Deduction List

A deduction is revenue that you can legally subtract from your gross revenue amount. For an overview, see deductions from the business license tax.

Deductions: A to D

Accrual basis accounting: credit loses

If you use accrual basis accounting, you can deduct credit losses actually sustained.

Advances and reimbursements

You can deduct money paid on behalf of your customer if the customer is solely liable for the money and repays you in the form of an advance, reimbursement or other payment.

Arts and cultural activities

You can deduct revenue from arts and cultural activities that you conduct. You can also deduct money you receive from the government for public arts events. The value of items manufactured for public arts events can be deducted as well. You cannot, however, deduct retail sales revenue.

Arts education admission and tuition charges

You can deduct qualified tuition you collect for educational programs.

Bad debts and uncollected revenue

You can deduct money that you previously reported as taxable revenue but were later unable to collect.

Cash and trade discounts

You can deduct the amount of cash or trade discount actually taken by the purchaser.

Casual and infrequent sales

You can deduct revenue from casual sales. Casual sales are the infrequent sale of tangible goods that are not part of your typical business activity.

Childcare provider service

You can deduct revenue earned by providing day care for children younger than 8 years old and not enrolled in first grade or above.

Constitutional prohibition

You can deduct revenue that the Washington or U.S. constitution prohibits cities from taxing.

Contributions, donations and endowments

You can deduct contributions, donations and endowments that are bona fide by law.

Distribution cooperatives and affiliates

You can deduct the cost of merchandise that a distribution cooperative, or its affiliate, sells to its customer-owners who then resell the merchandise at retail.

Deductions: E to Q

Health or social welfare government funds

You can deduct funds you receive from the government that support health or social welfare services provided by an organization of that type.

Initiation fees and membership dues

You can deduct initiation fees or membership dues if you do not provide goods or services in return for the fees or dues.

Interest on first mortgage or deed investments

Financial businesses can deduct interest income secured by first mortgages or trust deeds on non-transient residential properties.

Interest on farmer and rancher loans

You can deduct interest on loans made to farmers and ranchers by certain types of lending institutions.

Interest on state financial obligations

You can deduct revenue derived from interest paid on certain state financial obligations.

Intra-state sales

You can deduct revenue from the sale of tangible goods or retail services when you deliver them to another part of Washington, outside Seattle. Identify each city you deliver to.

Use the Intra State deduction if the delivery location does not impose a local gross receipts tax (B&O tax). Otherwise use the Taxed by Other Cities deduction.

Licensed boarding home rentals

You can deduct real estate rental revenue earned by boarding homes. The boarding home must be licensed by the state of Washington.

Life science research and development

You can deduct funding that you receive from government-supported research and development in the life sciences. If you take the deduction, you must fill out a deduction report and submit it to the City by April 30 each year. Download the Annual Tax Report for Life Science Research Deductions.

For further details about the life science research deduction, see Seattle Tax Rule 5-069.

If you have any questions, contact Joseph Cunha or Anna Pedroso by email or by calling 206-684-8484.

Out-of-state sales

You can deduct revenue from the sale of tangible goods that you deliver to a buyer who is located outside Washington.

Precious metal bullion sales

You can deduct revenue from the sale of precious metal bullion and monetized bullion.

Deductions: R to Z

Radio and TV broadcasting

You can deduct advertising revenue earned by radio and television broadcasters if that revenue meets certain requirements.

Repair and maintenance of residential structures

You can deduct money spent to improve or maintain residential structures and commonly held property. The money must be raised by residential associations described in the Seattle Municipal Code. Money spent to improve property that the public can pay to use cannot be deducted.

Returns and allowances

You can deduct revenue from items or services that were returned by a customer who you refunded.

Sales tax in gross

Use this deduction to "back out" sales, admission or excise tax revenue that you included in the gross amount.

Taxed by other cities

You can deduct revenue from the sale of tangible goods or retail services when you deliver them to another part of Washington, outside Seattle. Identify each city you deliver to.

Use the Taxed by Other Cities deduction if the delivery location imposes a local gross receipts tax (B&O tax). Otherwise use the Intra State deduction.

Transporting empty containers

You can deduct gross income from transporting empty containers picked up in Seattle. To qualify you must exchange the empty container for a full container at the time of pick-up. The full container must come from outside Seattle, and the job must be billed to the customer as a round-trip charge.

Transportation costs for out-of-state sales

Manufactures can deduct transportation costs for shipping outside the state.

Youth nonprofit membership fees

You can deduct membership fees and certain service fees for youth nonprofits.