Business License in Seattle (2026): License Fees, B&O Tax, Payroll Expense Tax and the State License

If you're opening a shop, freelancing from a Seattle apartment or sending crews into the city from Bellevue or Tacoma, you need a Seattle business license tax certificate, and probably a Washington state business license as well. This guide covers who needs the Seattle license, what it costs at each revenue tier in 2026, how the city's business and occupation (B&O) tax changed on January 1, 2026, which businesses pay the payroll expense tax and the newer social housing tax, and how the state license fits in. Every figure was checked on City of Seattle and Department of Revenue pages in October 2026.

Quick answer

Anyone doing business in Seattle, including home businesses, nonprofits and out-of-town firms, needs a Seattle business license tax certificate from the City, applied for through FileLocal. The 2026 fee is $73 for revenue under $20,000 and for new businesses, rising to $3,210 above $5 million. Licenses expire December 31.

• Exempt only if Seattle income is $4,000 or less and you have no place of business in the city

• City B&O tax: no tax below $2 million; rates 0.342% and 0.658% above it

• Payroll expense tax only applies at $9,074,409+ Seattle payroll

• You also need a state business license from the Department of Revenue in most cases

• Seattle sales tax rate: 10.55%

Who needs a Seattle business license

The City's rule is short: anyone doing business in Seattle must have a Seattle business license tax certificate. Only the business owner needs one; employees don't need their own. The City lists the kinds of business that are covered, and the list is broad: retail and wholesale, professional and personal services, manufacturing, home-based businesses and nonprofits.

Being based outside the city doesn't get you out of it. A landscaping company in Shoreline that works on Seattle gardens, or a consultant in Kirkland with Seattle clients, is doing business in Seattle. There is one exemption for small, occasional activity. You don't need the license if your annual products, gross proceeds or gross income in the city are $4,000 or less and you don't maintain a place of business in Seattle. That threshold rose from $2,000 for 2026. If you have a Seattle office or shop, the exemption doesn't apply, however small your income, and the City lists home-based businesses among those that need a license.

The exemption also doesn't cover regulatory licenses. Some activities need a separate Seattle regulatory license or permit whatever your income, such as short-term rental operators, taxi and for-hire vehicles, and certain entertainment businesses. The license tax certificate is a tax registration, not permission to carry on a regulated trade.

There's one more group with a specific rule. An Indian Tribe itself doesn't need the license, but businesses owned by tribal members that operate in Seattle outside Indian Country do.

Seattle business license fees in 2026

The fee depends on your Seattle taxable revenue in the most recent complete calendar year. Fees are adjusted each year for inflation: the lowest tier went from $71 in 2025 to $73 in 2026.

New applicants pay the lowest-tier fee in their first year, because they have no prior-year revenue. If you start on or after July 1, you pay half of it. From your first renewal, you move into the tier that matches the revenue you reported.

An important detail from the B&O changes: the license fee is calculated on taxable revenue before the new $2 million standard deduction. So a café with $900,000 of revenue pays the $667 license fee even though it owes no city B&O tax.

Seattle business license at a glance (2026)

$73

Fee for new businesses and revenue under $20,000

Half if you start on or after July 1

$3,210

Top fee, revenue over $5 million

$4,000 or less

Exempt if no place of business in Seattle

Dec 31

Annual expiry date

How to apply: FileLocal and the state license

Seattle is one of the Washington cities that license and collect local B&O tax through FileLocal, a shared online portal, rather than through the state's Business Licensing Service. Tacoma, Bellevue and Everett use the same system. That means a Seattle business usually holds two licenses from two places:

1. A Washington state business license from the Department of Revenue's Business Licensing Service (BLS), applied for through My DOR. You need it if your gross income is $12,000 a year or more, if you'll hire employees within 90 days, if you sell anything subject to sales tax, or if you use a trade name, among other triggers. Corporations and LLCs file with the Secretary of State first. Online state applications take about 10 business days, and endorsements can add 2 to 3 weeks. Our Washington business license guide covers the state side, including the $50 processing fee.
2. A Seattle business license tax certificate from the City, applied for on FileLocal.

The order matters. Get your Unified Business Identifier (UBI) number from the state first if your business legally needs one, because FileLocal asks for it. Sole proprietors who don't need a state license can choose "Skip UBI Question" and then "Enter UBI Later". Once you've paid online, you can usually print your current-year license within 2 to 3 business days. You can also apply by mail with the City's application packet, which takes one to six weeks.

Getting licensed in Seattle

1. 1

   Form your entity if you're using one

   LLCs and corporations file with the Washington Secretary of State before applying for licenses.

2. 2

   Apply for the state business license

   Use My DOR to apply through the Business Licensing Service and get your UBI number. Add any state endorsements your activity needs.

   WA DOR — Apply for a business license
3. 3

   Apply for the Seattle license on FileLocal

   Create a FileLocal account, enter your UBI and pay the first-year fee of $73 (half if you start on or after July 1).

   FileLocal
4. 4

   Check zoning and permits

   Confirm your use is allowed at your address and get any building, health, fire or regulatory permits before opening.

5. 5

   Set up your tax filing calendar

   Seattle tells you whether you file B&O returns quarterly or annually. File every return, even with $0 due.

Seattle B&O tax after January 1, 2026

The license is the part everyone pays. The bigger annual cost for growing businesses is the city's business and occupation (B&O) tax, a tax on gross receipts rather than profit. It changed sharply on January 1, 2026, under the Seattle Shield measure, Proposition 2, implemented by ordinances 127259 and 127267.

Higher threshold. The threshold rose from $100,000 to $2 million. If your Seattle taxable revenue is below it, you owe no city B&O tax.

New standard deduction. Businesses above the threshold get a $2 million standard deduction each calendar year. The City applies it first to revenue in your highest-rate classification, then to lower-rate ones. It's capped at $2 million a year and unused amounts don't carry forward. Quarterly filers apply it starting with their earliest quarter of taxable revenue.

Higher rates. To offset the revenue lost from the threshold and deduction, rates for 2026 to 2032 went up. Retail sales and services, wholesaling, manufacturing and printing now pay 0.342%, up from 0.222%. Service and other business activities, and transporting freight for hire, pay 0.658%, up from 0.427%.

You still file. Businesses under the threshold must still file a return showing $0 tax due, and must still renew the license and pay its fee. For 2026, quarterly filers' first return was due April 30, 2026, and annual filers report the whole of 2026 by April 30, 2027. Some quarterly filers were moved to annual filing in early 2026; the City notifies you if that applies.

Services that moved to retail

A second 2026 change affects tech and creative businesses. To match the state's 2025 sales tax law (ESSB 5814), Seattle's Ordinance 127353 moved several activities from the service classification to retail from January 1, 2026: advertising services, custom software and customization of prewritten software, custom website development, information technology services, investigation, security and armored car services (not locksmiths), live presentations, and temporary staffing (except for hospitals). Income from contracts signed before October 1, 2025 could stay in the service classification until April 1, 2026.

For the city B&O tax, that's good news: these activities now pay the lower 0.342% rate instead of 0.658%. The flip side is at state level, where many of the same services became subject to retail sales tax. In Seattle that means charging customers 10.55%. Our Washington sales tax guide explains which services are affected.

Seattle B&O tax, 2025 vs 2026

Rule	2025	From January 1, 2026
Threshold	$100,000	$2 million
Standard deduction	None	$2 million a year
Retail, wholesale, manufacturing rate	0.222%	0.342%
Service and other activities rate	0.427%	0.658%
IT, advertising, web development	Service rate	Retail rate

Threshold

2025

$100,000

From January 1, 2026

$2 million

Standard deduction

2025

None

From January 1, 2026

$2 million a year

Retail, wholesale, manufacturing rate

2025

0.222%

From January 1, 2026

0.342%

Service and other activities rate

2025

0.427%

From January 1, 2026

0.658%

IT, advertising, web development

2025

Service rate

From January 1, 2026

Retail rate

Worked examples

These examples use the 2026 figures above. They ignore state B&O tax, which the Department of Revenue charges separately at its own rates.

A freelance web developer working from home in Fremont, in her first year. She pays the first-year Seattle license fee of $73, or half that if she starts after July 1. She also needs a state business license, because custom website development is now a retail sale and she must collect sales tax. She charges her Seattle clients 10.55% on her fees. With $60,000 of revenue, she's far below the $2 million threshold, so she owes no city B&O tax but files a $0 return. At her next renewal she moves to the $147 tier.

A café in Capitol Hill with $900,000 of revenue last year. Its license fee is $667, because the fee uses revenue before the standard deduction. City B&O tax is $0, because $900,000 is under $2 million. In 2025, the same café would have paid 0.222% on its full revenue, about $2,000. It still collects 10.55% sales tax on its food and drink.

An engineering consultancy with $3.5 million of Seattle revenue. Its license fee is $1,604. For city B&O, it deducts $2 million and pays the 0.658% service rate on the remaining $1.5 million: about $9,870 a year. Its Seattle payroll is $2.8 million, well under $9,074,409, so it owes no payroll expense tax. Under the 2025 rules it would have paid 0.427% on nearly everything, around $14,900.

Payroll expense tax (JumpStart) and social housing tax

Seattle has two taxes on high employee pay. Most small businesses will never pay either, but you should know where the lines are.

Payroll expense tax

Often called the JumpStart tax, the payroll expense tax applies to a business in 2026 only if both are true:

• its Seattle payroll expense in 2025 was $9,074,409 or more; and
• it pays at least one employee $194,452 or more in 2026.

Both thresholds are adjusted for inflation; in 2025 they were $8,837,302 and $189,371. The tax applies only to the pay of employees at or above the compensation threshold, counted from the first dollar. For a business with Seattle payroll under about $129.6 million, the rate is 0.746% on employees paid from $194,452 up to $518,538, and 1.811% on employees paid more. Larger payrolls pay higher rates. Returns are filed quarterly, by January 31, April 30, July 31 and October 31.

For example, a software company with $12 million of Seattle payroll that pays five engineers $200,000 each pays 0.746% on $1 million of compensation, which is $7,460 a year. Its other employees, paid less than $194,452, aren't counted.

Social housing tax

Seattle voters approved the social housing tax at a special election on February 11, 2025, effective from January 1, 2025. It charges the business 5% of the compensation paid in Seattle to any employee above $1 million a year. The threshold isn't indexed to inflation, the tax can't be withheld from the employee's pay, and nonprofits and grocery businesses aren't exempt. The first return covered 2025 and was due January 31, 2026; after that, businesses file quarterly from the first quarter they pay excess compensation.

Renewal and penalties

Every Seattle business license tax certificate expires on December 31 and must be renewed each year, whether or not you owe any B&O tax. You renew online through FileLocal or by mail; the City doesn't take renewals by phone. Pay before December 31 to avoid penalties. If you pay in February, the penalty is $10; from March 1 it's $20. Late B&O returns carry their own penalties and interest.

A Seattle business's tax year

January 31

Q4 payroll expense and social housing tax returns (if they apply)

April 30

Q1 B&O return for quarterly filers; prior-year annual B&O return for annual filers

July 31 and October 31

Quarterly returns for B&O and payroll taxes

Before December 31

Renew your Seattle license on FileLocal

February / March

Late license penalties of $10 then $20

Changes during the year, closing and moving

Your license and tax account follow your business, so keep them current. If you add a branch, change your mailing address or change ownership structure, update your FileLocal account rather than waiting for renewal. A change of entity, such as a sole proprietor forming an LLC, usually means a new UBI number from the state and a new Seattle account, because the license belongs to the legal owner, not the trading name.

If you move your business out of Seattle but still serve Seattle customers, you may still need the license unless your Seattle income drops to $4,000 or less or less. If you close, close the account in FileLocal and file your final B&O return. Accounts left open keep generating renewal notices and missing-return penalties, and those can follow you if you start a new business later.

Buying an existing business's assets is similar: the license account belongs to the seller's legal entity, so unless you buy the entity itself, you apply for your own state license and Seattle license before taking over, and should ask the seller for proof that city taxes are paid up to the sale date.

Common mistakes

Assuming the state license covers Seattle. It doesn't. Seattle licenses through FileLocal, not as an endorsement on your state license, so you need both.

Skipping $0 returns. The new $2 million threshold means many businesses owe nothing, but they still have to file. Missing returns brings penalties and letters from the City.

Using the wrong revenue for the fee. The license tier uses revenue before the standard deduction. Reporting revenue net of the deduction puts you in the wrong tier.

Relying on the old $2,000 exemption. It's now $4,000 or less, and it only applies if you have no place of business in Seattle. If you work from a Seattle home, plan on needing the license; the City names home-based businesses as covered.

Not charging sales tax on newly retail services. IT, web development and advertising businesses that sell to Seattle clients may now owe 10.55% sales tax. Check the state's list before you invoice.

Forgetting each location. Each branch location costs $10 per location extra. Add new sites in FileLocal when you open them.

Official links

• Seattle Business LicensesFees, exemption, renewal
• Seattle B&O tax rates2026–2032 rates
• Seattle Shield B&O changes$2 million threshold and deduction
• Payroll Expense TaxThresholds and rates
• FileLocalApply, renew and file city taxes
• WA DOR — Apply for a business licenseState business license and UBI

What to do next

Get your state business license and UBI first, then apply for the Seattle license on FileLocal and note your B&O filing frequency. If you sell goods or newly taxable services, set up sales tax at 10.55% using our Washington sales tax guide and the sales tax calculator. For the state side in detail, read our Washington business license guide, and use the startup cost calculator to budget for license fees.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How much is a Seattle business license?

The Seattle business license tax certificate costs $73 in 2026 if your Seattle taxable revenue last year was under $20,000, and new businesses pay that tier in their first year. The fee rises with revenue: $147, $667, $1,604 and $3,210 for over $5 million. Each branch location adds $10 per location.

Do I need a Seattle business license if I'm based outside Seattle?

Usually, yes. The City says anyone doing business in Seattle needs the license tax certificate, including businesses based elsewhere. You're exempt only if your Seattle gross income is $4,000 or less a year and you don't have a place of business in the city. The exemption rose from $2,000 for 2026.

What is the Seattle B&O tax rate in 2026?

From January 1, 2026, Seattle's B&O tax is 0.342% for retail, wholesale and manufacturing and 0.658% for services. But the threshold rose to $2 million, so businesses below it owe no city B&O tax, and those above get a $2 million standard deduction. You still file a return either way.

Who pays Seattle's payroll expense tax (JumpStart)?

Only larger employers. For 2026, a business pays if its Seattle payroll expense in 2025 was $9,074,409 or more and it pays at least one employee $194,452 or more. The tax applies only to the pay of employees at or above that level, at rates starting at 0.746%.

Do I need a Washington state business license as well as a Seattle license?

Yes, in most cases. The Seattle license comes from the City through FileLocal, while the state business license comes from the Department of Revenue's Business Licensing Service. You need the state license if you earn $12,000 or more a year, collect sales tax, hire employees, or use a trade name, among other triggers.

When does the Seattle business license expire?

Every Seattle business license tax certificate expires on December 31 and must be renewed each year. Pay before December 31 to avoid penalties. The City charges a $10 penalty if you pay in February and $20 from March 1. Renew online through FileLocal or by mail; phone renewals aren't accepted.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Business Licenses — City of Seattle Office of City Finance · accessed 9 October 2026
2. 2.Tax Rates and Classifications — City of Seattle Office of City Finance · accessed 9 October 2026
3. 3.Seattle Shield Business & Occupation (B&O) Tax Changes — City of Seattle Office of City Finance · accessed 9 October 2026
4. 4.Effective January 1, 2026, Certain Service Activities Reclassified to Retail — City of Seattle Office of City Finance · accessed 9 October 2026
5. 5.Payroll Expense Tax — City of Seattle Office of City Finance · accessed 9 October 2026
6. 6.Social Housing Tax — City of Seattle Office of City Finance · accessed 9 October 2026
7. 7.Business taxes — City of Seattle · accessed 9 October 2026
8. 8.Apply for a business license — Washington State Department of Revenue · accessed 9 October 2026