Washington State Tax Information
The state of Washington has no personal or corporate income tax, but businesses and consumers must pay other types of taxes. Anyone conducting business or exchanging money for goods and services in Washington is likely required to pay some sort of tax. Knowing about the different taxes collected in Washington will help taxpayers better manage their finances.
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Department of Revenue
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The Washington State Department of Revenue is responsible for collecting taxes in the state, and processes about 1.85 million tax returns each year. In fiscal 2010, it collected about $10 billion in sales and use tax, which is its largest source of revenue, and $2.6 billion in business and occupation tax. The agency's headquarters are in Olympia, and public offices are located in other cities throughout the state. The agency performs a range of duties to administer the state's tax laws.
Sales And Use Tax
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Sellers collect retail sales tax on sales made in Washington, and must pay the tax to the Department of Revenue. The tax is collected on sales of tangible personal property and services provided to individuals and businesses. If sales tax is not collected, use tax must be paid on those items or services. Private party automobile purchases and property purchased outside the state for use in the state is also subject to use tax.
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Business Tax
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Washington requires businesses to pay a business and occupation tax based on its gross sales or income. Gross income is money earned before any deductions are made. Each business activity fits into one or more tax classifications, which determines the B&O tax rate. Based on Washington's "economic nexus" policy, certain classifications of business outside of Washington may be subject to Washington B&O tax without having a physical presence in the state.
Other Taxes
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The state collects excise taxes on a number of specific goods and services in addition to the other forms of tax. While Washington residents don't pay state income tax, residents who itemize deductions on their federal income tax returns may deduct state and local general sales tax for 2010 and 2011. Washington residents also pay property taxes, the assessment and collection of which is administered by local governments.
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References
- Washington State Department of Revenue: Income Tax
- Washington State Department of Revenue: What We Do
- Washington State Department of Revenue: Retail Sales Tax
- Washington State Department of Revenue: Do You Owe Use Tax?
- Washington State Department of Revenue: Business and Occupation Tax
- Washington State Department of Revenue: Economic Nexus
Resources
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