Quick Answer
Washington's B&O tax is a gross receipts tax on business income, with rates ranging from 0.13% to 1.5% depending on your business activity. Most freelancers pay 1.5% on service income over $12,000 annually, with quarterly filing required if you owe more than $1,200 per year.
Best Answer
James Okafor, Self-Employment Tax Specialist
Freelancers earning significant income who need to understand B&O tax obligations and planning strategies
How the Washington B&O tax works
Washington's Business & Occupation (B&O) tax is unique because it's based on gross receipts, not net income. Unlike income tax, you can't deduct business expenses to reduce your B&O tax liability. The tax applies to all business activity in Washington, regardless of where you're located if you have Washington customers.
Most freelancers fall under the "Service and Other Activities" classification, which has a tax rate of 1.5% of gross receipts. This means if you earn $60,000 in freelance income, you'll owe $900 in B&O tax ($60,000 × 0.015 = $900), regardless of your business expenses.
Example: Freelance graphic designer earning $75,000
Let's say you're a freelance graphic designer who earned $75,000 in 2026:
Even if you had $25,000 in business expenses (reducing your federal taxable income to $50,000), you still owe B&O tax on the full $75,000 in gross receipts.
B&O tax rates by business type
Filing requirements and deadlines
You must register for a Washington business license and file B&O tax returns if:
Filing frequency depends on your tax liability:
Quarterly due dates are: April 30, July 31, October 31, and January 31.
Small business credit
Washington offers a small business B&O tax credit of up to $35 per month ($420 annually) if your taxable amount is less than $20,000 per month. Most freelancers qualify for this credit, which reduces your B&O tax liability.
Key factors that affect your B&O tax
What you should do
1. Register for a Washington business license through the Department of Revenue
2. Determine your business classification (most freelancers are "Service")
3. Set aside 1.5% of your gross receipts for B&O tax
4. File quarterly if you expect to owe $1,200+ annually
5. Track your gross receipts separately from your net income for federal taxes
Use our quarterly tax estimator to calculate both your federal estimated taxes and Washington B&O tax obligations together.
Key takeaway: Washington's B&O tax is 1.5% of gross receipts for most freelancers, with no deductions allowed. Set aside $15 for every $1,000 you earn from Washington customers.
*Sources: [Washington Department of Revenue B&O Tax Guide](https://dor.wa.gov), [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf)*
Key Takeaway: Washington's B&O tax is 1.5% of gross receipts for most freelancers, with no business deductions allowed. Set aside $15 for every $1,000 earned.
B&O tax rates by business classification
| Business Type | Tax Rate | Typical Freelancers |
|---|---|---|
| Service & Other Activities | 1.5% | Consultants, designers, writers |
| Retailing | 0.471% | E-commerce sellers, Etsy shops |
| Manufacturing | 0.484% | Custom product creators |
| Wholesaling | 0.484% | Bulk resellers |
More Perspectives
James Okafor, Self-Employment Tax Specialist
First-year freelancers who need to understand Washington's unique tax system and registration requirements
What makes Washington different
As a new freelancer, you might be relieved that Washington has no state income tax. However, Washington does have the Business & Occupation (B&O) tax, which works very differently from income tax. Instead of taxing your profit, it taxes your gross receipts—the total amount you bring in before any expenses.
Do you need to register?
You must register for a Washington business license if you expect to earn more than $12,000 in gross receipts during the year. Don't wait until you hit $12,000—register when you start freelancing if you think you'll reach this threshold.
Simple example for new freelancers
Let's say you're a new freelance writer who expects to earn $2,000 per month ($24,000 annually):
Even though your federal taxes might be minimal after business deductions, you still owe the full B&O tax on gross receipts.
Getting started checklist
1. Register online at [bls.dor.wa.gov](https://bls.dor.wa.gov) within 30 days of starting business
2. Choose "Service and Other Activities" classification for most freelance work
3. Set up quarterly filing if you expect to owe more than $1,200 annually
4. Track gross receipts separately from your expense tracking for federal taxes
5. Save 1.5% of everything you earn in a separate account for B&O tax
Key takeaway: Register for a Washington business license as soon as you start freelancing if you expect to earn over $12,000 annually. The B&O tax is unavoidable and based on gross receipts, not profit.
*Sources: [Washington Department of Revenue](https://dor.wa.gov), [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf)*
Key Takeaway: Register for a Washington business license immediately if you expect over $12,000 in annual gross receipts. Save 1.5% of all income for B&O tax.
Sources
- Washington Department of Revenue B&O Tax Guide — Official guide to Washington B&O tax requirements
- IRS Publication 334 — Tax Guide for Small Business
Reviewed by James Okafor, Self-Employment Tax Specialist on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.