Washington Freelance Tax Calculator: B&O, SE Tax & No Income Tax

No income tax — but a tax on every dollar of revenue

Washington is one of the handful of states with no personal income tax, and freelancers moving to Seattle often stop reading there. The state raises its money another way: the business and occupation tax, a small percentage of your gross receipts.

For most freelancers B&O adds 1% to 2% of profit, and smaller businesses may owe nothing after the small business credit. The bigger bill, as everywhere, is federal: self-employment tax and income tax take about 23% of $100,000 of profit.

This guide walks the full bill in five steps, traces a Seattle consultant from $118,000 of revenue to a roughly $25,000 bill, and shows five profit levels. Figures are planning estimates, not filing advice.

How to calculate your Washington freelance tax in 5 steps

1. 01

   Start from net profit, not what clients paid

   Every tax on this page is worked out on profit. Take gross receipts and subtract every legitimate business cost — software, equipment, a home office, a share of phone and internet, mileage and the health premiums you pay yourself. A Seattle freelancer with $118,000 of revenue and $18,000 of expenses is taxed on $100,000. Getting this number right is the biggest single lever on the whole bill.

2. 02

   Apply the 15.3% self-employment tax

   Every US freelancer owes 15.3% self-employment tax on 92.35% of net profit — the Social Security and Medicare an employer would normally split with you. On $100,000 of profit that is $14,130, before any state gets involved. Half of it is deductible against federal income tax, which is why it shows up again in the next step.

3. 03

   Work out federal income tax after freelancer deductions

   Federal income tax applies to profit minus the deductible half of self-employment tax, the standard deduction ($15,000 for single filers in 2025) and the 20% qualified business income deduction. On $100,000 of profit that leaves roughly $62,000 of taxable income and a federal bill of about $8,630 — far less than simply multiplying profit by 22%.

4. 04

   Add the B&O tax — on revenue, not profit

   Washington's business and occupation tax is charged on gross receipts with no deduction for expenses. Most freelance services fall under the service and other activities classification at 1.5%. A small business credit reduces or eliminates the tax for lower-revenue businesses, and many very small businesses fall below the filing threshold. Seattle, Tacoma, Bellevue and several other cities add their own B&O tax once receipts pass a city threshold.

5. 05

   Pay estimates four times a year

   Nothing is withheld from freelance income, so the IRS expects quarterly estimated payments on April 15, June 15, September 15 and January 15. B&O returns are filed with the Department of Revenue monthly, quarterly or annually, depending on the frequency it assigns you. Paying 100% of last year's total tax across the four quarters (110% if income was above $150,000) keeps you clear of underpayment penalties even when this year turns out bigger.

A worked example: $100,000 of profit in Seattle

A single filer, no S-corp, standard deduction. B&O is small, but it is calculated on revenue — so expenses do not reduce it.

Washington freelance tax at five profit levels

Federal SE and income tax for a single filer plus state B&O at 1.5% of gross receipts (revenue assumed ≈18% above profit). Lower ranges reflect the small business credit. Seattle B&O excluded. Planning estimates.

Eight signs your Washington tax plan has a gap

Washington surprises freelancers with a tax they did not know existed, not a big one.

• !You think “no income tax” means no state tax at all
• !You never registered a business licence with the state
• !You have not heard of the B&O tax
• !You calculated B&O on profit instead of gross receipts
• !You work in Seattle and never checked the city's B&O threshold
• !You have no federal quarterly payments set up
• !You assume expenses reduce your B&O bill
• !Your tax reserve sits in your everyday account

How B&O differs from an income tax

An income tax is charged on profit. B&O is charged on revenue. That means two freelancers with the same revenue pay the same B&O, even if one spent far more to earn it.

The rate is low, so it rarely changes decisions — but it does matter if you resell software, hardware or subcontracted work at thin margins, because B&O applies to the whole amount you bill.

The small business credit is generous at low revenue. Many part-time and early-stage freelancers find their B&O bill is zero, though they may still need to register and file.

City taxes and licences in the Puget Sound

Seattle, Tacoma, Bellevue, Everett and a few other cities levy their own B&O tax, each with a threshold below which small businesses owe nothing.

Most cities also require a business licence endorsement through the state system. Fees range from free to a few hundred dollars depending on city and revenue.

Check your city before your first invoice, especially if you work from a home office inside city limits.

Turning the bill into a habit

Move 22% to 27% of every payment into a separate tax account. Pay federal estimates quarterly and your B&O return when the state asks.

Price the federal bill and B&O into your rate. Because B&O is on revenue, a 1.5% adjustment to your quote covers it neatly.

Frequently asked questions