Business and Occupation Tax
Beginning Jan. 1, 2026, the City will implement a Business & Occupation (B&O) Tax on certain retail businesses and services operating within city limits.
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Overview
Beginning Jan. 1, 2026, the City will implement a Business & Occupation (B&O) Tax on certain retail businesses and services operating within city limits. Under this tax, Retail Sales and Retail Service businesses will be required to submit a quarterly tax return. Retail businesses meeting the defined criteria and exceeding the minimum gross income threshold are also required to submit a tax payment. The taxes imposed shall be used only to fund the construction and operations of a new bridge shelter for the homeless.
Who is required to file?
The B&O tax is levied for businesses that are classified as Retail Sales and/or Retail Service in Vancouver, WA. It applies to gross receipts or the value of products manufactured or extracted. If your retail sales and/or retail business earns $50,000 or less for the year, or $12,500 or less in a quarter, you are below the threshold. This means you must still file a return, but you do not have to pay any tax. Only businesses that are above the threshold—more than $50,000 annually or more than $12,500 in any quarter—are required to both file and pay the tax.
When are tax returns due?
You must file your B&O Tax return on the last day of the month following the end of each quarter. If that date is a weekend or holiday, the due date is the next business day.
Filing schedule:
- Q1 January–March: Due by April 30
- Q2 April–June: Due by July 31
- Q3 July–September: Due by October 31
- Q4 October–December: Due by January 31
Where to file?
You must file and pay through Localgov or in-person. Payment must be submitted by the deadline to avoid penalties and interest.
Tax rates, penalty and interest rates
This section outlines how the B&O Tax is calculated, including current rates, penalties, and interest for late payments. It also defines key terms and outlines available exemptions under VMC 5.03.
Definitions
- Business: Any activity for gain, benefit, or advantage to the taxpayer or others, whether for profit or not.
- Engaging in Business: Includes sales, services, leasing, installation, consulting, deliveries, solicitation, or maintaining property or offices in the city—even without a physical storefront.
- Gross Income of Business: All value received from business activities including sales, services, interest, commissions, dividends, fees, royalties, and rent—without any deductions.
- Retail Sales: Selling goods directly to the final customer (the consumer), not for resale. Example: a clothing store selling shirts to shoppers.
- Retail Services: Providing personal, business, or retail professional services directly to consumers. Example: construction, gyms, tattoo parlors, parking garages, or landscape maintenance for homeowners. Visit theVancouver Municipal Code for the full definition and additional examples.
- Consumer: A person who buys for personal use, not for resale, or who uses the product in producing something else.
Tax, penalty, and interest rates
- Tax Rate: Retailing and retail services are taxed at a rate of 0.100% (or 0.001 of gross income).
- Interest: Delinquent taxes will accrue interest at a rate of 6% per annum, .5% a month, for each month the taxes remain unpaid. Interest rates are recalculated every first day of January of each year. See RCW 82.32.050 for more information.
- Penalty: 9% of tax due if 1–30 days late, 19% if 31–60 days late, 29% if over 60 days late.
Exemptions
- Exemption for Employees: Wages and salary income (not contractors). Booth renters are not employees.
- Exemption for Dividends and Investments: Passive income from investments not related to active business.
- Insurance Companies: Exempted due to gross premiums already taxed by the state (RCW 48.14.020).
- Real Estate Sales: Gross proceeds from selling property, not including commissions or interest charges.
- Fuel/Liquor Sales: Sales exempt under RCWs 82.38 and 66.08.
- Motor Vehicle Fuel: shall not apply to the manufacturing, selling, or distributing of motor vehicle fuel under RCW 82.38.020.
- Casual/Isolated Sales: Non-recurring sales by persons derived from casual or isolated sales.
- Accommodation Sales: Reimbursement resale at cost between registered vendors.
- Trust Fund Taxes: Retail sales tax and other pass-through taxes collected for the government.
Available deductions and credits
Deductions and credits are allowed if specific criteria are met and specific documentation is provided:
Deductions allowed include:
- Geographical Boundary: Sales delivered outside city limits or out of state.
- Credit Losses: Losses on Accounts Receivable for companies that operate on accrual accounting.
- Cash Discount: Cash discounts that were taken by customers.
- Employee-Related Costs: Professional employer organizations may deduct employee-related costs.
Credits allowed include:
Double Taxation: If tax was paid in another city for the same gross receipts, a credit may be applied.
Business and Occupation Tax filing and payment
To make your local Business and Occupation tax payments easier, the City has partnered with Localgov. This service facilitates secure online filings and payments. You can file and pay your Business and Occupation Tax Return at your convenience. Additionally, there is an alternative option to pay in person. Please contact the City B&O Tax team at 360-487-8410, option 7 or business.taxes@cityofvancouver.us for more information.
LocalGov offers:
- Automatic calculation of taxes and fees owed.
- Secure processing that keeps your data safe.
- Multiple payment options, including ACH/EFT drafts, credit and debit card payments.
- Payments that can be made when you have time—not only during government hours.
- No need for paper forms, envelopes, checks, or stamps.
- Help is available when you need it.
Get started
- Set up your account: If you have any questions or need assistance, please contact Localgov Customer Service or call 877-842-3037.
- Schedule a training with Localgov Customer Service and they will walk you through how to register and submit your first filing.
Resources
- How do I create a Localgov account?
- How do I log into Localgov?
- How do I submit a form on Localgov?
- Where do I find the form I need to submit on Localgov?
- How do I make a payment on Localgov?
How to file your taxes on Localgov
First, add your business into your Localgov portal:
- Sign into your Localgov account
- Go to the “My Businesses” page.
- Click the button “Add a Business.”
- Search for the “City of Vancouver, WA.”
- Select your business and click the button “Add Business.”
- You will be redirected back to the Businesses list page.
- To view your business details and required forms, click the “Actions” button and select “view details” next to your business name.
Submit your tax filing:
- Sign into your Localgov account.
- Go to the “Submit Forms” page.
- Search for the “City of Vancouver, WA.”
- Select the tax form you are required to file. If you select the wrong form, you will receive an error message.
- Fill out all required fields. The form will automatically calculate the tax and fees due.
Support and resources
- Government Support: Review the City’s Business & Occupation Ordinance.
- Localgov Support: If you need technical support while filing on Localgov, please reach out to Localgov Customer Service or call 877-842-3037.
Frequently asked questions
Who must file and/or pay the B&O tax?
Any business operating in the City that makes retail sales (selling goods to consumers) or provides retail services (like construction, gyms, parking, landscaping, or tattoo services) must pay this tax. For businesses with annual gross receipts less than $50,000 (or $12,500 per quarter), it is still required to submit a zero-dollar tax return via Localgov. Visit the Vancouver Municipal Code for the full definition and additional examples.
What is the tax rate?
The tax is 0.100% (one-tenth of one percent) of gross receipts from retail sales and retail services. Example: If you earn $100,000 in taxable sales, with no deductions or exemptions, your B&O tax would be $100.
What counts as a retail sale?
A retail sale is when you sell tangible goods (like clothing, electronics, or food) directly to consumers and not for resale. Example: A bookstore selling books to customers.
What counts as a retail service?
A retail service is when you provide certain services directly to consumers, such as:
- Construction Services
- Amusement/recreation (bowling, gyms, swimming)
- Automobile parking and storage garage services
- Landscape maintenance and horticultural services
- Personal services, such as physical fitness, tanning salons, tattoo parlors and steam bath services.
- Renting or leasing tangible personal property to customers
Visit Vancouver Municipal Code for the full definition and additional examples.
Are wholesalers or manufacturers taxed?
No. Extractors, manufacturers, and wholesalers are listed in the ordinance, but their current tax rate is 0.00%. Only retail sales and retail services are taxed at this time.
I’m a small business. Do I still need to file?
If your gross receipts are $50,000 or less in a calendar year (or $12,500 or less in a quarter if filing quarterly), you do not owe B&O tax, but you must still submit a return.
Does it matter if I deliver my product outside the city?
Gross income is generally allocated to the location where the activity takes place. In the case of sales of tangible personal property, the activity takes place where delivery to the buyer occurs. Please see VMC 5.03.077 for detailed guidance on allocation and apportionment of income.
Do I have to file/pay online?
There is an option to pay in-person for those that are unable to file/pay online. Please contact the City B&O Tax team at 360-487-8410, option 7 or business.taxes@cityofvancouver.us for more information.
What if I only deliver goods into the city but don’t operate here?
If you are outside the city and only deliver using a common carrier (like UPS, FedEx, or USPS), you do not need to register or pay this tax, as long as you don’t engage in other business activities within Vancouver.
When does the tax go into effect?
The B&O tax will go into effect on Jan. 1, 2026.
What happens if I don’t file or pay?
Like other city taxes, failure to file or pay may result in penalties, interest, or enforcement actions by the City of Vancouver.
What will the B&O tax fund be used for?
The taxes imposed shall be used only to fund the construction and operations of a new bridge shelter for the homeless.