Self-employed taxes and LLC costs in Washington, 2026
Washington taxes what a business takes in, not what it keeps, which matters more to a freelancer than the lack of an income tax.
Total tax on this income in 2026
$17,800
Put aside 21% of each payment · $4,450 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Washington income tax | $0 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 20.9% |
With an S corp election and a $34,000 salary, about $3,747 less tax (check it).
Computed by Radif Partners from IRS and Washington agency documents read on October 15, 2026 · How we calculate
Washington has no personal income tax in 2026, so a single filer with $75,000 of profit pays only federal income tax and self-employment tax, about $15,495. The state collects from businesses instead, through the business and occupation (B&O) tax on gross receipts with no deduction for expenses: 1.5% for most service businesses under $1 million, 1.75% from $1 million and 2.1% from $5 million. A small business credit cancels the tax for service businesses with modest receipts, roughly up to $128,000 a year for an annual filer. A state business license is required once gross income reaches $12,000 a year. An LLC costs $180 to form and $70 for each annual report. Cities such as Seattle add their own B&O tax. The S election has no state income tax to reduce, since the S corporation pays B&O like any business; at $120,000 of profit it saves about $5,303 on federal taxes.
Washington at a glance, 2026
| LLC filing fee | $180 |
| Annual Report | $70 a year |
| Income tax | none on wages or business income |
| S corporation election | followed, with exceptions |
| Tax on $75,000 of profit (single) | $15,495 in all, $0 to Washington |
A freelance developer in Washington who bills $150,000 and spends $30,000 on equipment and software pays B&O tax on the $150,000, not on the profit. That is the central fact of doing business here. The Department of Revenue classifications put most services at 1.5% of gross receipts for businesses under $1 million, then 1.75% and 2.1% at higher tiers; retailing and wholesaling carry lower rates. The calculator above, which works from profit, does not include it.
How the small business credit works
For small firms the tax often comes to nothing. Under RCW 82.04.4451, a mainly service business gets a credit that covers B&O tax up to $160 a month of the filing period, $1,920 a year for an annual filer, and phases out until the tax reaches twice that. At 1.5%, an annual service filer owes nothing up to about $128,000 of gross receipts. Above that the credit shrinks fast, and the full tax applies from roughly twice the credit point. Annual filers send their return by April 15 of the following year (RCW 82.32.045), and DOR can excuse a business from filing returns altogether when its B&O-taxable income stays under $125,000 and it owes no other tax.
Registering the business
The state business license is required once gross income reaches $12,000 a year, among other triggers, whether or not you form an LLC. The LLC itself is a separate filing with the Secretary of State: $180 for the certificate of formation and $70 for each annual report, $530 over five years.
Seattle and other city B&O taxes
Several cities run their own B&O tax on top. Seattle changed its rules for 2026: the city finance department raised the threshold from $100,000 to $2 million of receipts while raising rates, with service businesses at 0.658%. Most Seattle freelancers therefore owe no city B&O for 2026. Tacoma, Bellevue, Everett and Spokane set their own rates and thresholds. The local business taxes page compares them with city income taxes elsewhere.
The same profit in another state
Oregon minus Washington
$7,299
| Oregon | $7,299 |
| Washington | $0 |
Taxes on income that do exist
Washington is not free of every income-based tax. A capital gains excise of 7% applies to long-term gains above an indexed deduction, plus 2.9% on gains above $1 million, and the sale of an interest in a business can fall under it (RCW 82.87.040). And the Department of Revenue confirms that a 9.9% tax on adjusted gross income above $1 million begins on January 1, 2028. Neither touches a typical freelancer's 2026 return. For the structure question, the LLC vs S corp comparison is purely federal here, and Oregon across the river shows the opposite model, with a tax on personal income.
City and county taxes on business income in Washington
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| Seattle | Business license tax (city B&O), Service & other business activities | 0.658% | From 2026 no tax if Seattle taxable revenue under $2 million, but a return must still be filed. Annual business license tax certificate fee 2026: $73 (revenue $0-$19,999), $147 ($20,000-$499,999), $667 ($500,000-$1,999,999); exempt from the certificate if Seattle gross income is $4,000 or less and no place of business in the city. |
| Other WA cities (e.g., Tacoma, Bellevue, Everett, Spokane) | City B&O tax / business license | varies | varies by city |