Washington State sits in the far northwest of the USA. The Pacific Ocean forms its western border, Canada lies to the north, Idaho to the east and Oregon to the south. Covering a good 180,000 km², the state is defined by a striking contrast between coast and mountains in the west, while the east is mostly dry. Most of its 6.7 million residents live around Puget Sound, a 150-kilometer-long inlet that is also home to the capital, Olympia, and the largest city, Seattle.
Thanks to prudent leadership at state level and a fast-growing economy, there has never been a better time to invest in Washington. Investors can start their own companies or invest in businesses across the state that are bouncing back quickly from the global pandemic, growing exponentially and expanding. Washington wears its reputation as a world-class trade hub focused on exports and international business with pride, and rightly so.
"The Evergreen State" is home to global players such as Amazon, Microsoft and Boeing. All in all, more than half a million companies either have their headquarters in Washington or operate a location here.
A business-friendly climate
Washington was once known above all for airplanes. Today almost every industry is represented in the Evergreen State, from high tech, manufacturing and life sciences to maritime trades.
The state offers a range of competitive advantages, including industry-specific tax incentives. Its tax structure favors successful, growing businesses, because they get to keep a larger share of their profits.
Washington has won repeated recognition as an outstanding place to do business. It ranked first for "Best State Economy" (WalletHub) in both 2018 and 2019, and took the top spot in "Best Places for Business and Careers" (Forbes 2018). The state also has the best broadband in the country (TechNet) and the lowest price per kilowatt hour for industrial power.
These are just some of the reasons why so many of the best-known brands, most innovative companies and smartest startups choose Washington.
A modern creative economy
With broadband rolled out across the state, rural communities are increasingly becoming havens for tech startups, from games and mobile apps to big data. The Puget Sound region has risen to become an epicenter of information and communications technology, already second only to Silicon Valley in size and scope.
A number of local companies have worked their way to the global top of their industries, Amazon and Starbucks being just two examples. Many others, such as Facebook, Google and Apple, have set up shop here because they don't want to miss out on Washington's pioneering spirit and ideas.
The result is a wave of new industries such as commercial spaceflight, artificial intelligence, virtual reality and robotics. Here are the 10 most popular US states for foreign direct investment.
Ready for the future
The global pandemic and the economic downturn of 2020 proved what Washington's leadership already knew: diversification is key to resilience. While industries such as tourism and aerospace struggled, others like life sciences and technology kept thriving. They drove the fast recovery and contribute a major share of long-term prosperity.
Washington State will continue to stand for entrepreneurial success and economic growth. A highly skilled workforce, affordable energy and an inspiring lifestyle give entrepreneurs plenty of room to make their vision a reality.
Income tax in Washington
Washington levies no income tax on wages and salaries. Since 2022, however, the state has taxed large long-term capital gains at 7% (with an exemption, and now an additional tier for very large gains). You do still pay federal income tax.
Corporate tax in Washington
Washington levies no corporate income tax on profits. Instead, it applies the Business & Occupation Tax, a tax on gross receipts with rates that vary by industry. You do still pay federal corporate income tax.
Sales tax in Washington
The USA has no VAT on the European model. Instead, states, counties and municipalities levy a local sales tax on the sale of goods (but not services).
Sales tax rate in Washington
The state sales tax in Washington is 6.5%. Cities and counties add an average of 2.73%, for a combined average of 9.23%.
Washington nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date
October 1, 2018
Included transactions:
- Cumulative gross receipts from retail sales and taxable services into the state through December 31, 2019.
- Cumulative annual gross receipts in Washington from January 1, 2020.
Treatment of exempt sales:
Exempt sales and exempt services count toward the threshold; as of January 1, 2020, resales count as well
Trigger:
Sales only
Sales/transaction threshold:
$100,000
Evaluation period:
The threshold applies to the previous or current calendar year
Additional information:
- Until July 1, 2019, remote sellers with between $10,000 and $100,000 in sales in the state and fewer than 200 transactions had a choice: collect and remit sales tax, or comply with the use tax notice and reporting requirements for non-collecting sellers. Effective July 1, 2019, the reporting option for non-collecting sellers was eliminated.
- Washington also enforces economic nexus for its Business & Occupation (B&O) tax on gross receipts.
- Registration requirements: A remote business must register to collect and remit Washington sales tax starting on the first day of the month that begins at least 30 days after it crosses the threshold. For more information, see registration requirements for out-of-state businesses.
- Remote sellers
- Registration thresholds
Washington marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
January 1, 2018; new requirements from October 1, 2018 and July 1, 2019
Economic nexus threshold:
More than $100,000 in retail sales delivered into Washington in the current or previous calendar year. From January 1, 2020, the threshold changes to more than $100,000 in cumulative gross receipts in Washington. Remote sellers should include marketplace sales when calculating the threshold. Marketplace facilitators include all sales made through the marketplace when calculating the threshold.
Note:
Until June 30, 2019, remote marketplace facilitators and remote sellers with between $10,000 and $100,000 in taxable sales in Washington had to choose between registering to collect and remit Washington sales tax or complying with the notice and reporting requirements for non-collecting sellers. Effective July 1, 2019, the reporting option for non-collecting sellers was eliminated.
Registration requirements:
- Remote multichannel sellers: Once you cross the economic nexus threshold, you must register with the Washington Department of Revenue (DOR) and collect Washington sales tax on sales not taxed by a marketplace facilitator.
- For sales made through a collecting marketplace, use the "Retail sales tax collected by facilitator" deduction.
- Remote marketplace sellers: Once you cross the economic nexus threshold, you must register with the Washington DOR.
- For sales made through a collecting marketplace, use the "Retail sales tax collected by facilitator" deduction.
- In-state multichannel sellers: You must register with the Washington DOR and collect tax on sales not taxed by a marketplace facilitator.
- For sales made through a collecting marketplace, use the "Retail sales tax collected by facilitator" deduction.
- In-state marketplace sellers: You must register with the Washington DOR.
- For sales made through a collecting marketplace, use the "Retail sales tax collected by facilitator" deduction.
- As of January 1, 2020, marketplaces must collect all other applicable taxes on behalf of marketplace sellers.
- Learn more here.
For a look at every state, see our overview of the US states. Whether Washington or another state is the right home for your US company is covered in our guide Which US state is best for your company?, and you'll find the basics in our guide to forming a company in the USA.
How we help with Washington:
Whether your Washington business needs its own US company, and which state it should be based in, is something we'll work out together in a consultation. You'll find entity types, options and fees under US Company Formation.