Washington State Tax Credits
More ways to save your hard-earned money from the tax man!
Washington has some great State Tax Credits for you....
Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.
We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!
It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).
We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap
Washington State Small Business B&O Tax Credit
Overview:
This credit reduces or eliminates Business & Occupation (B&O) tax for small businesses with low tax liability in Washington State. It is automatically applied when filing electronically.
Who It’s For:
Washington-based businesses with total B&O tax liability under the threshold for their filing frequency—especially beneficial for service providers, hospitals, and research-driven firms.
Four Key Highlights:
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Two Credit Types:
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SBC [720]: For businesses earning 50%+ income from services, R&D, for-profit hospitals, or gambling contests.
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SBC [815]: For all other businesses with less than 50% in these categories.
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Updated Thresholds (Post-Jan 1, 2023):
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Monthly filers: $320 (SBC 720) or $110 (SBC 815)
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Quarterly: $960 or $330
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Annually: $3,840 or $1,320
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Automatic Credit:
If you file electronically, the credit is calculated and applied automatically—no need for a separate claim. -
Income Source Matters:
Businesses must properly categorize income to ensure eligibility for the correct credit type and avoid compliance issues.
Washington State Customized Employee Workforce Training Program [940] Tax Credit
Overview:
This B&O tax credit allows Washington businesses to claim 50% of the cost of participating in the state’s Customized Training Program, promoting workforce skill development.
Who It’s For:
Businesses that enroll employees in the Washington Customized Training Program and pay directly for those training services.
Four Key Highlights:
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50% Tax Credit:
Companies can claim 50% of their eligible training payments as a B&O tax credit. -
Carryforward Flexibility:
Unused credits can be carried forward and used until July 1, 2026—helpful for businesses with fluctuating tax liability. -
Electronic Filing Required:
Credit claims, documentation, and the Annual Tax Performance Report must all be submitted electronically via the My DOR portal. -
Mandatory Documentation:
Businesses must file the Customized Training Credit Worksheet with their excise tax return and submit the Annual Tax Performance Report by May 31 of the following year.
Washington State Commute Trip Reduction (CTR) Credit [820]
Overview:
This tax credit rewards Washington employers who financially support employees using eco-friendly commuting options like public transit, vanpools, or telecommuting.
Who It’s For:
Employers that offer financial incentives to employees for using alternative commute methods—public transit, carpools, biking, walking, or telework—to reduce single-occupancy vehicle use.
Four Key Highlights:
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50% Credit on Incentives Paid:
Receive a credit equal to 50% of the value of CTR incentives provided to employees. -
Annual Credit Caps:
Max $60 credit per employee, with a total employer cap of $100,000/year and a statewide cap of $2.75 million/year. -
Strict Filing Window:
Credit applications must be submitted via My DOR between January 1–31 following the year the incentives were issued. -
Documentation & Disclosure:
Employers must maintain clear records of all CTR payments and understand that credits become publicly disclosed 24 months after filing.