1. No Personal Income Tax
2. No Corporate Income Tax
3. No Inventory Tax
4. No Unitary Tax

Corporate and Personal Income Tax
The State of Washington does not impose a corporate income tax. Washington is one of a few states that does not levy a personal income tax, or impose a tax on intangible assets such as bank accounts, stocks, or bonds. In addition, Washington State does not assess any tax on retirement income earned and received from another state. 

Business and Occupation (B&O) Tax
Businesses in the state are not charged tax on the income, rather business tax is calculated on a company's gross receipts.  The rates vary between 0.138% to 1.5% depending on the type of business.  The rate for manufacturers is 0.484%.

Property Tax
Property taxes are one of the primary sources of funding for local governments. There is some variation of property tax throughout the state, due mainly to voter-approved special levies. The average rate is about $13.56 per $1,000 of fair market value. Personal property taxes are levied on the assets of businesses only.

Retail Sales Tax
Retail sales tax applies to most items sold to consumers. In Washington grocery store food items and prescription drugs are not taxed. Generally, no sales tax is charged on utility services, personal services (medical, dental, legal, barber, etc.) and real estate (although construction services and building materials are subject to sales tax). 
The retail sales tax is comprised of both a state and local portion. Within the Palouse Economic Development Council area,  the combined rate ranges from 7.2 percent to 7.9 percent. 

Taxable Retail Sales 
Taxable retail sales vary within each county with some posting a decline and others showing areas of increase. Please refer to the chart for more information.

PERCENT CHANGE IN TAXABLE RETAIL SALES

TAX CREDITS & INCENTIVES - 

Deferrals, Exemptions and Credits
The state of Washington offers several tax deferrals, exemptions and credits making Washington an attractive place to do business. New and existing manufacturers, research and development firms, and certain high technology companies can benefit from several tax incentives. These incentives are intended to encourage the creation and preservation of family-wage jobs in the manufacturing and high technology sectors, particularly where high unemployment exists. 
 
Sales/Use Tax Exemption on Machinery, Equipment and Buildings
Manufacturers, processor for hire, and manufacturers who perform research and development are not required to pay the sales or use tax on machinery, equipment or building used directly in the manufacturing or research operations. 
 
Rural Area Sales/Use Tax Deferral/Exemptions - This program grants a waiver of sales/use tax for manufacturing, research and development, or computer-related businesses locating in specific geographical areas. 
 
Rural Area Business and Occupation Tax Credit
Under this program companies may receive tax credits against their Business & Occupation tax for qualified employment positions.  Qualified positions are manufacturing, Research & Development and computer related.

Under this program companies involved in manufacturing, Research & Development or computer related industries are eligible for B & O tax credits if they increase their employment by 15% or more.  Applications must be done on an annual basis and before any of the actual hiring.  Credits are $2000 or $4000 (for positions with salaries over $40,000).   

High Technology Sales/Use Tax Deferral/Exemption
Some businesses in research and development technology categories may be eligible for a sales/use tax deferral/exemption. To meet eligibility requirements firms must; start new research and development or pilot scale manufacturing operations, or expand or diversify a current operation by expanding, renovating or equipping an existing facility.

High Technology Business and Occupation Tax Credit
An annual credit of up to $2 million is allowed for businesses that perform research and development in Washington in specified high technology categories and meet minimum expense requirements.

Rev. 3-07