Seattle mayor’s proposal would exempt 76% of businesses from B&O tax

(The Center Square) – A new proposal from Seattle Mayor Bruce Harrell and City Councilmember Alexis Mercedes Rinck intends to provide relief to small businesses, with 90% of Seattle businesses paying less in Business & Occupation, or B&O, taxes.

The proposal would raise the B&O tax threshold exemption from the current $100,000 to $2 million in gross revenue. This would exempt about 76% of current taxpayers from the B&O tax altogether.

Harrell’s proposal comes amid a reelection year. He is currently facing progressive Candidate Katie Wilson for his seat. Wilson is running on the platform of taxing corporations as part of funding solutions to the city's top problems.

In a statement, Harrell said the proposal rallies the city against budget threats from President Donald Trump’s administration.

“This plan would reduce taxes for 90% of Seattle businesses while raising a needed $90 million to protect city investments against Trump]threats to federal funding and to our local economy,” Harrell said. “Seattle’s small businesses create jobs and build communities – and they need our help.”

As for the remaining 10% of Seattle businesses –the larger ones with $12 million in gross receipts – they would see their B&O tax obligation go from $31,920 in 2025 to $39,587 in 2026, an increase of $7,667, according to city estimates.

Harrell’s proposal received conflicting opinions from city leaders. For instance, Seattle Metropolitan Chamber CEO Rachel Smith said she supports Harrell’s proposal to provide Seattle businesses B&O tax breaks , saying it “is a great idea” that the chamber has advocated for in the past.

However, Smith added that raising the B&O on any employer is a bad idea due to declining regional employment, high office vacancy rates and weakened consumer spending.

“The mayor’s proposal to restructure the B&O tax has some interesting ideas to explore, but the current proposal has been rushed; the beneficiaries and payers have not been sufficiently identified or engaged,” Smith said in a statement.

Downtown Seattle Association President and CEO Jon Scholes shared the sentiment that the proposal was rushed, adding that it would set Seattle back and raise costs to residents.

“City leaders should heed the lessons from the past and reject boneheaded ideas solely concocted in the name of fighting President Trump,” Scholes said.

The proposal’s $90 million in net revenues would be dedicated to backfilling human services and maintaining ongoing city programs that Harrell said could be at risk due to Trump administration threats to federal funding. Seattle is also set to address a looming $251 million budget deficit.

The proposal has to first be approved by the Seattle City Council and then face city voters in the upcoming November general election.

The change to the B&O tax would go into effect from 2026 through 2029, if approved. The city council could choose to renew them for another four years after that.