Washington does not impose a corporate income tax

# Summary

Washington does not impose a corporate income tax. There is no Washington tax on a corporation's net income, and no corporate income tax return.

That statement is narrower than it sounds. Washington taxes corporations on the business and occupation tax, levied on gross receipts rather than profit. A corporation with no net income — or a loss — still owes B&O on its gross proceeds. Describing Washington to a client as a state that does not tax corporations would be seriously misleading.

The two individual-level taxes do not reach corporations: the capital gains excise tax and the 9.90 percent income tax enacted for 2028 both apply to individuals only.

# No tax on corporate net income

Washington imposes no tax measured by corporate net income. The Department of Revenue's "Income tax" page describes the state's taxes as the newly enacted individual income tax plus "other types of taxes such as business and occupation (B&O) tax, retail sales or use tax, public utility tax, and other taxes." No corporate income or franchise tax on net income appears in Washington's tax structure.

The two recent individual measures are expressly confined to individuals. The Final Bill Report for ESSB 6346 states that under the new income tax, "Only individuals are subject to payment of the tax." RCW 82.87.040(1)(a) states of the capital gains excise tax that "Only individuals are subject to payment of the tax." Neither reaches a corporation.

A corporation's Washington shareholders may of course be affected in their own right — see the individual determination.

# What replaces it — the B&O tax

RCW 82.04.220(1):

"There is levied and collected from every person that has a substantial nexus with this state, as provided in RCW 82.04.067, a tax for the act or privilege of engaging in business activities. The tax is measured by the application of rates against value of products, gross proceeds of sales, or gross income of the business, as the case may be."

The features that matter when comparing this to a corporate income tax:

• Base. Value of products, gross proceeds of sales, or gross income of the business. Not net income. There is no deduction for cost of goods sold or for ordinary business expenses in the way an income tax allows.
• Loss is no defence. A corporation operating at a loss still owes B&O measured on its gross receipts.
• Rates vary by classification. B&O rates differ by the activity a business is engaged in, so there is no single headline rate.
• Nexus. Liability follows substantial nexus under RCW 82.04.067, so out-of-state corporations selling into Washington can be liable without physical presence.

RCW 82.04.220(2)(a) addresses mid-year nexus: a person that establishes or reestablishes substantial nexus after the first day of the current calendar year is subject to tax for that year only on business activity occurring on and after that date.

Many Washington cities impose their own local B&O taxes in addition to the state tax.

# Filing consequences

A Washington corporation files no state income tax return, computes no state apportionment of net income, and carries no state net operating loss, because there is no corporate income tax.

It does file Washington excise tax returns covering B&O, retail sales tax, use tax, and public utility tax as applicable, and may have local B&O filings in cities that impose them.

The absence of a corporate income tax means Washington also has no corporate-level credit for taxes paid to other states, and no combined or consolidated corporate income tax reporting.

# Coverage and verification

Tax years covered: 2025.

Verified on 2026-08-13 against the Washington Department of Revenue's "Income tax" page as then published, the Final Bill Report for ESSB 6346 (chapter 238, Laws of 2026), and RCW chapter 82.04 as published in this library.

This determination carries status "not-imposed-with-exception" because the B&O tax is a substantial entity-level tax that a reader could wrongly assume away from the phrase "no corporate income tax." The exception is not an income tax; it is recorded because the practical answer to "does Washington tax my corporation" is yes.

# Sources

Washington Department of Revenue, Income tax — https://dor.wa.gov/taxes-rates/income-tax

Final Bill Report ESSB 6346, ch. 238, Laws of 2026 — https://lawfilesext.leg.wa.gov/biennium/2025-26/Htm/Bill%20Reports/Senate/6346-S.E%20SBR%20FBR%2026.htm

RCW §§ 82.04.220, 82.04.067, 82.87.040, as published in this library.