99 of prior year Washington taxable income and to 2.1% at $5 million or more.
| Classification | Rate | Tax on $100,000 |
|---|---|---|
| Retailing | 0.471% | $471 |
| Wholesaling | 0.484% | $484 |
| Manufacturing | 0.484% | $484 |
| Service and other (under $1 million) | 1.5% | $1,500 |
| Service and other ($1 million to $4,999,999.99) | 1.75% | $1,750 |
| Service and other ($5 million or more) | 2.1% | $2,100 |
How Much Is the Small Business B&O Tax Credit?
The small business B&O tax credit is worth up to $55 a month, $165 a quarter or $660 a year for most businesses, and $160 a month, $480 a quarter or $1,920 a year for service businesses. It shrinks dollar for dollar once tax passes the maximum and disappears at twice the maximum.
| Filing frequency | Max credit (general) | Credit ends at tax of | Max credit (service) | Credit ends at tax of |
|---|---|---|---|---|
| Monthly | $55 | $110 | $160 | $320 |
| Quarterly | $165 | $330 | $480 | $960 |
| Annual | $660 | $1,320 | $1,920 | $3,840 |
Take Jenna, a freelance graphic designer in Spokane who files annually. With $110,000 of service income her tax before credit is $1,650, which is below the $1,920 maximum, so the credit covers it all and she owes nothing. If she earned $150,000, tax would be $2,250 and the credit would be $3,840 minus $2,250, or $1,590, leaving $660 to pay. Her credit runs out completely at $256,000 of service income.
Some news pages say the credit is already $125 or $375 a month. Under the current wording of RCW 82.04.4451 those larger amounts apply from 1 January 2029, so 2026 returns still use $55 and $160.
How to Use the Washington B&O Tax Calculator
Step 1: Choose Your Filing Frequency
Pick the frequency the Department of Revenue assigned you: monthly, quarterly or annual. It sets the number of months in the period and therefore the maximum credit.
Step 2: Enter Gross Income by Classification
Enter the gross income for the period under each classification you report. Sales to other businesses for resale go under wholesaling, and sales to final customers go under retailing. If your prices are built from cost plus a percentage, the markup calculator helps you check that your margin still covers B&O, since the tax falls on the selling price and not on profit.
Step 3: Pick Your Service Rate Tier
Choose the band that matches your Washington taxable income for the previous calendar year. Most small businesses stay on 1.5%. Hospitals and certain advanced computing businesses keep 1.5% at any size.
Step 4: Read Your Tax, Credit and Amount Due
The Washington B&O tax calculator shows tax before credit, the credit, the maximum credit and the tax due, plus a line for each classification. It also tests whether at least half your income is service income, which decides the larger service credit.
Do I Still Have to File If I Owe No B&O Tax?
Yes, if you are registered and have been given a filing frequency, you still file a return for every period, even when the credit brings the tax to zero. City B&O taxes in places such as Seattle and Tacoma are filed separately and are not part of this credit. Federal income tax is a separate matter again, and the IRS list of state government websites points you to the Washington Department of Revenue for state filing help.
Because the tax is charged on revenue, a low margin business feels it most. Run your prices through the profit margin calculator with B&O counted as a cost, and you will see whether 0.471% or 1.5% of every sale still leaves enough profit.
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How we checked this tool: the Tools Veria Editorial Team built this tool by hand, checked it against the official rules or published standards where they apply, and tested it against worked examples. Results are estimates for planning, not personal financial or tax advice. Read our editorial policy and disclaimer, or report an error.
Frequently Asked Questions
How do I calculate Washington B&O tax?
Multiply gross income in each classification by its rate and add the results, for example $50,000 of retail sales at 0.471% is $235.50. Then subtract the small business B&O tax credit if your total is low enough.
What is the B&O tax rate for service businesses in 2026?
The service and other activities rate is 1.5% for businesses with under $1 million of prior year Washington taxable income, 1.75% from $1 million to $4,999,999.99 and 2.1% at $5 million or more.
How much is the small business B&O tax credit in 2026?
It is up to $55 a month for most businesses and $160 a month for businesses with at least half their income under service and other activities. That is $660 or $1,920 a year for annual filers.
At what income does the B&O small business credit run out?
It ends when tax before credit reaches twice the maximum credit. For an annual service filer at 1.5% that is $3,840 of tax, or $256,000 of income, and for an annual retailer it is about $280,255 of sales.
Is B&O tax charged on profit or revenue?
B&O tax is charged on gross revenue, not profit. A business with $200,000 of sales and $190,000 of costs still pays B&O on the full $200,000, unless a specific deduction applies.
Is the B&O credit going up to $375 a month?
Yes, but not yet. The law sets $125 a month for most businesses and $375 for service businesses from 1 January 2029, so 2026 returns still use $55 and $160 a month.