Guide to Seattle's Business License & Taxes

What's the difference between an "exemption" and a "deduction"?

"Exemptions" are not included in the gross amount reported in Column B of the tax return. "Deductions" are included in the gross amount and are then "deducted" from the gross to arrive at the taxable amount. Costs of doing business are not deductible. Deductions must be itemized on the reverse side of the tax return. The following list covers the most common types of exemptions (see SMC §5.45.090), and is not intended to be inclusive:

Exemptions:

• Farm products/edibles raised, produced or manufactured within Washington state and sold by the grower or producer.
  
  
• Gross proceeds from the sale, lease, or rental of real estate. This exemption does not include commissions earned on the sale or management of real estate or the payments received for the license to use real estate (usually sublets or rentals of less than 30 days).
  
  
• Non-profit adult family homes.
  
  
• Day care provided by churches.
  
  
• Child care resources and referral services by non-profit organizations.
  
  
• Non-profit organizations that are guarantee agencies, issue debt, or provide guarantees for student loans.
  
  
• Non-profit organizations providing credit and debt educational or assistance services.
  
  
• The Red Cross.
  
  
• Gross income from premiums, fees, assessments, dues or other charges directly attributable to insurance or death benefits provided by certain fraternal and beneficiary organizations.
  
  
• Credit Unions.
  
  
• Dividends from subsidiary corporations.
  
  
• Certain insurance business.
  
  
• International banking facilities.
  
  
• Income derived as an employee.
  
  
• Mortgage brokers’ third-party provider services trust accounts.
  
  
• Manufacturing, selling or distributing motor vehicle fuel.
  
  
• Manufacturing, selling or distributing liquor, beer or wine.
  
  
• Gross amounts derived from the operation of a "sheltered workshop" (a nonprofit organization that provides gainful employment and/or rehabilitation services to the disabled). Note that revenue received from other operations conducted by such a business may be taxable.

Casual and isolated sales (sales made by a person who is not engaged in the business of selling the type of property involved) are not included in gross receipts. Example: office furniture sold by an attorney who no longer needs the furniture.

The material in this site is intended for general informational purposes only. While it is current at the time of publication, changes to the Seattle Municipal Code (SMC) or state law may invalidate some of this information. In the event of a conflict between this guide and the SMC, the SMC prevails.

City of Seattle
Revenue & Consumer Affairs
700 Fifth Ave., Suite 4250
PO Box 34214
Seattle, WA 98124-4214
Telephone: (206) 684-8484
Fax: (206) 684-5170
Contact us at: rca.bizlictx@seattle.gov

Introduction

City of Seattle Tax Forms

City of Seattle On-Line Business Application and Tax Filing

Business License FAQs

Business Tax Rates and Classifications

Business Tax Allocation and Apportionment

Exemptions

Deductions

Square Footage Tax

Admissions Tax

Gambling Tax

Utility Tax

Commercial Parking Tax

Employee Hours Tax

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