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Washington B & O Tax Exemption



What is the tax situation for non profits in Washington State?

Charitable non profits that receive their funding in WA from solicitations and grants would be classified as “active nonreporting” by the Department of Revenue. There is no exemption application to file. You still file a tax return; just don’t pay tax on that particular activity.

Non profit organizations in Washington State that have retail sales will be responsible for paying the B&O taxes even though they may be exempt from federal taxes. They will be responsible to collect sales tax on retail sales and pay sales tax on the purchase of goods.

If your organization has income of any kind over $12000 per year, you will need to get a Business License from the State of Washington, Business Licensing Service. If your non profit hires ‘Northwest’ as your Washington registered agent, the Business License Application is in your online account.

The Washington State Business and Occupation tax is a tax on all sales with no deductions for materials or labor or any other loss.

Are there any B&O tax exemptions for non profit organization?

Non profit organizations that carry out periodic fundraising, that does not make up the operation of a regular business, are exempt from B&O tax and do not need to collect sales tax on those donations. So a non profit does not claim taxable income from phone solicitations. Thrift stores and related business that dedicate their sales to the charitable purpose of a nonprofit must pay the B&O tax and collect sales tax, because it is a regular place of business. Another example: A non profit gets a booth at a county fair and sells ice cream for a week with all proceeds going to support a stated charitable purpose; they are exempt from collecting Washington sales tax or paying B&O tax on their sales.

How can I get an exemption from Washington property tax for my non profit.

Non profit organizations in Washington can apply for an exemption from real property tax and personal property tax by filing the Application for Property Tax Exemption with the Washington State Department of Revenue. Attach copies of your articles of incorporation, bylaws and IRS determination letter; if you have one. There is no fee. You can download the form at the WA Department of Revenue website, pick it up at your county assessor office, or find it in your online account if ‘Northwest’ is your WA agent. Renew your exemption by filing the same form each year by March 31st.

Additional Non-Profit Resources:

501(c)3 Registration

Business Licensing Service:

State of Washington
Business Licensing Service
P.O. Box 9034
Olympia, WA 98507-9034
Phone:  (800) 451-7985
Fax:  (360) 705-6699
Email:  BLS@dor.wa.gov

Department of Revenue Contact Information:

WA Department of Revenue
Property Tax Division/Exempt Properties
P.O. Box 47471
Olympia, WA 98504-7471
Phone: (360) 534-1400
Fax:  (360) 534-1380
Email:  SindyP@dor.wa.gov

This comprehensive guide to obtaining and maintaining 501c3 status from the IRS includes information on how to prepare your nonprofit to apply for 501c3 status, as well as information about the forms and fees required by the IRS.

This guide overviews and includes the special tax-exempt language a 501c3 nonprofit organization must include as part of its articles of incorporation. 

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