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HomeMy WebLinkAbout2026 Business and Occupation Tax GuideCITY OF RENTON Business & Occupation Tax Guide ________________________________________________________________________________________________________________________________ City of Renton Tax & Licensing • 1055 S Grady Way, Renton, WA 98057 • 425-430-6851 • taxandlicensing@rentonwa.gov • rentonwa.gov IMPORTANT DUE DATES Business License Renewals: • Due January 31st Monthly Tax Returns: • Due the last day of the month following the tax month (e.g. June tax return is due July 31st) Quarterly Tax Returns: • Due the last day of the month following the quarter (e.g. Quarter 1 tax return is due April 30th) Annual Tax Returns: • Due April 30th Helpful hints for submitting tax returns: • Use the FileLocal online filing system or download the current forms on the city’s website. • Payments made on FileLocal using eChecks are free; credit card payments are accepted but are subject to a convenience fee. • If filing by paper, make check or money order payable to City of Renton. Do not send cash or credit card payments as they will not be accepted. OTHER INFORMATION Taxpayers are required to keep records for a period of five years after filing a tax return. All books, records, invoices, receipts, etc. shall be open for examination at reasonable times by the city. The city offers free business outreach classes to explain the business and occupation tax and to assist businesses on how to file tax forms. If you are interested in attending, please call the city’s Tax & Licensing division at 425-430-6950. This flyer provides a basic description of Renton’s business license fee and business and occupation (B&O) tax and focuses on the more typical types of businesses and business activities. The material is intended for general information purposes only. It is current at the time of publication, but future changes in the city code or state law may invalidate some of this information, and not all possible applications of tax are discussed. Additional information and specifics relating to your business may be obtained in Chapter 5-5 (Business License) and Chapter 5-25 (B&O tax) of the Renton Municipal Code (RMC) or by contacting the city’s Tax & Licensing division. Copies of the municipal code can be found in the City Clerk’s office and online. REGISTRATION & PAYMENT PROCEDURES All businesses engaged in any business activity in Renton must be registered with the city’s Tax & Licensing division. An annual registration fee of $150 is required. In addition, a business is subject to a gross receipts-based Business and Occupation (B&O) tax based on the gross receipts generated in Renton. New businesses will be put on an annual reporting schedule initially, so the gross receipt level can be determined after the first year. Renewal notices and tax return reminders will be sent to existing businesses approximately 30 days before the due date. Online tax return and filing is available through FileLocal at www.filelocal- wa.gov . If filing paper returns, they must be completed and returned with payment by the specified due date. Penalties and interest are due if tax returns are not filed and paid by the due date. HIGHLIGHTS OF THE BUSINESS & OCCUPATION TAX • All registered businesses doing business in the city, whether located in the city or outside the city, must file the B&O tax return. • All new businesses with gross receipts in Renton under $1 million per year will be required to file B&O tax returns annually. Businesses with gross receipts in Renton over $1 million per year will be required to file B&O tax returns quarterly. • Businesses with annual gross receipts of $500,000 or less in Renton will not be subject to B&O tax however a tax return is still required to be filed. • Effective 1/1/2025, Renton’s annual tax cap is $12 million. Once a taxpayer has paid $12 million in taxes imposed in the given year, the rates specified in RMC 5.25.4.A shall be discounted by 75% for remaining gross proceeds of sales, gross income of business, or value of products, including by-products, as the case may be. ________________________________________________________________________________________________________________________________ City of Renton Tax & Licensing • 1055 S Grady Way, Renton, WA 98057 • 425-430-6851 • taxandlicensing@rentonwa.gov • rentonwa.gov GROSS RECEIPTS B&O TAX The gross receipts B&O tax is primarily measured on gross proceeds of sales or gross income for the reporting period. For purposes of the gross receipts tax, businesses have been divided into several classifications and are discussed below. Businesses conducting multiple activities will report in more than one tax classification. The gross receipts tax applies to businesses with annual gross receipts of $500,000 or higher in Renton. The tax rate for retail activities is 0.07% and 0.121% for all other gross receipts tax classifications. B&O Tax Classifications • Manufacturing/Processing for Hire: Manufacturing is the business of producing articles for sale from raw or prepared materials by giving these materials new forms or qualities, such as fabricating, processing, refining, mixing, packing, canning, etc. B&O tax is calculated on the value of products manufactured, determined by the selling price. Processing for hire means the performance of labor and mechanical services upon materials or ingredients belonging to others so that, as a result, a new, different, or useful product is produced for sale or commercial or industrial use. B&O tax is calculated on gross receipts generated. • Extracting/Extracting for Hire: Extracting is the taking of natural products, such as logging, mining, quarrying, etc. B&O tax is calculated on the value of products extracted, determined by the selling price. Extractor for hire means a person who performs under contract necessary labor or mechanical services for an extractor. B&O tax is calculated on gross receipts. • Wholesaling: Sellers of products to persons other than consumers are considered to be wholesalers. The B&O tax is calculated on the wholesale selling price. • Retailing: Businesses that sell tangible personal property or provide labor and services such as installing, constructing, altering, repairing, cleaning, decorating personal or real properties. The B&O tax is calculated on gross receipts. As of 1/1/2026, several activities previously classified as ‘Service and Other’ will report as ‘Retailing’. The activities include advertising services, live presentations, information technology services, custom website development services, investigation, security, and armored car services, temporary staffing services, sales of custom software and customization of prewritten software. • Retail Service: Some examples of retail services include amusement and recreation, physical fitness, escrow, insurance, parking, storage services, etc. It also includes the renting or leasing of tangible personal property to consumers and the rental of equipment with an operator. The B&O tax is calculated on gross receipts. • Printing/Publishing: Publishers of newspapers, magazines, and periodicals are taxable under this classification, as well as persons who both print and publish books, music, circulars, etc. Printing includes letterpress, offset lithography, and gravure processes as well as multigraph, mimeograph, autotyping, and similar activities. B&O tax is calculated on gross receipts. Firms engaging in photocopying documents should report under the Retailing classification. • Services and Other Activities: Businesses that provide personal and professional services, such as lawyers, doctors, financial institutions, real estate brokers, insurance brokers and solicitors, and accountants, are subject to the B&O tax under this classification. Also, any business that is not subject to another B&O tax classification must report under this “catch-all” category. B&O tax is calculated on the gross receipts of the business. Exemptions, Deductions, & Credits The following section discusses several of the most common exemptions from the gross receipts tax and deductions allowed for certain business activities or sources of income. This discussion is not intended to be all-inclusive and may change from time to time. If you have questions about specific exemptions or deductions, please contact the city’s Tax & Licensing division. Exemptions are typically excluded from the gross receipt amounts. Deductions are to be included in the gross receipts amounts and then deducted when calculating the taxable amount on which the gross receipts tax rate applies. The most common exemptions and deductions are listed below. Common Exemptions • Manufacturing, selling, or distributing motor vehicle fuel. • Liquor, beer, and wine sales. • Sale, lease, or rental of real estate. However, no exemption is allowed for a license to use real estate or for amounts received as commissions. • Insurance agents (brokers are subject to tax). • Farm products or edibles raised, produced, or manufactured within the State of Washington and sold by the farmer. • Casual and isolated sales, such as an accountant selling his or her office furniture. • Nonprofit child daycares. Common Deductions • Retail or wholesale sales delivered outside of Renton. • Cash discounts taken by customers. • Credit losses or bad debts sustained by sellers. • Bona fide non-profit membership fees, dues, grants, donations, tuition, tradeshows, except with respect to retail sales. Credits • Multiple activities tax credit applies to persons who engage in business activities that are subject to tax under two or more tax classifications on the same revenues. • New Business Tax Credit: For new businesses with 50 or more full-time positions, a tax credit up to $1,000 per position per year for the first 3 consecutive years (12 consecutive quarters).