HomeMy WebLinkAboutORD 6175CITY OF RENTON, WASHINGTON
ORDINANCE NO. 6175
AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, IMPLEMENTING
STATUTORY CHANGES REFLECTED IN THE OCTOBER 2025 REVISED MODEL
ORDINANCE FOR BUSINESS AND OCCUPATION TAX BY AMENDING SUBSECTIONS
5-25-2.J.1 THROUGH 5-25-2.J.3, 5-25-23.5, 5-25-2.R.2, 5-25-2.Y, and 5-25-22 OF
THE RENTON MUNICIPAL CODE BY CHANGING THE TAXATION OF CERTAIN
ACTIVITIES FROM SERVICES TO RETAIL, AUTHORIZING CORRECTIONS,
PROVIDING FOR SEVERABILITY. AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, Renton has established, and levies, a Business & Occupation ("B&O") tax on
parties engaging in business in the City; and
WHEREAS, on May 20, 2025, the Washington state legislature, through Engrossed
Substitute Senate Bill 5814 ("SB 5814"), modified the application and administration of taxation
of certain service activities; and
WHEREAS, pursuant to RCW 35.102.040, and in response to SB 5814, the Association of
Washington Cities updated the model ordinance for B&O tax; and
WHEREAS, pursuant to RCW 35.102.040(2), the city of Renton must adopt all mandatory
provisions in the B&O model ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DO
ORDAIN AS FOLLOWS:
SECTION I. All portions of the Renton Municipal Code ("RMC') in this ordinance not
shown in strikethrough and underline edits remain in effect and unchanged.
SECTION II. Subsections 5-25-2.J.1 through 5-25-2.1.3 RMC are amended as follows:
J. Engaging in business:
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1. The term "engaging in business" means commencing, conducting, or continuing
in business, and also the exercise of corporate or franchise powers, as well as liquidating
a business when the liquidators thereof hold themselves out to the public as conducting
such business.
2. This section sets forth examples of activities that constitute engaging in business
in the City, and establishes safe harbors for certain of those activities so that a person
who meets the criteria may engage in de minimis business activities in the City without
having to register and obtain a business license or pay City business and occupation taxes.
The activities listed in this section are illustrative only and are not intended to narrow the
definition of "engaging in business" in subsection 1. If an activity is not listed, whether it
constitutes engaging in business in the City shall be determined by considering all the
facts and circumstances and applicable law.
3. Without being all-inclusive, any one of the following activities conducted within
the City by a person, or its employee, agent, representative, independent contractor,
broker or another peFsen acting on its behalf constitutes engaging in business and
requires a person to register and obtain a business license:
a. Owning, renting, leasing, maintaining, or having the right to use, or using,
tangible personal property, intangible personal property, or real property
permanently or temporarily located in the City.
b. Owning, renting, leasing, using, or maintaining, an office, place of business, or
other establishment in the City.
c. Soliciting sales
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d. Making repairs or providing maintenance or service to real or tangible personal
property, including warranty work and property maintenance.
e. Providing technical assistance or service, including quality control, product
inspections, warranty work, or similar services on or in connection with tangible
personal property sold by the person or on its behalf.
f. Installing, constructing, or supervising installation or construction of, real or
tangible personal property.
g. Soliciting, negotiating, or approving franchise, license, or other similar
agreements.
h. Collecting current or delinquent accounts.
i. Picking up and transporting tangible personal property, solid waste, construction
debris, or excavated materials.
j. Providing disinfecting and pest control services, employment and labor pool
services, home nursing care, janitorial services, appraising, landscape architectural
services, security system services, surveying, and real estate services including the
listing of homes and managing real property.
k. Rendering professional services such as those provided by accountants,
architects, attorneys, auctioneers, consultants, engineers, professional athletes,
barbers, baseball clubs and other sports organizations, chemists, consultants,
psychologists, court reporters, dentists, doctors, detectives, laboratory operators,
teachers, veterinarians.
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I. Meeting with customers or potential customers, even when no sales or orders
are solicited at the meetings.
m. Training or recruiting agents, representatives, independent contractors,
brokers or others, domiciled or operating on a job in the City, acting on its behalf, or
for customers or potential customers.
n. Investigating, resolving, or otherwise assisting in resolving customer
complaints.
o. In-store stocking or manipulating products or goods, sold to and owned by a
customer, regardless of where sale and delivery of the goods took place.
p. Delivering goods in vehicles owned, rented, leased, used, or maintained by the
person or another person acting on its behalf.
SECTION III. Subsection 5-25-215 RMC is amended as follows:
5. A seller located outside the City merely delivering goods into the City by means of
common carrier is not required to register and obtain a business license, provided that it
engages in no other business activities in the City. Such activities do not include those in
subsection 4
The City expressly intends that engaging in business includes any activity sufficient to
establish nexus for purposes of applying the tax under the law and the constitutions of
the United States and the State of Washington. Nexus is presumed to continue as long as
the taxpayer benefits from the activity that constituted the original nexus generating
contact or subsequent contacts.
SECTION IV. Subsection 5-25-2.R.2 RMC is amended as follows:
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2. "To manufacture" means all activities of a commercial or industrial nature
FegUiFiRg *"^ ^{'- beF ^F skill, wherein labor or skill is applied, by hand or machinery,
to materials or ingredients Fesul, �.:�.g;,Tso that as a result thereof a new, different or useful
product for sale or commercial or industrial use, and shall include:
a. The production of special made or custom made articles;
b. The production of dental appliances, devices, restorations, substitutes, or
other dental laboratory products by a dental laboratory or dental technician;
c. Crushing and/or blending of rock, sand, stone, gravel, or ore; and
d. The producing of articles for sale, or for commercial or industrial use from raw
materials or prepared materials by giving such materials, articles, and substances of
trade or commerce new forms, qualities, properties or combinations including, but
not limited to, such activities as making, fabricating, processing, refining, mixing,
slaughtering, packing, aging, curing, mild curing, preserving, canning, and the
preparing and freezing of fresh fruits and vegetables.
"To manufacture" shall not include the production of digital goods or the production of
computer software if the computer software is delivered from the seller to the purchaser by
means other than tangible storage media, including the delivery by use of a tangible storage
media where the tangible storage media is not physically transferred to the purchaser.
SECTION V. Subsections 5-25-2(Y) and 5-25-2(Z) RMC is amended as shown below.
Y. Sale at retail, retail sale:
1. "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective of the
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nature of their business and including but not limited to, persons who install, repair, clean,
alter, improve, construct, or decorate real or personal property of or for consumers, other
than a sale to a person who presents a resale certificate under RCW 82.04.470, Wholesale
sale — Reseller permit — Exemption certificates — Burden of proof — Tax liability, and who:
a. Purchases for the purpose of resale as tangible personal property in the regular
course of business without intervening use by such person; or
b. Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real
or personal property of or for consumers, if such tangible personal property becomes
an ingredient or component of such real or personal property without intervening use
by such person; or
c. Purchases for the purpose of consuming the property purchased in producing
for sale a new article of tangible personal property or substance, of which such
property becomes an ingredient or component or is a chemical used in processing,
when the primary purpose of such chemical is to create a chemical reaction directly
through contact with an ingredient of a new article being produced for sale; or
d. Purchases for the purpose of consuming the property purchased in producing
ferrosilicon which is subsequently used in producing magnesium for sale, if the
primary purpose of such property is to create a chemical reaction directly through
contact with an ingredient of ferrosilicon; or
e. Purchases for the purpose of providing the property to consumers as part
of competitive telephone service, as defined in RCW 82.04.065. T"^ t -","
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r-an,;umad in the perfeFm_;;nce-ef anyactivity classified as a "sale at retail" er "Fetaif
Sale" Pde+, theugh such pFepeFty ld utilized •,I d th h f this
o r r..cic�i� rc�oiv er aclii=cv a��ivviacv iii a cii�vaSii c v� ciin
r-Hhrnrtien. fell.,. ing .-h .,., or
f. Purchases for the purpose of satisfying the person's obligations under an
extended warranty as defined in subsection -78 of this section, if such tangible
personal property replaces or becomes an ingredient or component of property
covered by the extended warranty without intervening use by such person.
The term shall include every sale of tangible personal property which is used or
consumed or to be used or consumed in the performance of any activity classified as
a "sale at retail" or "retail sales" even though such property is resold or utilized as
provided in (a), (b), (c), (d), (e), or (f) of this subsection following such use.
The term also means every sale of tangible personal property to persons engaged
in any business that is taxable under RCW 82.04.280(1)(a), (b), and (g) 82.04.290 and
82.04.2908.
2. "Sale at retail" or "retail sale" also means every sale of tangible personal property
to persons engaged in any business activity which is taxable under this chapter.
3. The term "sale at retail" or "retail sale" includes the sale of or charge made for
personal, business, or professional services including amounts designated as interest,
rents, fees, admission, and other service emoluments however designated, received by
persons engaging in the following business activities:
a. Information technology training services, technical support, and other services
including, but not limited to, assisting with network operations and support, help desk
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services, in -person training related to hardware or software network system support
services, data entry services, and data processing services• or
b. Custom website development services. For the purposes of this subsection (3)
"website development services" means the design development and support of a
website provided by a website developer to a customer• or
c. Investigation, security services, security monitoring services and armored car
services including but not limited to background checks security guard and patrol
services, personal and event security, armored car transportation of cash and
valuables, and security system services and monitoring. This does not include
locksmith services; or
d. Temporary staffing services. For the purposes of this subsection (3) "temporary
staffing services" means providing workers to other businesses except for hospitals
licensed under chapter 70.41 or 71.12 RCW for limited periods of time to supplement
their workforce and fill employment vacancies on a contract or for fee basis or
e. Advertising services.
i. For the purposes of this subsection 3, "advertising services" means all digital
and nondigital services related to the creation preparation production or
dissemination of advertisements including, but not limited to:
(A) Layout, art direction graphic design mechanical preparation
production supervision, placement, referrals, acquisition of advertising space and
rendering advice concerning the best methods of advertising products or services•
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ORDINANCE NO. 6175
(B) Online referrals, search engine marketing and lead generation
optimization, web campaign planning, the acquisition of advertising space in the
internet media, and the monitoring and evaluation of website traffic for the
purposes of determining the effectiveness of an advertising campaign.
ii. "Advertising services" do not include:
(A) Web hosting services and domain name registration•
(B) Services rendered in respect to the following:
(1) "Newspapers" as defined in RCW 82.04.214;
(II) Printing or publishing under RCW 82.04.280; and
(III) "Radio and television broadcasting" within this state as defined in
RCW 82.04 (section 1, chapter 9, Laws of 2025); and
(C) Services rendered in respect to out -of -home advertising, including•
Billboard advertising; street furniture advertising; transit advertising; place -
based advertising, such as in-store display advertising or point -of -sale
advertising; dynamic or static signage at live events; naming rights; and fixed
signage advertising. Out -of -home advertising does not include direct mail; or
f. Live presentation including, but not limited to, lectures, seminars, workshops,
or courses where participants attend either in person or via the internet or
telecommunications equipment that allows audience members and the presenter or
instructor to give, receive, and discuss information with each other in real time.
ORDINANCE NO. 6175
For the purposes of (a) through (c) and (e) of this subsection 3, the terms "sale at
retail" and "retail sale" do not include a sale between members of an affiliated group
as defined in RCW 82.04.299(1)(f).
34. "Sale at retail" or "retail sale" shall include the sale of or charge made for tangible
personal property consumed and/or for labor and services rendered in respect to the
following:
a. The installing, repairing, cleaning, altering, imprinting, or improving of tangible
personal property of or for consumers, including charges made for the mere use of
facilities, but excluding charges made for the use of coin -operated laundry facilities
when such facilities are situated in and for the exclusive use of tenants of an
apartment house, rooming house, or mobile home park, and also excluding sales of
laundry service to nonprofit health care facilities, and excluding services rendered in
respect to live animals, birds and insects;
b. The constructing, repairing, decorating, or improving of new or existing
buildings or other structures under, upon, or above real property of or for consumers,
including the installing or attaching of any tangible personal property, whether or not
such personal property becomes a part of the realty by virtue of installation, and shall
also include the sale of services or charges made for the clearing of land and the
moving of earth excepting the mere leveling of land used in commercial farming or
agriculture;
c. The charge for labor and services rendered in respect to constructing, repairing,
or improving any structure upon, above, or under any real property owned by an
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ORDINANCE NO. 6175
owner who conveys the property by title, possession, or any other means to the
person performing such construction, repair, or improvement for the purpose of
performing such construction, repair, or improvement and the property is then
reconveyed by title, possession, or any other means to the original owner;
d. The sale of or charge made for labor and services rendered in respect to the
cleaning, fumigating, razing or moving of existing buildings or structures, but shall not
include the charge made for janitorial services; and for purposes of this section the
term "janitorial services" shall mean those cleaning and caretaking services ordinarily
performed by commercial janitor service businesses including, but not limited to, wall
and window washing, floor cleaning and waxing, and the cleaning in place of rugs,
drapes and upholstery. The term "janitorial services" does not include painting,
papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting;
e. The sale of or charge made for labor and services rendered in respect to
automobile towing and similar automotive transportation services, but not in respect
to those required to report and pay taxes under RCW Chapter 82.16, Public Utility Tax;
f. The sale of and charge made for the furnishing of lodging and all other services,
except telephone business and cable service, by a hotel, rooming house, tourist court,
motel, trailer camp, and the granting of any similar license to use real property, as
distinguished from the renting or leasing of real property, and it shall be presumed
that the occupancy of real property for a continuous period of one (1) month or more
constitutes a rental or lease of real property and not a mere license to use or enjoy
the same. For the purposes of this subsection, it shall be presumed that the sale of
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ORDINANCE NO. 6175
and charge made for the furnishing of lodging for a continuous period of one (1)
month or more to a person is a rental or lease of real property and not a mere license
to enjoy the same;
g. The installing, repairing, altering, or improving of digital goods for consumers;
h. The sale of or charge made for tangible personal property, labor and services to
persons taxable under a through g of this subsection when such sales or charges are
for property, labor and services which are used or consumed in whole or in part by
such persons in the performance of any activity defined as a "sale at retail" or "retail
sale" even though such property, labor and services may be resold after such use or
consumption. Nothing contained in this subsection shall be construed to modify
subsection 1 of this section and nothing contained in subsection 1 of this section shall
be construed to modify this subsection.
45. "Sale at retail" or "retail sale" shall also include the providing of competitive
telephone service to consumers.
§6. "Sale at retail" or "retail sale":
a. Shall also include the sale of prewritten software, custom software, and
customization of prewritten computer software to a consumer, other than a sale to a
person who presents a resale certificate under RCW 82.04.470, regardless of the
method of delivery to the end user. For purposes of this subsection §6.a the sale of
prewritten computer software includes the sale of or charge made for a key or an
enabling or activation code, where the key or code is required to activate prewritten
computer software and use the software. There is no separate sale of the key or code
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ORDINANCE NO. 6175
MW
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from the prewritten computer software, regardless of how the sale may characterized
by the vendor or by the purchaser.
1141
i4J. The term "sale at retail" or "retail sales" also includes the charge made to
consumers for the right to access and use prewritten computer software, custom
software, and customization of prewritten computer software where possession
of the software is maintained by the seller or a third -party, regardless of whether
the charge for the service is on a per use, per user, per license, subscription, or
some other basis.
ii. (A) The service described in b.i of this subsection §6 includes the right to
access and use prewritten software, custom software, and customization of
prewritten computer software to perform data processing.
(B) For purposes of this subsection b.ii "data processing" means the
systematic performance of operations on data to extract the required
information in an appropriate form or to convert the data to usable
information. Data processing includes check processing, image processing,
form processing, survey processing, payroll processing, claim processing, and
similar activities.
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67. "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the building, repairing, or improving of any
street, place, road, highway, easement, right of way, mass public transportation terminal
or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or
political subdivision of the state, the State of Washington, or the United States of America
and which is used or to be used primarily for foot or vehicular traffic including mass
transportation vehicles of any kind (public road construction).
7-8. "Sale at retail" or "retail sale" shall also include the sale of or charge made for an
extended warranty to a consumer. For purposes of this subsection, "extended warranty"
means an agreement for a specified duration to perform the replacement or repair of
tangible personal property at no additional charge or a reduced charge for tangible
personal property, labor, or both, or to provide indemnification for the replacement or
repair of tangible personal property, based on the occurrence of specified events. The
term "extended warranty' does not include an agreement, otherwise meeting the
definition of extended warranty in this subsection, if no separate charge is made for the
agreement and the value of the agreement is included in the sales price of the tangible
personal property covered by the agreement.
99. "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the constructing, repairing, decorating, or
improving of new or existing buildings or other structures under, upon, or above real
property of or for the United States, any instrumentality thereof, or a county or city
housing authority created pursuant to chapter 35.82 RCW, including the installing, or
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ORDINANCE NO. 6175
attaching of any article of tangible personal property, whether or not such personal
property becomes a part of the real property by virtue of installation (government
contracting).
910. "Sale at retail" or "retail sale" shall not include the sale of services or charges
made for the clearing of land and the moving of earth of or for the United States of
America, or any of its instrumentality, or a county or city housing authority. The term does
not include the sale of services or charges made for cleaning up for the United States of
America, or any of its instrumentalities, radioactive waste and other byproducts of
weapons production and nuclear research and development. (This should be reported
under the service and other classification as defined under 5-25-4.A.7.)
4011. "Sale at retail" or "retail sale" shall not include the sale of or charge made for
labor and services rendered for environmental remedial action. (This should be reported
under the service and other classification as defined under 5-25-4.A.7.)
-1412. a. "Sale at retail" or "retail sale" shall also include the following sales to
consumers of digital goods, digital codes, and digital automated services:
a-i. Sales in which the seller has granted the purchaser the right of permanent
use;
b-.ii. Sales in which the seller has granted the purchaser a right of use that is
less than permanent;
e-iii. Sales in which the purchaser is not obligated to make continued payment
as a condition of the sale; and
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4-iv. Sales in which the purchaser is obligated to make continued payment as
a condition of the sale.
b. A retail sale of digital goods, digital codes, or digital automated services under
this subsection Y.4412 includes any services provided by the seller exclusively in
connection with the digital goods, digital codes, or digital automated services,
whether or not a separate charge is made for such services.
c. A retail sale of digital goods, digital codes, or digital automated services does
not include the following services if the sale occurs between members of an affiliated
group as defined in RCW 82.04.299(1)(f):
i. Any service that primarily involves the application of human effort by the
seller, and the human effort originated after the customer requested the service;
ii. Live presentations, such as lectures, seminars, workshops or courses where
participants are connected to other participants via the internet or
telecommunications equipment, which allows audience members and the
presenter or instructor to give receive, and discuss information with each other in
real time;
iii. Advertising services. For purposes of this subsection, "advertising services"
means all services directly related to the creation, preparation, production or
dissemination of advertisements. Advertising services include layout art
direction, graphic design, mechanical preparation, production supervision
placement, and rendering advice to a client concerning the best methods of
advertising that client's products or services. Advertising services also include
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ORDINANCE NO. 6175
online referrals, search engine marketing and lead generation optimization web
campaign planning, the acquisition of advertising space in the internet media and
the monitoring and evaluation of website traffic for the purposes of determining
the effectiveness of an advertising campaign. Advertising services do not include
web hosting services and domain name registration; and
iv. Data processing services. For purposes of this subsection, "data processing
service" means a primarily automated service provided to a business or other
organization where the primary object of the service is the systematic
performance of operations by the service provider on data supplied in whole or in
part by the customer to extract the required information in an appropriate form
or to convert the data to usable information. Data processing services include
check processing, image processing, form processing, survey processing, payroll
processing, claim processing, and similar activities. Data processing does not
include the service described in subsection of this section.
d. For purposes of this subsection, "permanent" means perpetual or for an
indefinite or unspecified length of time. A right of permanent use is presumed to have
been granted unless the agreement between the seller and the purchaser specifies or
the circumstances surrounding the transaction suggest or indicate that the right to
use terminates on the occurrence of a condition subsequent.
4-213. "Sale at retail" or "retail sale" shall also include the installing, repairing, altering,
or improving of digital goods for consumers.
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Z. Sale at wholesale, wholesale sale. "Sale at wholesale" or "wholesale sale" means any
sale of tangible personal property, digital goods, digital codes, digital automated services,
prewritten computer software, custom software, customization of prewritten software
to a consumer, or services described in subsection Y.156.b.i, "Sale at retail", which is not a
retail sale, and any charge made for labor and services rendered for persons who are not
consumers, in respect to real or personal property and retail services, if such charge is
expressly defined as a retail sale or retail service when rendered to or for consumers. Sale
at wholesale also includes the sale of telephone business to another telecommunications
company as defined in RCW 80.04.010 for the purpose of resale, as contemplated by RCW
35.21.715, Taxes on network telephone services.
SECTION VI. Section 4-25-4 RMC is amended as follows:
A. Except as provided in RMC 5-25-4.B (Tax ThFeshelds) and 5 25 ^ C (Annual Tax Cap ,„d
Rate Redbie+;^„` through D effective January 1, 2016 at 12:01 a.m. there is levied upon
and shall be collected from every person a tax for the act or privilege of engaging in
business activities in the City of Renton, whether the person's office or place of business
be within or without the City. The tax shall be in amounts to be determined by application
of rates against gross proceeds of sale, gross income of business, or value of products,
including by-products, as the case may be, as follows:
1. Upon every person engaging within the City in business as an extractor; as to such
persons, the amount of the tax with respect to such business shall be equal to the value
of the products, including by-products, extracted within the City for sale or for commercial
or industrial use, multiplied by the rate of .121 of one percent (.00121). The measure of
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the tax is the value of the products, including by-products, so extracted, regardless of the
place of sale or the fact that deliveries may be made to points outside the City.
2. Upon every person engaging within the City in business as a manufacturer; as to
such persons, the amount of the tax with respect to such business shall be equal to the
value of the products, including by-products, manufactured within the City, multiplied by
the rate of .121 of one percent (.00121). The measure of the tax is the value of the
products, including by-products, so manufactured, regardless of the place of sale or the
fact that deliveries may be made to points outside the City.
3. Upon every person engaging within the City in the business of making sales at
wholesale; as to such persons, the amount of tax with respect to such business shall be
equal to the gross proceeds of such sales of the business without regard to the place of
delivery of articles, commodities or merchandise sold, multiplied by the rate of .121 of
one percent (.00121).
4. Upon every person engaging within the City in the business of making sales at retail;
as to such persons, the amount of tax with respect to such business shall be equal to the
gross proceeds of such sales of the business, without regard to the place of delivery of
articles, commodities or merchandise sold, multiplied by the rate of .070 of one percent
(.00070).
5. Upon every person engaging within the City in the business of (a) printing, (b) both
printing and publishing newspapers, magazines, periodicals, books, music, and other
printed items, (c) publishing newspapers, magazines and periodicals, (d) extracting for
hire, and (e) processing for hire; as to such persons, the amount of tax on such business
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ORDINANCE NO. 6175
shall be equal to the gross income of the business multiplied by the rate of .121 of one
percent (.00121).
6. Upon every person engaging within the City in the business of sales of retail
services; as to such persons, the amount of tax with respect to such business shall be
equal to the gross proceeds of sales multiplied by the rate of .121 of one percent (.00121).
7. Upon every other person engaging within the City in any business activity other
than or in addition to those enumerated in the above subsections; as to such persons, the
amount of tax on account of such activities shall be equal to the gross income of the
business multiplied by the rate of .121 of one percent (.00121). This subsection includes,
among others, and without limitation whether or not title to material used in the
performance of such business passes to another by accession, merger or other than by
outright sale, persons engaged in the business of developing, or producing custom
software or of customizing canned software, producing royalties or commissions, and
persons engaged in the business of rendering any type of service which does not
constitute a sale at retail, a sale at wholesale, or a retail service.
B. The gross receipts tax imposed in this section shall not apply to any person whose gross
proceeds of sales, gross income of the business, and value of products including by-
products, as the case may be, from all activities conducted within the City during any
calendar year is equal to or less than $20 000 or is equal to or less than $5 000 during
any quarter if on a quarterly reporting basis.
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9C. Expanded Tax Thresholds: The City of Renton has further determined that beyond the
mandatory exception noted in Subsection 5-25-4.13 Tthis chapter shall not apply to any
person engaging in any one (1) or more business activities which are otherwise taxable
pursuant to RMC 5-25-4.A, whose value of products, including by-products, gross
proceeds of sales, and gross income of the business, less any deductions, as the case may
be, from all activities conducted during any calendar year, is less than or equal to the
threshold amount of five hundred thousand dollars ($500,000).
Q. Annual Tax Cap and Rate Reduction: For the calendar years 2022-2024, the tax
imposed under this chapter for a single taxpayer shall not exceed the following maximum
tax amounts for each respective year according to the following schedule: 2022 — seven
million dollars ($7,000,000); 2023 — nine million dollars ($9,000,000); 2024 — eleven
million dollars ($11,000,000). Starting in 2025 and for each subsequent year thereafter,
once a taxpayer has paid twelve million dollars ($12,000,000) in taxes imposed under this
chapter in the given year, the rates specified in RMC 5-25-4.A shall be discounted by
seventy-five percent (75%) for remaining gross proceeds of sale, gross income of business,
or value of products, including by-products, as the case may be.
SECTION VIL Subsection 5-25-5.13 RMC is amended as follows:
B. Notwithstanding any provision to the contrary, if the ^d., iRistrat F fiR dS that the
imposition of the City's tax would place an undue burden upon interstate commerce or
violate constitutional requirements, a taxpayer shall be allowed a credit to the extent
necessary to preserve the validity of the City's tax, and still apply the City tax to as much
of the taxpayer's activities as may be subject to the City's taxing authority.
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ORDINANCE NO. 6175
SECTION Vill. Subsection 5-25-11.M RMC is amended as follows:
M. Constitutional Prohibitions: In computing tax, there may be deducted
from the measure of the tax amounts derived from business which the City is prohibited from
taxing under the Constitutions of the State of Washington or the Constitution of the United
States of America.
SECTION IX. Upon approval of the City Attorney, the City Clerk is authorized to direct the
codifier to make necessary corrections to this ordinance, including the corrections of scriveners
or clerical errors; references to other local, state, or federal laws, codes, rules, or regulations; or
ordinance numbering and section/subsection numbering and references.
SECTION X. If any section, subsection, sentence, clause, phrase, or word of this ordinance
should be held to be invalid or unconstitutional by a court or competent jurisdiction, such
invalidity or unconstitutionality thereof shall not affect the constitutionality of any other section,
subsection, sentence, clause, phrase, or word of this ordinance.
SECTION XI. This ordinance shall be in full force and effect thirty (30) days after adoption.
No later than five (5) days prior to such effective date, a summary of this ordinance consisting of
its title shall be published in the City's official newspaper.
PASSED BY THE CITY COUNCIL this 1st day of December, 2025.
22
ORDINANCE NO. 6175
APPROVED BY THE MAYOR this 111 day of December, 2025.
Armondo Pavone, Mayor
Approved as to form:
Shane Moloney, City Attorney
Date of Publication: 12/4/2025 (summary)
ORD-FINANCE:25ORD023:11/06/2025
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