Washington State Income Tax
Washington does not tax personal income, although it does levy a capital gains tax and has one of the highest sales tax rates in the nation
Combined state and local retail sales taxes, as well as fees for services and borrowing, comprise nearly half of all Washington state revenue. These revenues are the primary source of funding for schools, fire protection, libraries, and other public agencies. Washington state has no income tax and relies instead on business and occupation (B&O) taxes, property tax, and other revenue sources. The B&O tax is a gross receipts-based tax that is less progressive than a Washington income tax.
In addition to the tax due on taxable items, the City charges an additional interest rate for late payments. Interest is calculated based on the City’s tax rate and the length of time the taxes are overdue. If you’re unable to pay your taxes on time, you can request that the City cancel your interest charges by submitting a letter within 30 days of being billed. The letter must address why the penalty should be canceled and include proof that you are currently licensed and filing returns.
How to Pay Washington State Taxes?
The Washington Department of Revenue (DOR) takes unpaid state taxes seriously. They will send you notices of your tax liability and may take collection action if you don’t pay the amount you owe. You can try to resolve your debt with the DOR through a payment plan, or you can hire a tax professional to handle the process for you.
The DOR will assess back taxes up to four years from the date of the tax incurred. However, you can get relief from these assessments if you can show that the taxes or the state’s collection actions are causing you financial hardship. To apply, you need to submit a financial statement and the DOR’s tax questionnaire, and confidential email authorization form.
Washington State Sales Tax
Washington State Sales Tax rate is 6.5 percent, and localities can add up to an additional 4.1 percent. Combined, this makes Washington one of the most tax-adverse states for residents. Fortunately, there are several exemptions available to help you lower your tax burden.
In addition to the state’s 6.5% sales tax, cities and counties levy their own rates on top of that amount. In many areas, sales tax rates can reach 8% or more. Sales taxes apply to most tangible goods and services, with the exception of food and food ingredients, soft drinks, and dietary supplements.
Business owners who sell taxable goods or services in Washington must charge, collect, and pay the state’s sales tax on a monthly, quarterly, or annual basis. This is known as the state’s “business and occupation” (B & O) tax. It is calculated based on a company’s gross receipts, which is tracked by its state UBI number.
