Exemptions from the business license tax
Certain organizations and business types are not required to obtain a Seattle business license tax certificate or pay the business license tax. They are exempt from these requirements. Certain types of revenue are also exempt.
Exemptions are different than deductions. You do not report exemptions on your tax return; you must report deduction amounts. To learn about deductions, see deductions from the Seattle business license tax.
Guidelines to follow
You qualify for an exemption if your business or revenue type is defined as an exemption in the Seattle Municipal Code.
Before you file, review the allowable exemptions from the Seattle business license tax. To get a list of exemptions and a general overview of each one, see exemption list for the Seattle business license tax.
If you have questions, please contact us.
Read the code
You can read the Seattle Municipal Code (SMC) for legal details about exemptions.
SMC Chapter 5.45.090 covers exemptions from the Seattle business license tax.
Exemptions: A to D
Certain accommodation sales are exempt from the Seattle business license tax.
Licensed adult family homes are exempt from the Seattle business license tax.
Federally incorporated aid and relief organizations, such as the American Red Cross, are exempt from the Seattle business license tax.
State-licensed boxing and wrestling matches are exempt from the Seattle business license tax.
Casual sales are exempt from the Seattle business license tax. Casual sales are the infrequent sale of tangible goods that are not part of your typical business activity.
Certain government-funded or religiously-funded hospitals and clinics are exempt from the Seattle business license tax.
Commuter ride-sharing or carpool funds are exempt from the Seattle business license tax. Funds from transporting those with special needs are exempt if in accordance with state law.
Credit unions are exempt from the Seattle business license tax.
Day care services provided by churches are exempt from the Seattle business license tax.
Death benefits provided by fraternal and beneficiary organizations are exempt from the Seattle business license tax. This exemption is limited to certain organizations described in state law. And only gross income from insurance or death benefits is exempt.
Exemptions: E to K
Employees are exempt from the Seattle business license tax. Independent contractors are not exempt.
Agricultural product revenue earned by farmers is exempt from the Seattle business license tax.
Selling, manufacturing and distributing gasoline, and other motor vehicle fuels, is exempt from the Seattle business license tax. However, fuels not subject to the state fuel excise tax are not exempt.
Business activities that are taxed under SMC Chapter 5.48 or 5.52.030 B1 and B3 are exempt from the Seattle business license tax.
The premiums and prepayments of health care plans are exempt from the Seattle business license tax. The contractors and organizations that receive this exemption are specified by state law.
State-licensed horse races are exempt from the Seattle business license tax.
Certain insurance businesses are exempt from the Seattle business license tax.
International banking facilities defined in the Seattle Municipal Code are exempt from the Seattle business license tax.
Investment revenue gained by individuals is exempt from the Seattle business license tax. However, investment revenue gained by financial businesses is not exempt.
Certain dividends are exempt if a parent corporation gains the dividend from its subsidiary. Some dividends, however, are subject to tax. These are specified in the Seattle Municipal Code.
Exemptions: L to Z
State-sanctioned liquor sales are exempt from the Seattle business license tax. "Liquor" is defined by the State of Washington in RCW 66.04.010. Liquor does not include confections or food products that contain one percent or less of alcohol by weight.
Revenue from trust accounts is exempt from the Seattle business license tax if the money is used by mortgage brokers to pay third-party costs.
Child-care resource and referral services provided by nonprofits are exempt from the Seattle business license tax.
Credit and debt services provided by nonprofits are exempt from the Seattle business license tax. These nonprofits provide credit and debt education. Or they work with lending agencies on behalf of the debtor.
Nonprofits that provide employment services for the handicapped or disabled are exempt from the Seattle business license tax. These services are sometimes called sheltered workshops. State-funded group-training homes are also exempt.
Student loan services provided by nonprofits are exempt from the Seattle business license tax. These nonprofits issue debt to provide or acquire student loans. Or they provide guarantees for student loans.
A portion of real estate commissions is exempt from the Seattle business license tax when the commission is divided among multiple brokers.
Real estate sale proceeds are exempt from the Seattle business license tax. However, commissions and similar real estate fees are not exempt.
Amounts collected as trust funds are exempt from the Seattle business license tax. The taxpayer collects money in a trust fund on behalf of a third party. The funds satisfy the third party's obligation to pay retail sales tax, use tax, commercial parking tax, admission tax and other taxes.