Multiple Activities Tax Credit (MATC)
The multiple activities tax credit (MATC) ensures that a business is not taxed twice when it performs multiple taxable activities (manufacturing and selling, for example) that result in the same product.
Who qualifies for it?
Take this credit if you perform two or more taxable business activities on the same product.
For example, if you both manufacture and sell a product, report sale revenue under two tax classifications: Manufacturing and Retail Sales. Then take the credit so you only pay tax on the product once.
Both business activities can occur in Seattle. Or one can occur in Seattle and the other in another Washington city that imposes a B&O tax (also called a gross receipts tax).
Guidelines to follow
Skip the MATC if you are reporting revenue in only one classification.
To claim a multiple activities tax credit, fill out the MATC worksheet. If you file taxes online using either the Seattle electronic filing system (SELF) or FileLocal, complete the MATC worksheet in the system when you file. If you choose to file on paper, download the MATC worksheet.
Also, please note that the MATC:
- is not a deduction, so do not enter it as a deduction
- applies to local B&O taxes only, so paying the Washington state B&O tax does not qualify you for taking a credit for a local B&O tax
If you have questions about whether or not a tax qualifies or is eligible, please contact us.
How the credit works
MATC credits are divided into two categories:
- Internal Credits
- External Credits
Use Internal Credits when both your business activities (manufacturing and retail sales, for example) occurred within Seattle.
Use External Credits when one of your business activities occurred outside Seattle and you already paid local B&O tax (gross receipts tax).
Example 1: Internal Credits
Company A makes furniture in Seattle's SODO neighborhood. It also has a retail store in downtown Seattle where it sells the tables, dressers and desks that it manufactures.
During one quarter, it sells $40,000 of furniture. So, on its Seattle business license tax return, Company A enters a gross amount of $40,000 for the Retail Sales classification. And because it also made the furniture, it enters $40,000 for the Manufacturing classification.
At this point Company A owes $86 for Retail Sales and $86 for Manufacturing, or $172 total.
Company A then fills out the multiple activities tax credit (MATC) worksheet, and it receives a credit for $86. This ensures that it is only taxed once. And its tax due is now $86, not $172.
Example 2: External Credits
Company B makes furniture in Bellevue. It sells tables, dressers and desks at a retail store in downtown Seattle.
During one quarter, it sells $60,000 of furniture in Seattle. So, it enters a gross amount of $60,000 for the Retail Sales classification on its Seattle business license tax return..
Bellevue, like Seattle, has a business license tax (also called a B&O tax, or gross receipts tax). Because Company B manufactured the furniture in Bellevue, it reports $60,000 on its Bellevue tax return.
At this point Company B owes Seattle $129. And it owes Bellevue $89.76. (The two tax amounts owed are different because Seattle and Bellevue have different tax rates).
Company B then fills out the Seattle multiple activities tax credit (MATC) worksheet. It receives a credit for $89.76, which is equal to the amount it owes to Bellevue for Manufacturing. The credit is subtracted from the $129. As a result, it now owes only $39.24 to Seattle, not $129.
MATC 2026 B&O Tax Changes
Standard Deduction
Beginning January 1, 2026, taxpayers with $2 million or more in taxable revenue are allowed to take an annual $2 million Standard Deduction due to the recent Business and Occupation (B&O) tax changes under the voter-approved Seattle Shield Initiative.
Manufacturers and the Standard Deduction
Taxpayers who report income under the manufacturing classification and the applicable wholesaling or retailing tax classifications must follow the instructions outlined below to properly claim the new Standard Deduction. These instructions apply to either manual or electronically filed returns.
- Taxpayers with manufacturing activities in Seattle must claim the $2 million annual standard deduction under the Manufacturing tax classification in Column 4.
- Manufacturers will then need to claim the standard deduction for the selling activities under the corresponding wholesaling or retailing classification using the “Other” deduction in Column 2. Taxpayers must describe this other deduction as “Standard Deduction”.
- The total standard deduction taken under the wholesaling and retailing classifications is limited to the lesser of $2 million or the gross income from products manufactured and sold in the city not to exceed $2 million.
Once the $2 million annual standard deduction taken under the manufacturing tax classification is exhausted for the year, the standard deduction under the selling classifications is no longer applicable.
BCD is a manufacturer who manufactures and sells products in the City. In the first quarter of 2026, BCD manufactured and sold at retail $3,000,000 of products from their business location in Seattle. In the first quarter of 2026, BCD shipped $1,000,000 of the retail sales to customers out of state.
When completing BCD’s first quarter return, BCD will report $3,000,000 under both the Manufacturing and Retailing classifications in the Gross Income Column (1). BCD will deduct its $2,000,000 Standard Deduction (Column 4) under the Manufacturing classification resulting in $1,000,000 of Taxable Amount for Manufacturing with Manufacturing tax due of $3,420.
Under the Retailing classification, BCD will deduct $1,000,000 of its interstate sales under the Deductions Column (2). BCD will also deduct $2,000,000 of “Other” deduction under the Deductions Column (2) for products manufactured and sold in the City resulting in $0 of Taxable Revenue. BCD will describe the “Other” deduction taken as “Standard Deduction.”
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Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
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| Classification | Gross Income | Deductions | Taxable Revenue | Standard Deduction | Taxable Amount | Rate | Tax Due |
| Manufacturing | 3,000,000 | 0 | 3,000,000 | 2,000,000 | 1,000,000 | 0.00342 | 3,420 |
| Retailing | 3,000,000 | 3,000,000 | 0 | 0 | 0 | 0.00342 | 0 |
| Total Tax Due before MATC | 3,420 | ||||||
| MATC | 0 | ||||||
| Total Tax Due | 3,420 | ||||||
| Retailing Deductions | |
| Interstate Sales | $1,000,000 |
| Standard Deduction | $2,000,000 |
| Total Retail Deductions | $3,000,000 |
After taking an “Other” deduction under the retailing classification, this leaves the retailing taxable amount of $0 and retailing tax due of $0. As a result, the MATC credit would be $0 and the tax due would be $3,420.
| MATC WORKSHEET | ||||||
| Activity Resulting in a Tax Credit | Taxable Amount | Extracting Tax Paid | Manufacturing Tax Paid | Wholesaling Tax Paid | Retailing Tax Paid | Credit = Lesser of Extracting, Manufacturing, or Wholesaling + Retailing |
| Selling in Seattle products extracted, manufactured, or printed in Seattle. | 0 | 0 | 0 | 0 | 0 | 0 |
| Total Credit | 0 | |||||
BCD is a manufacturer who manufactures and sells products in the City. In the first quarter of 2026, BCD manufactured and sold at retail $3,000,000 of products from their business location in Seattle. In first quarter of 2026, BCD sold all its manufactured products in the City.
When completing BCD’s first quarter return, BCD will report $3,000,000 under both the Manufacturing and Retailing classifications in the Gross Income Column (1). BCD will deduct its $2,000,000 Standard Deduction (Column 4) under the Manufacturing classification resulting in $1,000,000 of Taxable Amount for Manufacturing with Manufacturing tax due of $3,420.
Under the Retailing classification, BCD will also deduct $2,000,000 of “Other” deduction under the Deductions Column (2) for products manufactured and sold in the City resulting in $1,000,000 of Taxable Revenue and Taxable Amount resulting in $3,420 of Retailing tax due. BCD will describe the “Other” deduction taken as “Standard Deduction.”
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Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
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|
| Classification | Gross Income | Deductions | Taxable Revenue | Standard Deduction | Taxable Amount | Rate | Tax Due |
| Manufacturing | 3,000,000 | 0 | 3,000,000 | 2,000,000 | 1,000,000 | 0.00342 | 3,420 |
| Retailing | 3,000,000 | 2,000,000 | 1,000,000 | 0 | 1,000,000 | 0.00342 | 3,420 |
| Total Tax Due before MATC | 6,840 | ||||||
| MATC | (3,420) | ||||||
| Total Tax Due | 3,420 | ||||||
| Retailing Deductions | |
| Interstate Sales | 0 |
| Standard Deduction | 2,000,000 |
| Total Retail Deductions | 2,000,000 |
After taking an “Other” deduction under the Retailing classification, this leaves the retailing taxable amount of $3,420 and retailing tax due of $3,420. As a result, the MATC credit would be $3,420 and the tax due would be $3,420.
| Activity Resulting in a Tax Credit | Taxable Amount | Extracting Tax Paid | Manufacturing Tax Paid | Wholesaling Tax Paid | Retailing Tax Paid | Credit = Lesser of Extracting, Manufacturing, or Wholesaling + Retailing |
| Selling in Seattle products extracted, manufactured or printed in Seattle. | 1,000,000 | 0 | 3,420 | 0 | 3,420 | 3,420 |
| Total Credit | 3,420 | |||||
Read The Code
You can read the Seattle Municipal Code (SMC) for legal details about the multiple activities tax credit.
SMC Chapter 5.45.070 covers the multiple activities tax credit.