Proposed Changes to B&O Tax and License Fees

The City of Tukwila is considering changing its business and occupation (B&O) taxes and business license fees. If approved, the changes would take effect January 1, 2027.

We invite business owners to review the information provided below and share feedback by completing this SURVEY.

You may also use this CALCULATOR to determine the potential impact to your business. Please download the Excel file to use the calculator tool.

Why are changes being proposed?

The City of Tukwila currently charges business license fees based on the number of employees in Tukwila. In addition, the City levies a municipal B&O tax which took effect January 1, 2024.

To better align with the tax and license structures used by neighboring cities and to adopt a more progressive approach, the City is proposing a flat‑rate business license fee. This change is expected to reduce the City’s annual business license revenue by approximately $2,000,000.

To offset this revenue reduction, the City is proposing adjustments to the B&O tax structure, including an increase to the tax rate on gross income and the addition of a square footage tax component. The square footage tax enables the City to maintain lower tax rates on gross income while continuing to support essential infrastructure and services. It also helps distribute tax responsibility more evenly among businesses with larger facility spaces in Tukwila.

While the overall changes are intended to be revenue‑neutral for the City’s annual budget, the combined impact on each individual business’s B&O tax and business license fee will vary.

Summary of Proposed Changes

BUSINESS LICENSE FEES

Businesses with a physical commercial location or home occupation in Tukwila currently pay a general business license fee based on the number of employees working in Tukwila, $56 per part-time employee and $112 per full-time employee.

Under the proposal, business license fees would shift to a flat-rate structure that varies by employee count, as follows:

• Non-Resident Business License: $150 (non-resident license fee is waived if annual gross income in Tukwila is less than $4,000)
• Home Occupation Business License: $75
• Tukwila General Business License:
  • $150 for up to nine (9) employees
  • $300 for 10-24 employees
  • $500 for 25-49 employees
  • $750 for 50-99 employees
  • $1,000 for 100 employees or more

Current vs Proposed Business License Fees

B&O TAX

B&O tax rates are currently at 0.05% (0.0005) for retail activities and 0.085% (0.00085) for all other activities and apply if the gross income attributable to Tukwila exceeds $750,000 in a calendar year. Under the proposal, B&O tax rates would increase to the rates shown below and the gross receipts tax threshold would increase to $1,000,000 per calendar year or $250,000 per calendar quarter.

The proposal would also add a square footage tax on business facilities within Tukwila. A business would owe the greater of the gross receipts tax OR the square footage tax for the reporting period, not both. Click here for Square Footage Tax Definitions.

• Gross Receipts Tax Rates:
  • Retailing & Retail Services: 0.07% (0.0007)
  • All Other Business Activities: 0.125% (0.00125)
• Square Footage Tax Rates (per square foot):
  • Business Warehouse Space: $0.24 per year or $0.06 per quarter (4,000 sq ft threshold)
  • Other Business Floor Space: $0.06 per year or $0.015 per quarter (12,000 sq ft threshold)

Current vs Proposed B&O Tax Rates

Timeline for Proposed Changes

The proposed changes are currently scheduled to be discussed at upcoming public council and committee meetings. Council agendas can be found at tukwilawa.gov/departments/city-council.

• September 14, 2026 – Finance & Governance Committee Meeting
• September 28, 2026 – Committee of the Whole Council Meeting
• October 5, 2026 – Regular Council Meeting

If the City Council adopts these changes, the Finance Department will send written notice to your business and publish updated information online at tukwilawa.gov/citytaxes. The changes would take effect on January 1, 2027.

Feedback or Questions

To provide feedback regarding the proposed changes, please complete this SURVEY. The City welcomes your input and asks that all feedback be submitted by September 7, 2026.

If you have questions, please email Finance@TukwilaWA.gov.