How Much Is Tax in Seattle? A Breakdown of State and Local Rates

Seattle’s tax landscape is a key consideration for residents and businesses, influencing purchases, property ownership, and overall financial planning. Understanding the structure of sales tax, property tax, and other local levies is essential for managing costs effectively.

Determining the Combined Sales Tax

In Seattle, sales tax includes state, local, and sometimes special district rates, all of which contribute to the total tax on goods and services. It’s important for consumers and businesses to know how these components are applied.

Statewide Portion

Washington State imposes a base sales tax rate of 6.5%, which applies uniformly across purchases statewide. This tax funds services like public education, transportation, and healthcare. Exemptions are provided for prescription medications and certain food items to reduce the cost burden on essentials.

Local Portion

Seattle adds a local sales tax rate of 3.75%, bringing the total combined rate to 10.25%. This includes contributions from King County and municipal levies, which support city services such as public safety and parks. Businesses must apply this rate accurately to remain compliant and avoid penalties. While the rate is generally consistent, slight variations can occur based on neighborhood-specific assessments.

Special Districts

Special districts may impose additional sales taxes for targeted projects or services. For example, the Sound Transit District levies an extra 1.4% sales tax to support regional transit projects like light rail expansions. These taxes are added to the state and local sales tax portions, increasing the total rate in applicable areas. Monitoring changes in these districts is critical for planning financial obligations.

Calculating Property Tax

Property tax in Seattle is based on the assessed value of the property, which is determined by the King County Assessor’s Office. Factors like property size, location, and market trends influence assessments. For instance, properties in areas like Capitol Hill may see higher valuation increases due to market demand.

The tax rate, or levy rate, is expressed in dollars per $1,000 of assessed value. In 2024, Seattle’s rate is approximately $9.56 per $1,000. This includes funding for school districts, city services, and voter-approved measures. For example, a property assessed at $500,000 would result in an annual tax of about $4,780. Property owners should stay informed about changes in levy rates, as these can fluctuate with new measures or budget adjustments.

Business & Occupation Tax Basics

Seattle’s Business & Occupation (B&O) tax applies to gross receipts of businesses, regardless of profitability. The tax is categorized by activity, with retailing taxed at 0.471% and services at 1.5%. Accurate reporting is crucial, as outlined in Washington Administrative Code 458-20, and businesses must retain transaction records for at least five years to ensure compliance during audits. Deductions, such as those for interstate sales, can significantly reduce tax liability.

Other Possible Local Taxes

Seattle imposes additional taxes that impact businesses and residents. The commercial parking tax, for instance, is levied at 12.5% on gross revenue from parking services, with funds allocated to transportation infrastructure improvements.

The employee hours tax, or “head tax,” applies to large employers with annual gross receipts exceeding $20 million. It charges $275 per full-time employee annually, with revenue directed toward affordable housing and homelessness prevention programs. Employers must track workforce data to calculate their liability accurately and avoid penalties.

Resources for Updated Rates

Staying informed about Seattle’s tax rates and regulations is essential, as changes can occur due to legislative updates or local adjustments. The Washington State Department of Revenue offers tools like the Tax Rate Lookup Tool for sales tax rates. For property tax information, the King County Assessor’s Office provides resources on assessed values and levy rates. Businesses can consult the City of Seattle’s Office of Economic Development for updates on local taxes. Engaging with tax professionals familiar with Seattle’s tax system can also ensure compliance and clarity in more complex cases.