TNC Tax
Transportation Network Company Tax
The City of Seattle imposes a tax on Transportation Network Company (TNC) trips originating from within Seattle. The tax is levied on TNC companies, not individual drivers, engaging in the business of arranging transportation for compensation by using online platforms to connect passengers with drivers. Revenue from this tax will support affordable housing near transit, the Center City Connector streetcar and the establishment of an independent driver resolution center.
Tax rate
The Washington State Legislature passed a bill during the 2022 session which, in part, prevents cities from imposing any tax on Transportation Network Companies (TNCs) or their drivers. The new law provides that any local ordinance or regulation that existed before Jan. 1, 2022, and imposes a tax, fee, or other charge on a TNC or driver, remains in effect but shall be reduced by 15 cents per trip.
As of Jan. 1, 2023, the tax on TNCs shall be 42 cents per trip that originates in Seattle. The tax is levied on TNC companies, not individual drivers.
Guidelines
- All TNCs must file a tax return and report the number of trips originating in Seattle whether or not tax is actually owed. This tax return should be used in 2023 and going forward.
- No tax is due if a TNC has less than 200,000 trips originating in Seattle during the prior calendar quarter. Originally, the threshold was 1 million trips originating in Seattle during the prior calendar quarter. However, this threshold was changed to the lower number of 200,000 trips originating in Seattle during the prior calendar quarter.
- The TNC tax shall be due and payable quarterly.
- Additional fees and/or requirements are separate from the TNC tax.
- Individual drivers and TNC companies must have a Business License Tax Certificate if they do business in Seattle.
Deductions
Any trip originating in Seattle and terminating outside the state of Washington may be deducted when calculating the overall TNC tax due.
Get more information
Read related regulations at https://www.seattle.gov/business-regulations/taxis-for-hires-and-tncs/transportation-network-companies/tnc-companies .
Final Rule Adopted
The Director of the Department of Finance and Administrative Services, acting under the authority of Seattle Municipal Code Chapters 3.02 and 5.55, adopted an amended rule for the implementation of the Transportation Network Company Tax Ordinance (Seattle Municipal Code Chapter 5.39). The rule became effective Feb. 1, 2021: Seattle Rule 5-970 Transportation Network Company Tax
The Department of Finance and Administrative Services' License and Tax Administration Division held a virtual public hearing on Jan. 28, 2021 to receive comment on Seattle Rule 5-970 Transportation Network Company Tax
The public may review a copy of the rule here.
TNC Tax FAQs
The TNC tax does not apply to drivers. The tax applies to the companies that hire them. Drivers who operate in Seattle are legally required to have a business license tax certificate and file an annual tax return if their revenue from trips originating in Seattle is $2,000 or more during the year or they reside in the city. TNC drivers are also subject to City of Seattle business regulations for TNC drivers. For more information on TNC driver regulations see http://www.seattle.gov/business-regulations/taxis-for-hires-and-tncs/transportationnetwork-companies/tnc-drivers
A “split fare” is a method of allocating the cost of a single trip between passengers on the same trip. A split fare is a single trip and the total fare is allocated between the passengers on trips that originate in Seattle. The tax on a single trip originating in the city limits of Seattle can be shared between passengers on the same trip.
A tax of 42 cents per trip originating in Seattle tax is imposed upon every TNC operating within the city that provides application dispatch services for transportation. This means that a TNC dispatched trip where a passenger enters the driver's vehicle within the city limits of Seattle is taxed. This tax applies only to Transportation Network Companies; other for-hire vehicles and drivers are not subject to the TNC tax.
Drivers DO NOT need to file this tax return. All TNCs (the companies, not the drivers) operating in Seattle must file a tax return and report the number of trips originating in Seattle whether or not tax is actually owed. No TNC tax is due if the company has less than 200,000 trips originating in Seattle during the prior calendar quarter. The TNC tax is reported quarterly.
Any trip originating in Seattle and terminating outside the state of Washington can be deducted when calculating the overall TNC tax due.
It was not the intention of this tax that the tax is imposed on the passenger or customer, but that the tax is part of the operating overhead or cost of doing business. If the TNC elects to pass the taxes on to their customers, the taxes collected from customers are included in gross receipts for the Seattle Business License tax. The TNC taxes collected are not a deductible expense.
TNC taxes are separate and apart from the TNC licensing fee collected under SMC 6.310.150 and the wheelchair accessible services surcharge collected under SMC 6.310.175.