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Home » Budget » State budgets » Gov. Inslee's proposed 2019-21 budgets » 19-21 Budget and policy highlights » Revenue changes » Increase service business and occupation tax rate to 2.5 percent

Increase service business and occupation tax rate to 2.5 percent


This proposal would increase the business and occupation (B&O) tax rates for most service businesses by 1 percentage point.

  • The service and other activities B&O tax rate would increase from 1.5 percent to 2.5 percent.
  • The gambling/contests of chance B&O tax rate would increase from 1.63 percent to 2.63 percent.

This proposal is effective July 1, 2019.

Current law

Many individuals, corporations, and other entities that engage in business activities in Washington are required to pay business and occupation (B&O) tax on their gross receipts. Businesses that engage in more than one type of activity in Washington may be required to report under more than one classification. They may also be subject to more than one B&O tax rate. There are 12 B&O tax rates that apply to 55 different tax classifications. 

Service and other activities

The service and other activities classification applies to income from:

  • most service activities, including medical, architectural, legal, and janitorial services, and
  • activities that the law does not specifically list under another B&O tax classification, such as commission income of certain brokers and agents, solid waste collection charges, and movie admission charges.

The service and other activities B&O tax classification tax rate is 1.5 percent.

Gambling/contests of chance

Persons operating contests of chance, such as social card games, raffles, bingo, and pull tabs, report under either:

  • the service and other activities tax rate if their income is less than $50,000 per year, or
  • the gambling/contests of chance rate of 1.63 percent.

Revenue impact

This proposal impacts approximately 175,000 taxpayers and the state general fund in the following ways:






Service B&O





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