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Surcharge on high grossing businesses

Issue Date

Intended audience: Businesses with Washington taxable income greater than $250,000,000 in a calendar year.

Beginning Jan. 1, 2026, businesses with Washington taxable income of $250,000,000 or more in a calendar year are subject to a surcharge in addition to the business and occupation (B&O) tax. The rate is 0.5% of certain Washington taxable income over $250,000,000.

This surcharge expires December 31, 2029.

Exempt business activities

The following amounts are exempt from the surcharge and excluded from the calculation of income subject to the surcharge:

  • Income subject to the financial institution surcharge.
  • Income subject to any manufacturing B&O tax classification, including wholesale and retail sales of these products by a person subject to that manufacturing B&O tax classification.
  • Retail sales of exempt food and food ingredients, including food purchased under the supplemental nutrition assistance program (SNAP).
  • Retail sales of prescription drugs.
  • Income subject to the preferential tax rates for timber or wood products.
  • Income from the wholesale or retail sale of petroleum products owned by a person not located in Washington and processed for hire in Washington by an affiliated entity.
  • Income for which the multiple activities credit (MATC) is allowed.
  • Income earned by persons engaged in business primarily as a farmer or eligible apiarist as defined under RCW 82.04.213.
  • Income subject to the workforce education surcharge.
  • Income from the wholesale or retail sale of motor vehicle or special fuel.

How do I report the surcharge?

You will report the surcharge on your excise tax return using the Taxable Income Over $250 Million per Year Surcharge B&O tax classification.

Note: If you believe you are subject to the surcharge, you may use the Add/Delete feature when filing to add this classification to your excise tax return. If you do not see this classification, please call us at 360-705-6705.

More information

RCW 82.04.288 Surcharge on Washington taxable income over $250,000,000-Exemptions
Engrossed Substitute House Bill (ESHB) 2081, (Sec. 201); Chapter 420, Laws of 2025.

Questions?

Please call 360-705-6705 or you may request a ruling.