Seattle City Council voted, 9-0, on Aug. 4 to send a proposal to restructure the city’s Business and Occupation (B&O) Tax to the November 2025 General Election Ballot. If approved by the voters, the proposal would raise the tax exemption threshold from $100,000 to $2 million, create a standard $2 million deduction, and raise the B&O rates for remaining payers. The city anticipates that businesses with gross receipts greater than $5.7 million will see an increase in their B&O tax obligations.

The rate changes are as follows, according to the proposal’s bill report:

The business and occupation tax restructure proposed to the qualified voters of Seattle by this council bill would increase the rate per dollar of gross receipt from retail and wholesale trade, manufacturing, extracting, printing and publishing activities to 0.342% through Dec. 31, 2032, and would decrease the rate to 0.273% thereafter; and would increase the rate per dollar of gross receipts from services, other and transport for hire to 0.658% through Dec. 31, 2032, and would decrease the rate to 0.526% thereafter.

The package includes a credit for pediatric hospitals, and comprehensive cancer centers, which would effectively exempt those business types from this B&O increase. Dependent on the outcome of the November election, the Seattle Metro Chamber will provide technical information to members regarding payment of the tax and claiming of the credits and standard deduction.

In response to the action taken by the Seattle City Council on Aug. 4, Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce, issued the following statement:

“The city’s proposal gives needed relief to small businesses, something that we – and voters – strongly support, but we are disappointed that city leaders have also chosen to raise the B&O for many other hometown companies, making Seattle’s economic environment more volatile and uncertain. When business costs go up, consumer prices also go up, and we – and voters – also understand that. Finally, this tax package was rushed, including not taking into account the city’s revenue forecast, discussed just hours ago, which revises previous revenue projections up by about $90 million for the biennium. This policy choice simply misses the mark.”