Income of employees

From the 2024 DOR Tax Exemption Study

82.04.360 - Income of employees Description Employees and servants are exempt from the B&O tax for their income. The exemption does not extend to corporate board directors, or to licensed cosmetologists, barbers, estheticians, and manicurists who pay a fee to use part of a salon, but do not receive compensation from the owner. They must pay B&O tax. Purpose Provides a B&O tax exemption for those not engaged in business as independent contractors. Washington's Constitution does not allow a personal income tax. B&O tax applied to employee income may be considered a personal income tax. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $1,093.000 $1,175.000 $1,270.000 $1,374.000 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this exemption may increase revenues; however, a repeal would likely exemption result in litigation. Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY 2027 from full repeal State Taxes $0.000 $545.000 $1,174.000 $1,305.000 Local Taxes $0.000 $0.000 $0.000 $0.000 Assumptions - This repeal takes effect July 1, 2024, and impacts nine months of collections in fiscal year 2025. - Annual growth mirrors the Econo