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A definition of each tax credit is listed below. If you need further assistance in determining the proper credit, contact us.

note Next to each credit definition, the number inside the brackets [ ] correspond to the credit ID number located on the excise tax return.


 

 



Aerospace Credit
A business and occupation (B&O) tax credit available to:

  1. [920]
    Manufacturers and processors for hire of commercial airplanes and component parts of commercial airplanes for qualified preproduction development expenditures.  An affidavit is required and an Annual Report must be completed and filed by April 30 of the year following the credit.  Effective December 1, 2003. Electronic filing required.
  2. [910]
    Manufacturers of commercial airplanes or component parts of commercial airplanes equal to property taxes and leasehold excise taxes paid on new buildings, land upon which the new buildings are located and increased value or renovated buildings used exclusively for manufacturing commercial airplanes or component parts thereof and property taxes paid on equipment eligible for the machinery and equipment exemption.  Credit is taken on the excise tax return after property taxes have been paid.  An Annual Report must be completed and filed by April 30 of the following year.  Electronic filing required. Effective December 1, 2003.  Note:  Effective July 1, 2006, the B&O tax credit was expanded to include leasehold excise tax paid on such property.
  3. [935]
    Aerospace Non-Manufacturer’s.  Persons who develop, design, and engineer, but do not manufacture commercial airplanes and component parts thereof are eligible for a B&O tax credit for qualified preproduction development expenditures occurring after July 1, 2006.  The credit must be taken against taxes due for the same calendar year in which the qualified preproduction development expenditures are incurred and an Annual Survey must be completed and filed by April 30 of the following year. Electronic filing required.


Aerospace Manufacturers Tax Incentives
and Non-manufacturer Aerospace Incentives



Alternatives to Field Burning B&O Credit [875]
Businesses who use structures and equipment as alternatives to field burning of cereal grains, and field and turf grass grown for seed are eligible to take a credit up to 50 percent of the amount of costs expended for constructing structures or acquiring machinery and/or equipment that are used more than half of the time for the reduction of field burning. The credit may not exceed your B&O tax liability or be carried over to subsequent calendar years. The credit must be claimed by the due date of the last tax return for the calendar year when the payment is made.  The B&O tax credit was repealed effective July 1, 2005. It is available for costs incurred before July 1, 2005. The credit must be claimed against the B&O tax liability incurred before July 1, 2005. The credit is itemized on the Credits section of the excise tax return. RCW 82.04.4459. Special Notice - Sales Tax Exemption to Reduce Agricultural Burning Expires (pdf)


Aluminum Smelter Credit
[890]
Aluminum smelters may qualify for:

  1. a business and occupation (B&O) tax credit for property taxes paid,
  2. an exemption from the state portion of retail sales tax and use tax on tangible personal property and all construction at the aluminum smelter, and
  3. an exemption from the natural gas use tax.

Persons selling power or gas to aluminum smelters:

Qualifying companies selling electricity, natural gas, or manufactured gas to an aluminum smelter may receive a public utility tax credit provided the selling price is reduced by the amount of the credit.  Complete and attach Credit for Energy Providers to Aluminum Smelters (pdf) form to Excise Tax Return. RCW 82.04.290982.04.4481



Bad Debt Tax Credit [801]
Bad debt tax credit is allowed for retail sales tax which has been remitted to the Department, but has become uncollectible and written off for IRS purposes. Completion of a Schedule B form is necessary only if the sales tax rate at the time of sale is different from the current rate. When the rates are the same, the deduction may be taken on retailing B&O [02] and retail sales [01] tax. WAC 458-20-196


Commute Trip Reduction Credit
[820]
Employers and property managers who provide commute trip reduction incentives to or on behalf of their own or other employees are eligible for a credit against their B&O tax or public utility tax (PUT) due.  An application must be submitted to the Department between January 1 and January 31, following the calendar year in which the applicant made commute trip reduction incentive payments.  Special Notice – Commute Trip Reduction Tax Credit Extended to June 2015 (pdf)

Any unused credit will expire on June 30, 2015. All approved credit must be used by June 30, 2015. No adjustments will be allowed after this date.


CSP Relief for Sourcing Credit [601]
This credit applies only to certified service providers (CSPs) filing returns for Washington retail businesses that ship or deliver products they sell to in-state locations.

Beginning July 1, 2008, Washington businesses that ship or deliver goods in-state are required to charge sales tax based on where the customer receives the goods - the destination of the delivery. To help retailers with this change, eligible retail businesses may use the services of a CSP at no cost to themselves for tax reporting periods starting July 1, 2008, through June 30, 2010. A CSP is a third party certified by the Department of Revenue and under SSUTA, to perform all of a seller's retail sales and use tax functions including filing and remitting the sales tax returns and payments for the seller. Retail businesses are eligible if they meet all of the following requirements:

  • Registered with the Department of Revenue prior to July 1, 2008
  • Physical presence in Washington
  • Gross sales for Washington State is less than $500,000 annually
  • Receive at least 5% of their taxable sales income from deliveries
  • Receive at least 1% of their taxable sales income from deliveries outside the jurisdiction where they collect the most sales tax

Sellers must have retained the services of a CSP within one year after July 1, 2008, to be eligible for this credit. CSPs are compensated by retaining a percentage of the total sales tax remitted for each return period filed by the certified service provider for periods July 1, 2008, through June 30, 2010. RCW 82.32.760



Customized Employee Workforce Training Program
[940]
Effective June 7, 2006, businesses that participate in the Washington Customized Training Program may take a B&O tax credit for 50 percent of their payment to the training program. The tax credit may not exceed the B&O tax amount due. Credits may be carried over until July 1, 2021. Electronic filing of all returns, documents, and surveys is required. To document the credit, the Customized Training Credit Worksheet must be completed and submitted with the return. The credit is itemized on the Credits section of the excise tax return. Businesses must also file an Annual Tax Incentive Survey with the Department of Revenue by April 30 of the following year. RCW 82.04.449; Special Notice - B&O Tax Credit for Washington Customized Training Program Extended (pdf)


Destination Sourcing Tax Credit [602]
This credit applies only to Washington retail businesses that ship or deliver products they sell to in-state locations.

Beginning July 1, 2008, Washington businesses that ship or deliver goods in-state are required to charge sales tax based on where the customer receives the goods - the destination of the delivery. To help retailers with this change, eligible retail businesses may receive up to $1,000 in tax credits to offset any necessary changes to their accounting system, point of sale, or other systems. Retail businesses are eligible if they meet all of the following requirements:

  • Registered with the Department of Revenue prior to July 1, 2008
  • Physical presence in Washington
  • Gross sales for Washington State is less than $500,000 annually
  • Receive at least 5% of their taxable sales income from deliveries
  • Receive at least 1% of their taxable sales income from deliveries outside the jurisdiction where they collect the most sales tax

How to calculate and report the credit:

  • Calculate total costs incurred one year before or after July 1, 2008, to comply with tax sourcing changes. Costs include goods and services purchased and labor costs.
  • Credit is the lesser of total costs incurred or $1,000. For example, if the total cost incurred was $850, the maximum credit allowed is $850. If the total cost incurred was $1,500, the amount of the credit is limited to $1,000.
  • Credit taken per return cannot exceed the total of B&O taxes plus the state portion of the retail sales tax, minus any other credits. However, any remaining credit may be carried over to the next reporting period until used.

    For example, total costs incurred equal $850. The maximum credit allowed is $850. On the July 2008 tax return, total taxable retail sales equal $8,000.

    State portion of retail sales = $520
    B&O taxes = $37.68
    Small business B&O credit (SBC) = $35
    B&O tax due less SBC = $2.68
    B&O taxes due + state portion of retail sales tax = $522.68
    Sourcing tax credit allowed on the July 2008 tax return = $522.68

    $327.32 may be carried over to the next reporting period.

  • If at least a portion of the credit is not claimed on a return period within one year after the effective date of July 1, 2008, the credit is no longer available. RCW 82.32.755


Electric Utility Rural Economic Development Revolving Fund Public Utility Tax Credit (Expired June 30, 2011) [870]
Certain light and power businesses servicing rural areas are allowed a public utility tax credit of up to $25,000 per year for amounts contributed to an` electric utility rural economic development revolving fund. The total credit allowable in any calendar year is limited to $350,000 on a first come, first served basis. The credit is also limited to 50 percent of amounts contributed to the fund. Unused credits can be carried forward to the following year if a credit form is submitted.  The credit is itemized on the Credits section of the excise tax return.   RCW 82.16.0491Special Notice – Electric Utility Tax Credit for Rural Economic Development Revolving Fund (pdf)


Employee Training B&O Credit
[850]
A B&O tax credit is allowed for 20 percent of the amount spent on job training by firms that are eligible for the distressed area/rural county sales tax deferral/exemption.  The training must be designed to enhance job performance in a state-approved program which is sponsored or provided by the employer. The amount of credit for a particular firm is limited to $5,000 annually. Prior to claiming the credit, the business must obtain approval of the proposed job training service from the Employment Security Department. The employer's request for approval must include a description of the proposed job training service, how the job training will enhance the employee's performance, and the cost of the proposed job training. B&O Tax Credit Application for Employee Training (pdf); RCW 82.04.4333; RCW 82.60


Hazardous Substance [805]
Hazardous substance tax credit is allowed for the tax paid on the value of fuel carried from this state in the fuel tank of airplanes, ships, trucks, or other vehicles. In effect, this gives a tax credit for fuel that was taxed, but not used, in Washington. WAC 458-20-252.


Help Desk Services B&O Credit (Expired January 1, 2011) [865]
Businesses providing information technology help desk services by telephone or electronically, from rural counties are allowed a B&O tax credit equal to the amount of B&O tax due from activities performed at the rural county location. Information technology help desk services consist of the following activities for software and hardware: maintenance; diagnostics and troubleshooting; installation; repair information and training; and upgrades. Businesses must file an annual survey with the Department of Revenue by April 30 of the following year. Electronic filing required. This credit expired January 1, 2011. RCW 82.04.4484.


High Technology Credit [830]
note Effective June 6, 2011, Engrossed Substitute House Bill (ESHB) 2088 allows businesses to voluntarily donate all or part of their high technology credit to the Opportunity Expansion Program. Special Notice – High Tech B&O Tax Credit Donation

High technology businesses may claim a B&O tax credit for research and development activities in Washington. Businesses performing research and development in the following areas qualify for the high technology credit: advanced computing, advanced materials, biotechnology, electronic device technology, and environmental technology.  Persons claiming the credit must file an annual survey due by April 30 of the year following any year in which credit is taken.  Effective January 1, 2006, all returns, surveys, reports, and any other required forms or information must be filed in an electronic format as provided or approved by the Department of Revenue.  RCW 82.04.4452; Special Notice – High Technology Business and Occupation Tax Credit Changes (pdf)


Hospitals Safe Patient Handling  Credit
[955]
Effective June 7, 2006, ESHB 1672 requires hospitals to establish a program to improve the safety of patients who are being moved, lifted, or repositioned.  Hospitals can take a B&O tax credit equal to 100 percent of the cost of patient lifting equipment.  Each hospital’s total available credit is capped at $1,000 for each acute care available inpatient bed.  Complete and attach the Hospital Safe Patient Handling B&O Credit Worksheet to the excise tax return each time the credit is taken.  The credit is itemized on the Credits section of the excise tax return. This credit is only available for purchases made between June 7, 2006 and December 30, 2010.  Special Notice – Hospital Safe Patient Handling B&O Credit. RCW 82.04.4485



International Services Credit [855]
Businesses engaging in certain international services and creating and filling new employment positions in Community Empowerment Zones, or contiguous designated census tracts meeting certain unemployment and poverty criteria, may take the international services B&O tax credit. International services must be provided to persons domiciled outside the United States or be for use primarily outside this country. See Special Notice - International Services District Business and Occupation Tax Credit (pdf) . RCW 82.04.44525


Main Street
Credit
Starting January 1, 2006, businesses can apply electronically for a credit against the B&O tax and public utility tax equal to:

  • 75% of approved contributions to designated revitalization programs, or
  • 50% of approved contributions to the Main Street Trust Fund.

The tax credit request must be approved prior to making a contribution to a designated organization. Businesses applying for the credit must be signed up to file electronically (E-file) with the Department of Revenue. Once a business is registered to file electronically, it can logon to its E-file account and click on the Main Street Credit link. The business only needs to know the organizations it intends to contribute to and how much it intends to contribute to apply for the program. The application is simply a matter of inputting this information. The credit may only be claimed in the calendar year immediately following the calendar year in which the credit was approved by the department and the contribution was made to the program or the main street trust fund. Credits may not be carried over to subsequent years. No refunds may be granted for credits. For more information about the program, visit the Department of Archaeology and Historic Preservation web site. RCW 82.73



Manufacturing Software/Programming Rural Employment B&O Credit (Expired January 1, 2011) [860]
Businesses developing or manufacturing software in rural counties are eligible for a B&O tax credit for employment positions created after July 1, 1999. The credit amount is $1,000 for jobs created before July 1 of the credit year. The credit can be taken in the first year the position is created and for four years thereafter. Jobs created after July 1 are initially eligible for a $500 tax credit in the first year and $1,000 in the four following years. Businesses must file an annual survey with the Department of Revenue by April 30 of the following year. Electronic filing required. This credit expired January 1, 2011. RCW 82.04.4483.



Motion Picture Competitiveness Program Contributors B&O Credit
[950]

Effective June 7, 2006, persons who make cash contributions to an approved Motion Picture Competitiveness Program (MPCP) may qualify for a B&O tax credit. MPCP is a nonprofit organization whose sole purpose is to revitalize the state’s economic, cultural, and educational standing in the national and international market of motion picture production.  The credit has a total statewide annual cap of $3.5 million and is available on a first-come basis. (Second Substitute Senate Bill 6558, Chapter 247, Laws of 2006)  Special Notice – WashingtonFilmWorks Contributors B&O Tax Credit - Modification (pdf).



Multiple Activities Tax Credit (MATC) [800]
When a business performs more than one taxable activity for the same product, it reports each activity under the proper classification, but takes the MATC credit so B&O tax is not paid twice on the same amount. For instance, a business that both manufactures and sells a product at wholesale in Washington does not pay both manufacturing and wholesaling B&O tax. A credit is allowed so that B&O tax is paid only once. This also applies to a business that has paid a gross receipt tax to another state. Completion of the Multiple Activities Tax Credit, Schedule C is necessary each time credit is claimed. WAC 458-20-19301



Other Credits [810]
Credit Memorandum: If you receive a credit memorandum from the Department of Revenue for previously overpaid taxes, write the credit amount on the Other Credits line of the tax return, and attach the Credit Memorandum. Sales Tax Paid to Other States: Tangible personal property acquired for use in this state without payment of Washington sales tax is subject to use tax. If you acquire such property and paid sales or use tax to another state before using the property in Washington, you may take a credit for the amount of tax paid in the other state.



Public Utility Tax Credit for Billing Discounts/Qualified Contributions to a Low Income Home Energy Assistance Fund [880]
Public Utility Tax credit is allowed for billing discounts and qualifying contributions made by light and power businesses or gas distribution businesses.  The credit is itemized on the Credits section of the excise tax return.   Special Notice - Public Utility Tax Credits for "Billing Discounts" and "Qualified Contributions." For more information, please call (360) 902-7025 or (800) 647-7706.



Renewable Energy System Cost Recovery Credit [925]
A public utility tax credit is available to participating light and power businesses for amounts paid as incentives for community solar projects (CSPs) or renewable energy systems that produce customer-generated electricity. "Renewable energy system" means a solar energy system, an anaerobic digester as defined in RCW 82.08.900, or a wind generator used for producing electricity.

The maximum annual PUT credit that can be taken by a light and power business during a fiscal year is one-half percent (0.5%) of the business's taxable power sales or $100,000, whichever is greater.

The light and power business may take a public utility tax credit equal to the amount of allowable incentive payments up to the amount of their public utility tax. WAC 458-20-273



Small Business B&O Tax Credit [815]
Businesses whose B&O tax liability is below a certain level are entitled to a credit. The credit varies depending on the amount of B&O tax due (the total of all classifications) after all other B&O tax credits have been taken.

The Small Business Tax Credit is available for businesses whose total B&O tax liability is below:


File electronically and it will automatically calculate your small business credit!



Syrup Tax Credit
[945]
Effective July 1, 2006, retailers that pay syrup tax when buying carbonated beverage syrup to make carbonated fountain drinks can claim a B&O tax credit. The portion of the syrup tax allowed as a credit increases each year as follows: July 1, 2006 to June 30, 2007 – 25%; July 1, 2007 to June 30, 2008 – 50%; July 1, 2008 to June 30, 2009 – 75%; After June 30, 2009 – 100%. The credit must be claimed in the tax reporting period in which the syrup was purchased. The B&O tax credit can not be refunded. No credit is allowed for syrup tax paid prior to July 1, 2006. The credit is itemized on the Credits section of the excise tax return. (Substitute Senate Bill 6533, Chapter 245, Laws of 2006) Special Notice – Retailers of Fountain Drinks B&O Tax Credit for Syrup Tax Paid; RCW 82.04.4486



Tobacco Products/Cigar Tax Credit
[930]
Distributors who first possess tobacco products in the State of Washington are allowed to take credits for:

  • Interstate and foreign sales - Available to distributors of tobacco products sold to retailers and wholesalers outside the state for resale. This credit may be taken only for the amount of tobacco products tax reported and previously paid on such products. No credit may be taken for a sale of tobacco products from a stock of goods in this state to a consumer outside the state.   See RCW 82.26.110.
  • Returned or destroyed goods - May be taken for tax previously paid when tobacco products are destroyed or returned to the manufacturer. Credits claimed against tax owed or as a refund of tax paid must be supported by documentation.
  • Sales to the United States Government - Available to distributors of tobacco products sold to the US Government, or any of its agencies or instrumentalities.  This credit may be taken only for the amount of tobacco products tax reported and previously paid on such products.
  • Sales to Indian Tribal Organizations - Available to distributors of tobacco products sold to any Indian Tribal Organizations.  This credit may be taken only for the amount of tobacco products tax reported and previously paid on such products

Distributors must document the credits. The documentation should conform to requirements outlined in WAC 458-20-185.  For help calculating your credit, use the Tobacco Products/Cigar Tax Credit Worksheet (pdf). The credit is itemized on the Credits section of the excise tax return.