At a glance
- Corporate tax
- None (B&O tax on gross receipts)
- Tax on wages
- None on wages (9.9% over $1M from 2028)
- Sales tax
- 6.5% + local
- Economic nexus
- $100,000 in gross receipts
- Minimum wage
- $17.13/hr
- UI wage base
- $78,200
- New-employer UI rate
- 115% of industry average
- Paid leave program
- PFML 1.13% + WA Cares 0.58%
- Annual report
- Anniversary month, $70
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Register with the Secretary of State
Before doing business in WashingtonFile a Foreign Registration Statement for a profit corporation ($180) with the Secretary of State.
Get a Washington business license
Before hiring or once Washington receipts pass $100,000Apply through DOR’s Business Licensing Service for a UBI number, the excise tax account and any city endorsements.
Register with ESD
Before the first Washington payrollOpen an ESD account for unemployment insurance and a Paid Leave / WA Cares account for premiums.
Open an L&I account
Before the first employee startsOpen a state-fund workers’ compensation account with L&I; private insurance is not available.
Report new hires
Within 20 days of hireReport each new or rehired employee to the DSHS Division of Child Support.
Turn on sales tax and B&O
From the first taxable sale after registeringSet up sales tax collection by location code for SaaS and other retail sales, and accrue B&O tax monthly.
Register locally
When you have employees or receipts in the cityRegister with cities that levy their own B&O tax or license, such as Seattle, Bellevue or Tacoma.
The six areas
- AccountingAccounting and state tax in WashingtonWashington has no corporate income tax; it taxes gross receipts through the B&O tax, at 0.471% for retail sales (including SaaS) and 1.5%–2.1% for other services since October 2025.Corporate income taxNone
- ReceivablesReceivables and sales tax in WashingtonWashington taxes SaaS as a retail sale and, since October 2025, IT services and custom software too; remote sellers register at $100,000 of Washington receipts and collect 6.5% plus local tax.State sales tax rate6.5%
- PayablesPayables and contractors in WashingtonWashington has no state 1099 filing, but it taxes much of what startups buy — software, SaaS and since October 2025 IT services — and tests contractors twice, for UI and workers’ comp.State 1099 filingNone
- PayrollPayroll taxes and employer rules in WashingtonWashington payroll has no income tax withholding, but carries UI on $78,200, Paid Family & Medical Leave at 1.13%, WA Cares at 0.58% and state-fund workers’ comp, under a $17.13 minimum wage.Minimum wage$17.13 an hour
- ComplianceCompliance and filings in WashingtonWashington has no corporate return; compliance is a $180 foreign registration, a $70 annual report, a DOR business license, the excise tax return and an annual unclaimed property report.Foreign registration$180
- AdvisoryAdvisory: credits and decisions in WashingtonWashington has no corporate income tax and no general R&D credit; the planning issues are B&O on revenue, the capital gains tax on founders’ exits, and a 9.9% tax on income over $1 million from 2028.Capital gains tax7%
Who you register with
- Washington Department of Revenue (DOR)Business license (UBI), B&O tax, sales and use tax, and unclaimed property
- Employment Security Department (ESD)Unemployment insurance, Paid Family & Medical Leave and WA Cares premiums
- Department of Labor & Industries (L&I)Workers’ compensation (state fund), minimum wage, pay transparency and sick leave
- Washington Secretary of State — Corporations and Charities DivisionForeign registration and the annual report
- DSHS Division of Child SupportNew-hire reporting
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Washington’s neighbors.
Common questions
Is the B&O tax an income tax for our provision?
No. B&O is a tax on gross receipts, with no deduction for payroll, rent or cost of goods. A company that loses money still owes it on every dollar of Washington revenue above the small business credit. It belongs in operating expenses as a tax other than income tax, not in the income tax provision.
Is SaaS taxable in Washington?
Yes. Washington treats remote access to prewritten software as a retail sale, and digital automated services are retail sales too, so a SaaS subscription delivered to a Washington customer is subject to sales tax at the customer’s location rate and to Retailing B&O.
Do we owe tax on software we buy from out-of-state vendors?
If a vendor didn’t charge Washington sales tax on something taxable, the buyer owes use tax at the rate where it is used, reported on the excise tax return. Since SaaS, digital automated services and, from October 2025, IT services and custom software are taxable in Washington, that now covers much of a startup’s software and contractor spend.
When is a final paycheck due in Washington?
At the end of the established pay period. Under RCW 49.48.010, wages due to an employee who is discharged or quits are paid at the end of the pay period in which they leave, not immediately.
How do we get a Washington business license?
Through the Department of Revenue’s Business Licensing Service, which issues the Unified Business Identifier (UBI) used by DOR, ESD and L&I, and adds city endorsements for cities that license through the state. The Secretary of State registration as a foreign corporation is a separate $180 filing.
Does Washington really have no income tax?
Not on wages, through 2027. From January 1, 2028, SB 6346 imposes a 9.9% tax on individuals and married couples with annual adjusted gross income over $1 million, first due in April 2029, unless voters repeal it: Initiative 645, which would do that, is on the November 3, 2026 ballot. Separately, Washington already taxes individuals’ long-term capital gains at 7%, and 9.9% on gains above $1 million, above an annual standard deduction.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- WA DOR — Business & occupation tax
- WA DOR — Business & occupation tax classifications
- WA DOR — Special notice: Service and Other Activities rate changes
- WA DOR — 2025 tax legislation
- WA DOR — 2026 tax legislation
- WA DOR — Services subject to sales tax
- WA DOR — Digital products including digital goods
- WA DOR — Remote sellers
- WA DOR — Local sales and use tax rates by county, Q1 2026
- WA DOR — Income tax (SB 6346)
- WA DOR — Capital gains tax
- WA DOR — Special notice: New tiered rates for Washington’s capital gains tax
- WA DOR — Unclaimed property
- ESD — Paid Family & Medical Leave premium rate increases to 1.13% in 2026
- Paid Leave WA — Estimate your Paid Leave and WA Cares payments
- ESD — How we determine tax rates
- ESD — Taxable wage base
- ESD — Independent contractors
- DSHS Division of Child Support — New hire reporting
- L&I — Washington’s minimum wage going up to $17.13 an hour in 2026
- L&I — Equal Pay & Opportunities Act Q&A
- L&I — Paid sick leave minimum requirements
- L&I — Employers’ guide to workers’ compensation insurance in Washington
- L&I — Independent contractor guide (F101-063-000)
- RCW 49.48.010 — Payment of wages due to employee ceasing work
- City of Seattle Office of Labor Standards — Minimum wage
- City of Seattle — Payroll expense tax
- WA DOR — Filing frequencies & due dates
- WA Secretary of State — Fee schedules & priority services
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.