Seattle voters overwhelmingly approving business & occupation tax restructure

(The Center Square) – Seattle’s business & occupation, or B&O, tax is likely be restructured next year to provide relief to its small businesses, with more than 65% of voters supporting a ballot measure to do just that, according to preliminary election returns Tuesday night.

Seattle Prop. 2 – sponsored by Seattle Mayor Bruce Harrell and City Councilmember Alexis Mercedes Rinck – raises the B&O tax threshold exemption from the current $100,000 to $2 million in gross revenue. This reduces tax payments for 90% of taxpayers and exempts about 76% from the B&O tax altogether.

The 10% of Seattle businesses that will pay more toward the B&O tax – the larger ones with $12 million in gross receipts – can expect their B&O tax obligation to go from $31,920 in 2025 to $39,587 in 2026, an increase of $7,667, according to city estimates.

According to the city, the restructure will raise $81 million in net revenues dedicated to city funding in food access, gender-based violence services, small business supports, homelessness prevention, and support for workers' rights and protections, according to a fiscal note. Up to $30 million would also be used to pay for implementation costs and ongoing administration of the tax.

The city council unanimously approved the proposal to be placed on ballots, but some council members voiced concerns about it. This includes Seattle City Council President Sara Nelson, who said it was a rushed process for the scale of change in the legislation and Councilmember Maritza Rivera, who said the city is avoiding a more in-depth analysis of its programs that could be cut in order to relieve its budget.

The change to the B&O tax will go into effect from 2026 through 2029.