Seattle B&O Tax & License Estimator
Estimates based on the City of Seattle's 2026 business license tax rules under Proposition 2 (Ordinance 127259, effective January 1, 2026): a $2,000,000 standard deduction on taxable gross receipts, then 0.342% or 0.658% depending on business category, plus the tiered annual license fee.
Estimates use the City of Seattle's 2026 business license tax rules (Proposition 2, Ordinance 127259, effective January 1, 2026) and the 2026 license fee tiers. The license fee tier is based on taxable revenue before the $2M standard deduction. We are not a government agency and are not liable for differences between these estimates and your final city tax bill. Rules current as of September 2026.
Business Taxes in Seattle: The Honest 2026 Guide
Seattle rewrote its business tax in 2026. Proposition 2, passed by voters in November 2025, gave every business a $2 million standard deduction on the Business and Occupation (B&O) tax. At or under $2 million in Seattle taxable revenue, your B&O tax is $0. Above $2 million, you pay 0.342% or 0.658% depending on your category, on the amount over $2 million. You still need the annual business license either way, and its fee is tiered by revenue.
What Seattle actually charges businesses in 2026
| Tax / fee | Current amount | Who pays it |
|---|---|---|
| B&O tax, trade categories | 0.342% on revenue above $2M | Manufacturing, printing and publishing, wholesaling, retail sales and retail services, tour operators |
| B&O tax, service categories | 0.658% on revenue above $2M | Service and other business activities, transporting freight for hire |
| Annual business license fee | $73 / $147 / $667 / $1,604 / $3,210 | Everyone doing business in Seattle; tier by revenue before the $2M deduction, +$10 per branch |
What that looks like in real numbers
- Design studio, $1.5 million in Seattle revenue: $0 B&O tax (under the $2M deduction) + $667 license fee = $667 a year.
- Software company, $5 million in Seattle revenue: 0.658% of $3M = $19,740 B&O tax + $3,210 license fee = $22,950 a year.
- Retailer, $3 million in Seattle revenue: 0.342% of $1M = $3,420 B&O tax + $1,604 license fee = $5,024 a year.
- New wholesaler, $30,000 in revenue, started in August, one extra branch: $0 B&O tax + half-year license fee ($147 / 2 = $73.50) + $10 branch = $83.50.
How the $2 million deduction really works
It is a true deduction, not a cliff. Before 2026, Seattle had a $100,000 threshold with a cliff: cross it and the tax applied to all your receipts. Now the first $2 million is simply subtracted, and the rate applies only to what is left. Multi-activity businesses choose which classifications to apply the deduction to. The elevated rates run through at least 2029 and are scheduled to drop in 2033.
The license fee has its own logic
The annual license fee is tiered by your taxable revenue before the $2M deduction, so a $3M business pays the $1,604 tier even though part of its revenue is tax-free. Fees adjust for inflation every year. Start on or after July 1 and the fee is halved. Each branch location adds $10.
Where to license and file
- Business licenses and B&O tax: seattle.gov business licenses
- Ordinance 127259 (the Proposition 2 statute, PDF): clerk.seattle.gov
Frequently asked questions
How much is a business license in Seattle?
The 2026 license fee is $73 to $3,210 depending on your revenue tier, plus $10 per branch location. The B&O tax is separate: $0 up to $2M in revenue, then 0.342% or 0.658% on the excess.
Is the $2 million really tax-free?
Yes. Proposition 2 created a true $2 million standard deduction on the B&O tax for every business, effective January 1, 2026.
Do I need a license if I owe no B&O tax?
Yes. Businesses under $2M owe no B&O tax but still need the business license and may still need to file.
What did Prop 2 replace?
The old $100,000 threshold with a tax cliff, at rates of 0.222% and 0.427% on all receipts once you crossed it.
Will the rates change again?
The elevated rates run through at least 2029 and are scheduled to drop in 2033 (to 0.273% and 0.526%). We update this page as the city publishes changes.
Sources
Every figure on this page comes from an official city source, verified September 2026:
- Ordinance 127259, Proposition 2 statute (PDF) - clerk.seattle.gov
- Business licenses and 2026 fee table - seattle.gov
- Director's Rule 5-002 - seattle.gov
Rules shown are the City of Seattle's 2026 business license tax rules under Proposition 2 (effective January 1, 2026). The license fee tiers adjust annually for inflation. Confirm your classification and current rules with the city before finalizing your business budget. Last updated September 2026.