Washington LLC Tax Filing: How Your LLC Is Taxed (2026)

Q: How is a Washington LLC taxed?

By default the IRS taxes a single-member Washington LLC as a disregarded entity (reported on Schedule C) and a multi-member LLC as a partnership (Form 1065). Washington itself has no personal or corporate income tax, so the main state tax is the business and occupation (B&O) tax on gross receipts, reported to the Department of Revenue, plus retail sales tax where it applies.

Q: Does a Washington LLC pay state income tax?

No. Washington has no personal income tax and no corporate income tax, and there is no franchise tax on LLCs. Instead, most LLCs pay the B&O tax, a gross-receipts tax, and collect retail sales tax on taxable retail sales.

Q: What is the B&O tax rate for a Washington LLC?

The rate depends on your business classification. Common rates are 0.471% for retailing, 0.484% for wholesaling and manufacturing, and 1.5% for the service and other activities classification. The Service and Other Activities classification changed effective October 1, 2025, so confirm the current rate on the Department of Revenue rate list.

Q: Can a Washington LLC elect S-corp taxation?

Yes. An LLC can elect S-corporation treatment by filing IRS Form 2553, which affects federal self-employment tax and payroll but does not change Washington's B&O tax, since B&O applies to gross receipts regardless of federal tax classification.

Q: Does a single-member Washington LLC file a separate federal return?

No. A single-member LLC is disregarded by default, so its income and expenses are reported on Schedule C of the owner's Form 1040. It still needs its own B&O and sales tax registration with the Washington Department of Revenue.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

A Washington LLC pays no state income tax. By default the IRS taxes it as a pass-through - a single-member LLC on Schedule C, a multi-member LLC on Form 1065 - so profit lands on the owners' returns. Washington instead taxes the LLC's gross receipts under the business and occupation (B&O) tax (about 0.471% retailing, 1.5% service), reported on a combined excise tax return to the Department of Revenue, plus retail sales tax on taxable sales.

Quick Answer

Federal default: Disregarded entity (1 member) or partnership (2+ members)
State income tax: None - no personal, corporate, or franchise tax
Main state tax: B&O tax on gross receipts (Department of Revenue)
Common B&O rates: 0.471% retailing · 0.484% wholesaling/manufacturing · 1.5% service
Also collect: Retail sales tax on taxable retail sales
Return due: Monthly (25th), quarterly (end of next month), or annual (Apr 15)

How a Washington LLC Is Taxed: Two Layers

A Washington LLC faces two separate tax systems that people often confuse. The federal layer is run by the IRS and taxes your net profit. The state layer is run by the Washington Department of Revenue and, because Washington has no income tax, taxes your gross receipts through the business and occupation (B&O) tax instead. The two are calculated on completely different bases, so it is normal for a Washington LLC to owe B&O tax in a year it reports little or no federal profit. Understanding which tax applies to what is the key to filing correctly. For the national picture, see the business tax overview and how to file business taxes.

Neither layer depends on the LLC being a special "tax entity." An LLC is a state-law entity; the IRS simply assigns it a default tax classification, and Washington simply taxes its business activity. Below we walk through the federal default, the optional S-corp election, and then each Washington tax in turn, with the forms and deadlines for each.

Federal Default: Disregarded Entity or Partnership

By default the IRS does not tax an LLC as its own kind of entity. A single-member LLC is a disregarded entity: its income and expenses flow onto the owner's personal return on Schedule C (Form 1040), and the net profit is subject to self-employment tax for Social Security and Medicare. A multi-member LLC is taxed as a partnership and files an informational return, Form 1065, issuing a Schedule K-1 to each member who then reports their share on their own return. In both cases the LLC's profit is taxed once, at the member level - this is what "pass-through" means. The default classification is set out in the federal entity-classification rules and confirmed on the IRS LLC page.

Because Washington has no income tax, this federal profit is not taxed a second time by the state. That is the core reason many owners find Washington's income-side treatment simple: there is no Washington equivalent of a state 1040 or a state partnership return for the LLC's profit. You still owe federal income tax and self-employment tax, and you generally pay those in installments through quarterly estimated taxes. See Schedule C and which federal form your LLC files for the mechanics.

Electing S-Corp or C-Corp Tax Treatment

An LLC can change its federal tax treatment by election. Filing Form 2553 makes the LLC an S corporation for tax purposes, which can reduce self-employment tax by splitting income into a reasonable salary (subject to payroll tax) and distributions (not subject to self-employment tax). Filing Form 8832 instead elects C-corporation treatment, which subjects the LLC to the 21% federal corporate tax and potential double taxation on dividends. Most small Washington LLCs stay with the default or elect S-corp status; weigh the trade-offs at S-corp vs LLC and LLC vs S-corp tax.

Crucially, an S-corp or C-corp election changes only your federal taxes. It does not change your Washington B&O tax, because B&O is imposed on gross receipts regardless of how the IRS classifies the entity. A Washington LLC taxed as an S corporation still files the same combined excise tax return and pays the same B&O rate on the same gross income. See Form 2553 explained before electing.

Washington Has No State Income Tax

Washington is one of a small number of states with no personal income tax and no corporate income tax, and it imposes no franchise tax on LLCs. That means the LLC's net profit is not taxed by the state, and members do not file a Washington income return on their distributive shares. This is a genuine advantage compared with states like California, which charges an $800 minimum franchise tax, or states with a graduated corporate income tax. It is also why the recurring state cost of a Washington LLC is modest - mainly the $70 annual report to the Secretary of State, covered in Washington LLC cost.

The trade-off is that Washington funds itself largely through taxes on activity rather than income: the B&O tax on gross receipts and the retail sales tax. For a low-margin, high-revenue business, B&O tax on gross receipts can exceed what an income tax would cost, so do not assume "no income tax" means "no state tax." Model your gross receipts, not just your profit.

The Business & Occupation (B&O) Tax

The business and occupation tax is Washington's primary business tax. It is a gross-receipts tax under RCW Chapter 82.04, administered by the Department of Revenue, and it applies to the gross income of the business with very few deductions for costs. In other words, you pay B&O tax on what you take in, not on your profit. Nearly every for-profit Washington LLC engaged in business activity is subject to B&O tax, and you register for it through the state Business License Application when you get your business license.

The tax you owe is your gross receipts multiplied by the rate for your business classification. A business with more than one type of activity - say, a shop that both manufactures and sells at retail - reports each activity under its own classification. The smallest businesses may owe little or nothing because of the small business B&O tax credit under RCW 82.04.4451, which phases out as gross income rises. Even a business that owes no B&O tax after the credit generally must still file its return. For how this fits your yearly compliance, see Washington LLC annual report and taxes.

B&O Rates by Classification (2026)

The rate depends entirely on your classification. The table below lists the most common ones. Note that the Service and Other Activities classification changed effective October 1, 2025 and now carries tiered rates, so confirm your exact rate on the Department of Revenue rate list before filing.

Classification	Typical rate	Applies to
Retailing	0.471%	Retail sales of goods and certain services
Wholesaling	0.484%	Sales for resale
Manufacturing	0.484%	Manufacturing activity in Washington
Service & other activities	1.5% (tiered from Oct 1, 2025)	Most services and activities not classified elsewhere
Retail sales tax (collected, not B&O)	Varies by location	Taxable retail sales - collected from the customer

Because there are more than 50 B&O classifications and some carry surcharges, always match your activity to the Department of Revenue's official rate list rather than assuming a single rate covers your whole business.

Retail Sales and Use Tax

If your LLC makes retail sales of goods or taxable services in Washington, you must collect retail sales tax from customers and remit it to the Department of Revenue on the same combined excise tax return where you report B&O tax. The sales tax rate is the state rate plus the local rate for the location of the sale, so it varies across cities and counties. Sales tax is separate from B&O tax: on a single retail sale you may owe B&O tax under the retailing classification and collect retail sales tax from the buyer.

When you buy goods for use in your business and no sales tax was charged (for example, an out-of-state purchase), you generally owe use tax at the same rate. Both taxes are reported through your Department of Revenue account. Retailers register for sales tax collection as part of the same Business License Application that registers them for B&O tax.

Filing Frequencies and Due Dates

Washington reports B&O tax, retail sales tax, and use tax together on the combined excise tax return, filed electronically through the Department of Revenue's My DOR system. The Department assigns your filing frequency - monthly, quarterly, or annual - based on your estimated yearly tax. The due dates are:

Monthly filers: due the 25th of the following month.
Quarterly filers: due the end of the month after the quarter (April 30, July 31, October 31, and January 31).
Annual filers: due April 15 of the following year.

If a due date falls on a weekend or legal holiday, it moves to the next business day. Late returns carry escalating penalties, so file even a zero return on time. Your federal income-tax deadlines run on a different calendar, covered in when business taxes are due.

Federal Forms and Deadlines

Your federal filing depends on the LLC's classification:

Single-member (default): report on Schedule C with your Form 1040, due April 15; pay self-employment tax on net profit.
Multi-member (default): file partnership Form 1065 by March 15, issuing Schedule K-1s to members.
S-corp election: file Form 1120-S by March 15 and run payroll for owner-employees.
C-corp election: file Form 1120, generally due the 15th day of the fourth month after year-end.

Every Washington LLC also needs a federal EIN, which is free from the IRS and required for a partnership, an S-corp, or any LLC with employees. Owners generally pay federal income and self-employment tax through quarterly estimated payments. Note that Washington also imposes a separate 7% tax on individuals' long-term capital gains above an inflation-adjusted standard deduction (in the mid-$200,000s), which can apply when an owner sells a business or investment - confirm the current threshold with the Department of Revenue.

Frequently Asked Questions

How is a Washington LLC taxed?

By default the IRS taxes a single-member LLC as a disregarded entity (Schedule C) and a multi-member LLC as a partnership (Form 1065). Washington has no income tax, so the main state tax is the B&O tax on gross receipts, plus retail sales tax where it applies.

Does a Washington LLC pay state income tax?

No. Washington has no personal or corporate income tax and no franchise tax. Most LLCs instead pay B&O tax on gross receipts and collect retail sales tax on taxable sales.

What is the B&O tax rate for a Washington LLC?

It depends on your classification - commonly 0.471% retailing, 0.484% wholesaling or manufacturing, and 1.5% for service and other activities. The service classification changed October 1, 2025, so check the Department of Revenue rate list for your current rate.

When are Washington excise (B&O) tax returns due?

Monthly filers file by the 25th of the following month, quarterly filers by the end of the month after the quarter, and annual filers by April 15. The Department of Revenue sets your frequency.

Can a Washington LLC elect S-corp taxation?

Yes, by filing IRS Form 2553. It changes federal self-employment tax and payroll but not Washington B&O tax, which applies to gross receipts regardless of federal classification.

Does a single-member Washington LLC file a separate federal return?

No. A disregarded single-member LLC reports on Schedule C of the owner's 1040, but it still needs its own B&O and sales tax registration with the Department of Revenue.

Sources

Washington Department of Revenue - Business & occupation tax (gross-receipts tax; no state income tax; classifications).
Washington Department of Revenue - Service and Other Activities rate changes (Oct 1, 2025 tiered service rate).
Washington Department of Revenue - Retail sales tax (state plus local rate; use tax).
Washington Department of Revenue - Filing frequencies & due dates (monthly 25th; quarterly end of next month; annual April 15).
Washington Department of Revenue - Apply for a business license (register for B&O and sales tax).
Washington Department of Revenue - Capital gains tax (7% on individuals' long-term gains above the standard deduction).
Washington Legislature - RCW Chapter 82.04 (business and occupation tax).
Washington Legislature - RCW 82.04.4451 (small business B&O tax credit).
IRS - Limited Liability Company (LLC) (default federal classification).
IRS - Get an Employer Identification Number (free EIN).
IRS - About Form 2553 (S-corporation election).
IRS - About Form 8832 (entity classification election).
IRS - About Form 1065 (partnership return; March 15).
IRS - About Form 1120-S (S-corporation return; March 15).
IRS - About Schedule C (Form 1040) (sole proprietor / single-member LLC profit).
IRS - Self-Employment Tax (Social Security and Medicare).
Legal Information Institute - 26 CFR 301.7701-3 (entity classification).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, rates, and thresholds change; verify current requirements with the IRS and the Washington Department of Revenue before acting.