Deductions from the business license tax

A deduction is revenue that you can legally subtract from your gross revenue amount. Although you must list the deduction amount on your return, you do not pay tax on that amount.

Deductions are different than exemptions. You report deductions on your tax return; you do not report exemptions. To learn about exemptions, see exemptions from the Seattle business license tax.

Costs of doing business cannot be deducted

The costs of doing business cannot be deducted from your gross revenue amount. This includes:

  • rent and utilities
  • insurance
  • material costs
  • employee wages
  • employee sales
  • cost of products purchased for resale

Only deductions specifically defined in the Seattle Municipal Code are allowed.

Guidelines to follow

You qualify for a deduction if you generate revenue from an activity that is defined as a deduction in the Seattle Municipal Code.

When you file, include the deduction amount in your gross amount. Separately list and describe each specific deduction that you claim. Then subtract the deduction amount from your gross to determine your taxable amount.

To get a list of deductions and a general overview of each type, see the deduction list for the Seattle business license tax.

If you have any questions, please contact us.

Read the code

You can read the Seattle Municipal Code (SMC) for legal details about deductions:

SMC Chapter 5.45.100 covers deductions from the Seattle business license tax.

Seattle business tax rule 5-065 provides further information.