Washington is the other no income tax state that venture backed founders move to, and it works very differently from Texas. Instead of a margin tax with a generous threshold, Washington taxes gross receipts through the business and occupation tax from the first dollar of revenue. Seattle adds its own business license tax, a payroll expense tax aimed at large employers, and a tax on very high individual compensation. On the payroll side, Washington charges premiums for Paid Family and Medical Leave and the WA Cares long term care program that most other states do not.
The rules also moved a lot in the last eighteen months. The 2025 legislature raised B&O rates, added a surcharge on very large companies, and extended sales tax to services such as IT support and custom software starting October 1, 2025. Seattle voters then raised the city's small business threshold to $2 million for 2026. And in 2026 the legislature passed ESSB 6346, which creates a 9.9 percent tax on individual income above $1 million starting in 2028, raises small business B&O relief in 2029, and repeals most of the 2025 services sales tax in 2029.
This guide covers Seattle startup taxes for calendar year 2027, layered on the federal and Delaware obligations every venture backed C-corp carries. For the full federal calendar, see our 2027 startup tax deadlines guide. Figures reflect the Washington Department of Revenue, the City of Seattle, the Employment Security Department, and the legislative record as of November 2026. Several 2027 figures (Seattle's indexed thresholds in particular) were not yet published, so confirm before filing.
The Consolidated 2027 Calendar
Dates assume a calendar year Delaware C-corp registered in Washington with an office or employees in Seattle. Weekend shifts are applied.
| Date | Layer | What is due |
|---|---|---|
| Jan 15 (Fri) | Federal | Q4 2026 personal estimated taxes for founders (Form 1040-ES) |
| Jan 25 (Mon) | Washington | December monthly excise tax return (B&O and sales tax), monthly filers |
| Feb 1 (Mon) | Federal | W-2s to employees and SSA; 1099-NEC to contractors and IRS (January 31 is a Sunday) |
| Feb 1 (Mon) | Washington | Q4 2026 quarterly excise tax return; Q4 Paid Leave and WA Cares report; Q4 unemployment insurance report |
| Feb 1 (Mon) | Seattle | Q4 2026 payroll expense tax and Social Housing Tax returns, if applicable; Q4 city B&O for quarterly filers |
| Mar 1 (Mon) | Delaware | Delaware franchise tax and annual report |
| Apr 15 (Thu) | Federal | Form 1120 or Form 7004 extension; Q1 2027 estimates |
| Apr 15 (Thu) | Washington | 2026 annual excise tax return, annual filers |
| Apr 30 (Fri) | Washington | Q1 excise return; Q1 Paid Leave and WA Cares report |
| Apr 30 (Fri) | Seattle | 2026 annual city B&O return for annual filers; Q1 quarterly returns |
| Apr 30 (Fri) | King County | Business personal property listing |
| Jun 15 (Tue) | Federal | Q2 estimates |
| Aug 2 (Mon) | Washington + Seattle | Q2 quarterly returns and premium reports (July 31 is a Saturday) |
| Sep 15 (Wed) | Federal | Q3 estimates |
| Oct 15 (Fri) | Federal | Extended Form 1120 |
| Nov 1 (Mon) | Washington + Seattle | Q3 quarterly returns and premium reports (October 31 is a Sunday) |
| Dec 15 (Wed) | Federal | Q4 corporate estimate |
| Dec 31 (Fri) | Seattle | Business license tax certificate expires; renew for 2028 |
| Anniversary month | Washington | Secretary of State annual report, due by the end of your registration month |
Monthly Washington excise returns are due on the 25th of the following month all year.
Step Zero: Registering in Washington
A Delaware corporation with an office or employees in Washington registers as a foreign entity with the Washington Secretary of State and obtains a Washington business license through the Department of Revenue's Business Licensing Service, adding a Seattle city endorsement. The state business license is what gives you a Unified Business Identifier and an excise tax account. Do this before your first Washington hire, because Paid Leave, WA Cares, unemployment insurance, and workers' compensation accounts all key off that registration.
The Secretary of State then requires an annual report, due by the last day of your registration anniversary month. If you registered in Washington in March, the report is due every March 31. Third party fee summaries currently list the for profit annual report fee at $70, with a late fee on top; confirm the current fee on the Secretary of State's filing portal. Missing it can lead to administrative dissolution or revocation of your Washington registration.
Washington B&O Tax: Gross Receipts From Dollar One
The B&O tax is Washington's main business tax. It is calculated on gross receipts, with no deduction for payroll, rent, or cost of goods sold. A startup losing money on $800,000 of revenue still owes B&O on $800,000. There are more than 50 classifications, and a business with several activities can owe under several of them.
The rates that matter for most startups, per the Department of Revenue's classification table:
| Classification | Rate | Typical startup activity |
|---|---|---|
| Retailing | 0.471% | Selling SaaS or other digital products to end users |
| Wholesaling | 0.484% | Selling for resale |
| Service and other activities, under $1 million prior year | 1.5% | Consulting, professional services, many marketplaces |
| Service and other activities, $1 million to under $5 million | 1.75% | Same, at higher prior year gross income |
| Service and other activities, $5 million or more | 2.1% | Same, top tier |
The 2.1 percent top tier for service businesses with $5 million or more of prior year gross income is new under ESHB 2081 (2025) and took effect January 1, 2026. That law also added a 0.5 percent surcharge on Washington taxable income above $250 million a year from 2026 through 2029, which does not touch startups but matters to acquirers.
Classification is the first real decision. SaaS sold to customers is generally a retail sale in Washington, taxed at the low retailing rate, while professional services land in the service classification at three times the rate or more. A company that bundles implementation services with software can owe under both. Getting this wrong in either direction is one of the most common Washington audit findings.
The small business credit. Washington's small business B&O credit reduces or eliminates tax for businesses with small liabilities. The credit phases out as liability rises, and the Department of Revenue publishes the cutoffs by filing frequency; for businesses whose income is mostly service and other activities, the credit applies to monthly liabilities under $320, quarterly under $960, and annual under $3,840. Legislative reports put the current maximum at $160 a month for service businesses and $55 a month for others. ESSB 6346 raises those to $375 and $125 a month starting January 1, 2029.
Filing frequency. The Department assigns your frequency based on liability: annual for $1,050 or less a year, quarterly for $1,051 to $4,800, and monthly above that. Monthly returns are due on the 25th of the following month, quarterly returns at the end of the month after the quarter, and annual returns on April 15. A business with under $125,000 of gross income may qualify for active non reporting status, but only if it is not collecting retail sales tax, which rules out most SaaS sellers.
Sales Tax: SaaS Already Taxable, Services Added in 2025
Washington treats remotely accessed prewritten software as a retail sale, so SaaS sold to Washington customers has been taxable for years. The combined state and local rate in Seattle exceeds 10 percent, and you report sales tax on the same excise return as B&O.
ESSB 5814 widened the base effective October 1, 2025. According to the Department of Revenue, the newly taxable retail sales include information technology services, training, technical support and similar services, custom website development, custom software and customization of prewritten software, advertising services, temporary staffing, investigation and security services, and live presentations. The law also removed several exclusions from the digital automated services category, including for services primarily involving human effort and for data processing. For a Seattle startup, that can mean your implementation fees, custom development work, and support contracts are now taxable, and so are some services you buy, such as outsourced IT and advertising.
Two follow-up points:
- The Department issued interim guidance on contracts signed before October 1, 2025, including a transition period that ran through March 31, 2026. If you had multi period contracts spanning the change, confirm they were handled correctly.
- ESSB 6346 (2026) repeals most of it. Effective January 1, 2029, the retail services taxes added by ESSB 5814 are repealed except for advertising services. That is two years away; for all of 2027, plan to collect. The 2026 law also narrowed some categories starting July 1, 2026, for example excluding one on one consulting and tutoring from live presentations.
Seattle Business License Tax: The $2 Million Threshold
Seattle levies its own gross receipts tax, called the business license tax, plus a required annual business license tax certificate.
The tax. Under the Seattle Shield measure (Proposition 2, approved in November 2025), the threshold rose from $100,000 to $2 million in annual Seattle gross receipts effective January 1, 2026. Businesses at or under it owe no city B&O tax. Businesses above it get a $2 million standard deduction, so a company with $3 million of Seattle receipts pays on $1 million. Rates also rose for tax years 2026 through 2032, to 0.658 percent for service and other activities and 0.342 percent for retailing, wholesaling, and manufacturing, stepping down in 2033.
You still file. The city's Director's Rule is explicit that businesses below the threshold must still file a business license tax return. The city has moved some quarterly filers to annual filing starting with 2026; annual filers' 2026 return is due April 30, 2027.
The certificate. Every business engaging in business in Seattle needs a business license tax certificate, which runs for the calendar year and expires December 31. The fee is tiered on taxable revenue before the standard deduction, so even a business under the $2 million tax threshold pays a license fee. Letting the certificate lapse does not close your account; the city requires a written request to cancel.
Seattle Payroll Expense Tax and the Social Housing Tax
JumpStart payroll expense tax. For 2026, it applies only if your Seattle payroll expense in 2025 was at least $9,074,409, and then only to compensation of Seattle employees earning $194,452 or more. Rates for 2026 range from 0.746 percent to 2.557 percent depending on the employee's pay band and the company's total Seattle payroll. Thresholds are indexed to inflation each year, and the 2027 figures had not been posted at the time of writing. Most seed and Series A companies are well under the business threshold, but a fast growing Seattle engineering team can cross it within a couple of years. Returns are quarterly, with the Q4 2026 return due at the end of January 2027.
Social Housing Tax. This is the one that surprises founders. Approved by voters in February 2025 and in effect since January 1, 2025, it charges 5 percent of each employee's Seattle compensation above $1 million. Unlike the payroll expense tax, it has no employer size threshold. If a single founder or executive has a year with compensation above $1 million paid in Seattle (a large bonus or certain equity events could do it), the company owes. It is filed quarterly.
Paid Leave, WA Cares, and Other Payroll Premiums
Washington has no income tax withholding, but its payroll premiums are real:
- Paid Family and Medical Leave: 1.13 percent of gross wages in 2026, rising to 1.2 percent in 2027, with employees paying 70.7 percent and employers 29.3 percent, per the Employment Security Department. Businesses ESD classifies as under 50 employees do not owe the employer share but must still collect the employee share. A separate 2026 law, effective January 1, 2027, changes how the employer and employee portions are allocated between the family and medical premiums without changing the overall split.
- WA Cares Fund: 0.58 percent of each employee's gross wages, with no wage cap, paid by the employee through withholding.
- Reporting: Paid Leave and WA Cares are reported together quarterly, due April 30, July 31, October 31, and January 31, shifting to the next business day on weekends. Paid Leave began applying penalties to past due reports and interest on overdue premiums in August 2026.
- Unemployment insurance and workers' compensation: quarterly unemployment tax to ESD and industrial insurance premiums to Labor and Industries. Washington runs its own workers' comp system, so a private policy does not cover Washington employees.
King County Business Personal Property: April 30
Washington taxes business personal property, and the King County Assessor requires every business in the county to file a personal property listing for equipment, furniture, and computers in use as of January 1. It is due April 30. The Assessor does not grant extensions and applies a penalty of 5 percent per month on late listings, up to 25 percent. New businesses should contact the Assessor to set up an account so the form arrives in time.
The Federal and Delaware Layer, Briefly
- February 1, 2027: W-2s and 1099-NEC forms (January 31 is a Sunday). Under the One Big Beautiful Bill Act, the 1099-NEC and 1099-MISC threshold rose from $600 to $2,000 for payments made after December 31, 2025, so forms filed in early 2027 for 2026 payments use $2,000. The figure is indexed for inflation after 2026.
- March 1, 2027: Delaware franchise tax and annual report. Our Delaware franchise tax calculator shows how the assumed par value method usually cuts the bill dramatically.
- April 15, 2027: Form 1120 or Form 7004, plus Q1 estimates. October 15, 2027: extended Form 1120.
Washington has no corporate income tax return. The excise return is your state level business tax filing. Founders should note one personal item: Washington's capital gains tax already applies to large long term gains, and the new 9.9 percent tax on individual income above $1 million begins in 2028; the law provides that it is void in its entirety if a court strikes the tax down, so watch for litigation. If a liquidity event is on your horizon, it is worth a planning conversation now.
The Classic Seattle Founder Mistakes
- Assuming no income tax means no tax until profitable. B&O applies to gross receipts from the first dollar.
- Picking the wrong B&O classification. SaaS and services are taxed at very different rates.
- Not collecting sales tax on implementation, support, or custom development after October 1, 2025.
- Skipping the Seattle return because of the $2 million threshold. The return and the license certificate are still required.
- Forgetting the Social Housing Tax in a year when one person's Seattle pay crosses $1 million.
- Missing the King County listing. No extensions, and the penalty compounds monthly.
Bringing It Together
Seattle startup taxes are a stack of small, frequent filings rather than one large annual bill, which makes them easy to miss and expensive to clean up in diligence. Use our tax compliance checklist to map which of these apply to you, and if part of your team is in the Bay Area, compare against our San Francisco startup tax guide.
StartupCFO tracks federal, state, and local deadlines across all 50 states on every plan, and our tax service includes a 50 percent discount on preparation of one federal and one state return, with additional states and agency filing fees billed as add ons. If you want your Washington classifications and filing frequencies checked before the 2027 cycle, book a consultation.
This article is general information, not tax advice. Rates, thresholds, and deadlines change, and the Washington Department of Revenue, the City of Seattle, the Employment Security Department, the Secretary of State, and the King County Assessor publish the controlling figures. Confirm your specific obligations with your CPA and the official pages at dor.wa.gov, seattle.gov, esd.wa.gov, paidleave.wa.gov, sos.wa.gov, and kingcounty.gov before filing.
