Washington has no state personal income tax, which attracts many freelancers. But the state raises money in other ways, and for freelancers those ways matter: a gross receipts tax called the B&O tax, a state business license, and, since late 2025, sales tax on several services that used to be exempt.
This guide covers the main points. It is educational, not tax or legal advice. Washington’s rules have been changing quickly, so verify everything with the Washington Department of Revenue or a tax professional.
No Personal Income Tax, But Federal Taxes Apply
- Washington doesn’t tax your personal income, including freelance profit, and you don’t file a state personal income tax return.
- You still owe federal income tax and self-employment tax. See Self-Employment Tax Explained.
- You generally make quarterly federal estimated payments. There are no state estimated payments for personal income. See our Freelance Tax Deadlines: 2026–2027 Calendar.
- Washington also has a separate excise tax on certain large long-term capital gains. It isn’t a tax on freelance income, but it’s worth knowing about if you invest.
The Business & Occupation (B&O) Tax
The B&O tax is the tax that surprises most new Washington freelancers.
What it is: a tax on your gross receipts, meaning your revenue, not your profit. You can owe it even if your expenses leave you with little or no profit.
How it works:
- Rates depend on your business classification, such as service activities, retailing, or wholesaling.
- Washington has adjusted B&O rates and classifications in recent years, so check the current rates on the Washington Department of Revenue website.
- A small business credit may reduce or eliminate the tax for businesses with low revenue. Eligibility and amounts depend on your income level.
- You typically report and pay through your Department of Revenue account, usually monthly, quarterly, or annually depending on your volume.
Because the tax is based on revenue, good record-keeping matters. See our guide to a simple bookkeeping system.
The Washington Business License
Most businesses in Washington, including many freelancers, need a state business license.
- You generally apply through the state’s Business Licensing Service, which is part of the Department of Revenue.
- Requirements depend on factors such as your income level and whether you have employees. Check the current thresholds on the DOR website.
- Registering also sets up your tax account for B&O and, if applicable, sales tax.
- The license usually has a fee and must be renewed.
Your city may also require its own license. For the general process, see How to Register a Freelance Business in Your State and Do Freelancers Need a Business License?.
Big Change: Sales Tax on More Services
This is the most important point for many freelancers right now.
In 2025, Washington passed a law (ESSB 5814) that expanded retail sales tax to many services that were previously not taxed, effective October 1, 2025. According to the Department of Revenue’s guidance and professional tax commentary, the newly taxable services include:
- Custom website development
- Custom software development
- Information technology services
- Advertising services, including many digital advertising services
- Temporary staffing services
- Security and investigation services
If you provide any of these, you may now need to collect sales tax from your Washington customers and report it. Your revenue may also move into a different B&O classification.
Things to know:
- The rules include exclusions and special cases. For example, web hosting and domain registration aren’t treated the same as custom development, and some business-to-business situations are handled differently.
- Washington provided temporary relief for some existing contracts, which ended on March 31, 2026.
- The legislature made additional changes and clarifications in 2026, so the details have kept moving.
- Where the customer is located can affect which sales tax applies.
If you’re a web developer, designer, marketer, IT consultant, or software freelancer working with Washington clients, talk to the Department of Revenue or a tax professional now. Updating invoices and contracts is a practical priority. Other professional services, such as many types of writing, remain outside the new rules, but confirm for your situation.
City B&O Taxes and Local Licenses
Some Washington cities, including Seattle, have their own business license and B&O taxes. Rates and thresholds vary by city, and home-based freelancers can be covered. Contact your city’s finance or licensing office.
Forming an LLC in Washington
If you form an LLC:
- File a certificate of formation with the Washington Secretary of State, with a filing fee.
- Name a registered agent with a Washington address.
- File an initial report and then an annual report each year. Missing it can lead to penalties and administrative dissolution.
Fees change, so check the Secretary of State website. To weigh whether an LLC makes sense, see Sole Proprietor vs. LLC. If your profit grows, read When Does an S-Corp Make Sense for Freelancers?.
Optional Programs for the Self-Employed
Washington has social insurance programs that cover employees automatically but that self-employed people can usually opt into:
- Paid Family and Medical Leave (PFML): elective coverage may provide paid leave benefits if you need time off for a qualifying reason.
- WA Cares Fund: a long-term care insurance program with an optional enrollment for the self-employed.
These come with premiums and enrollment rules. Review the details on the state’s websites before deciding.
Working With Clients in Other States
- If you physically perform work in another state, that state may require you to file and pay income tax on income earned there.
- Remote work from your Washington home for out-of-state clients generally doesn’t create another state’s income tax, but rules vary.
- Keep records of where you work.
Deductions Still Matter
Deductions lower your federal taxable profit. Common ones include:
- Software, equipment, and supplies
- Home office expenses (if you qualify)
- Business mileage. See tracking mileage for freelance deductions.
- Professional fees, licenses, and B&O tax payments (confirm treatment with a professional)
- Retirement contributions. See SEP IRA vs. Solo 401(k).
Use our Year-End Tax Planning Checklist and Last-Minute Tax Deductions guide each year.
Washington Freelancer Checklist
- ☐ Set aside money for federal income and self-employment tax
- ☐ Make quarterly federal estimated payments
- ☐ Get your state business license and DOR tax account
- ☐ Check your B&O classification and any small business credit
- ☐ Find out whether your services are subject to sales tax
- ☐ Check city licenses and city B&O taxes
- ☐ Choose a structure, and file LLC annual reports if you have an LLC
- ☐ Consider optional PFML and WA Cares coverage
- ☐ Keep records of revenue by customer location
Common Mistakes
- Thinking no income tax means no state taxes. The B&O tax applies to revenue.
- Not collecting sales tax on newly taxable services. This can create a bill later.
- Skipping the business license.
- Ignoring city taxes.
- Using outdated information. Washington’s rules changed in 2025 and again in 2026.
Frequently Asked Questions
Do freelancers in Washington pay state income tax?
No. Washington has no personal income tax.
What is the B&O tax?
A tax on gross receipts, not profit. Rates depend on your business classification.
Do I need to charge sales tax on my freelance services?
It depends on the type of service. Since October 2025, services such as custom website development, IT services, and advertising are generally taxable. Check with the Department of Revenue.
Do I need a business license in Washington?
Many freelancers do. Requirements depend on your income and activity.
Does Seattle have its own taxes?
Yes. Seattle and some other cities have their own business license and B&O taxes.
Final Thoughts
Washington is attractive because of no income tax, but the B&O tax, the business license, and the new sales tax rules mean freelancers need to pay attention. Register properly, check whether your services are taxable, and keep your information current.
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Washington tax laws have changed recently and may change again. Verify current information with the Washington Department of Revenue, the Secretary of State, or a licensed tax professional.
Last Update: October 12, 2026