Published on Oct 04, 2019

City B&O tax rates and business licenses

Contact: Maggie Carol

City B&O rates & license info

B&O tax rates

Proposed city B&O apportionment model rule

State excise tax interest rates

AWC Tax & User fee survey


City B&O Tax Model Ordinance – 2019 required updates

Legislation adopted in the 2003 session required the 45 cities with local B&O taxes to adopt a city B&O tax model ordinance. (RCW 35.102) The model was updated in 2007 and 2012.

EHB 2005, passed in 2017, also established a task force of city and business representatives to recommend changes to the two-factor apportionment formula for service income under RCW 35.102.130(3) and required a report to the legislature by October 31, 2018.

2019 updates required

To incorporate changes required by two bills passed in the 2019 session, HB 1403 regarding service apportionment rules and HB 1059 regarding annual tax filers, a work group of cities met over the past several months to update the model ordinance. The updates were finalized in September 2019. All B&O tax cities must adopt the changes with an effective date of January 1, 2020.

In addition, as part of the implementation of the change, a work group of city tax managers has drafted a proposed city B&O apportionment model rule to assist in uniformity of implementation.

2019 B&O Model Ordinance (mandatory changes to service apportionment, definitions, and technical changes including updated references to statutes)

2019 Administrative Provisions (mandatory change to annual tax filing deadline)

Summary of changes

Proposed city B&O apportionment model rule



Summaries of city B&O tax ordinances – MRSC overview and links to city summaries of provisions that differ from the model ordinance

2018 Local B&O Tax Apportionment Task Force Report

2016 Report of the Task Force on Local Tax & Licensing Simplification

2005 B&O tax apportionment impact study

MRSC Revenue Guide for Cities and Towns


Former version of Model Ordinance (2012 version, adopted by cities effective January 1, 2013)

2012 B&O Model Ordinance (mandatory B&O tax definitions, classifications, and provisions)
2012 Administrative Provisions (mandatory threshold, penalties, and other administrative provisions)
2012 Guidelines for Model Ordinance (model ordinance plus non-mandatory common definitions, exemptions, and other provisions)
2012 factsheet

Excerpt of 2012 revised model ordinance changes


City business licenses

Cities and towns have broad authority to license businesses for the purpose of regulation and revenue. More than 230 cities have business licenses. Rates and bases vary based on the city’s needs and business community.

EHB 2005 (RCW 35.90), passed in 2017, requires two changes to city business licenses.

  1. Requires cities with business licenses to partner with one of two online portals for business license administration:
  1. Requires cities to develop a mandatory model definition of engaging in business and business license threshold

Model license threshold – A workgroup of cities met August 2017 – June 2018 to develop the model definition and threshold. The threshold was required to be completed by July 1, 2018, and must be adopted by all cities with business licenses by January 1, 2019. (Deadline is October 17, 2018 for cities that currently partner with BLS for business license administration due to required 75-day notice to BLS).

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