Issaquah, WA Local Taxes & Fees: Business Tax Classification (2026)
Key Facts
- Tax base
- Gross proceeds, gross income, or value of products, by classification
- Product classes rate
- 8/100 of 1 percent, increasing to 12/100 of 1 percent from April 1, 2015
- Service and other rate
- 1/10 of 1 percent, increasing to 15/100 of 1 percent from April 1, 2015
- Quarterly filer floor
- $5,000, increasing to $25,000 effective January 1, 2015
- Annual filer floor
- $20,000, increasing to $100,000 effective January 1, 2015
- Reach
- Applies whether the business office is within or without the City
Summary
Issaquah levies a business and occupation (gross receipts) tax on every person engaging in business activity in the city, whether or not the office sits inside city limits. IMC 5.04.050 sorts businesses into seven classifications: extracting, manufacturing, wholesaling, retailing, printing and publishing, retail services, and a catch-all for every other activity, each with its own printed rate.
A. Except as provided in subsection B of this section, there is hereby levied upon and shall be collected from every person a tax for the act or privilege of engaging in business activities within the City, whether the person’s office or place of business be within or without the City. The tax shall be in amounts to be determined by application of rates against gross proceeds of sale, gross income of business, or value of products, including byproducts, as the case may be, as follows: ... 4. Upon every person engaging within the City in the business of making sales at retail, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of such sales of the business, without regard to the place of delivery of articles, commodities or merchandise sold, multiplied by the rate of 8/100 of 1 percent (.0008) and increasing to 12/100 of 1 percent (.0012) effective April 1, 2015. ... 6. Upon every person engaging within the City in the business of making sales of retail services; as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales multiplied by the rate of 1/10 of 1 percent (.001) and increasing to 15/100 of 1 percent (.0015) effective April 1, 2015.
Full Breakdown
Issaquah Municipal Code § 5.04.050(A) imposes the tax on the act or privilege of engaging in business within the City, measured by gross proceeds of sales, gross income of the business, or value of products, depending on the classification. Extractors and manufacturers pay on the value of products, including byproducts, extracted or manufactured in the City, regardless of the place of sale. Wholesalers and retailers pay on gross proceeds of sales without regard to the place of delivery. The first group of four classifications (extracting, manufacturing, wholesaling, retailing) carries a rate of 8/100 of 1 percent (.0008), increasing to 12/100 of 1 percent (.0012) effective April 1, 2015.
The second group carries 1/10 of 1 percent (.001), increasing to 15/100 of 1 percent (.0015) effective April 1, 2015. It covers printing, printing and publishing, publishing newspapers, magazines and periodicals, extracting for hire, and processing for hire (all measured on gross income), plus sales of retail services (measured on gross proceeds). Subsection A.7 catches every other business activity not listed, at the same second-group rate, and names custom software development, customizing canned software, royalties, commissions, and any service that is not a retail sale, wholesale sale or retail service.
Subsection B sets a small-business floor. The gross receipts tax does not apply to a person whose receipts from all City activities are at or below $5,000 in a quarter for quarterly filers, increasing to $25,000 effective January 1, 2015, or $20,000 in a calendar year for annual filers, increasing to $100,000 effective January 1, 2015. A business that switches between monthly, quarterly and annual reporting receives no refund or credit for City B&O tax accrued, owed or paid before the change. The classification terms (retailing, wholesaling, retail service) are defined in IMC 5.04.040, administered by the Finance Director, and IMC 5.04.070 taxes a person under each subsection that applies when activities fall in more than one classification.
Violations & Fines
IMC 5.04.050 sets the classifications and rates but prints no penalty amount of its own. IMC 5.04.030 makes the administrative provisions of Chapter 5.05 IMC fully applicable to the B&O tax chapter, so assessment, enforcement and collection run through that chapter, and IMC 5.04.020 puts the burden on the licensee or taxpayer to reconfirm tax computation and remain in compliance.
Frequently Asked Questions
Which Issaquah businesses pay the lower rate group?
What rate applies to services and printing in Issaquah?
Does an out-of-city business owe Issaquah B&O tax?
Is there a minimum before the tax applies?
Can a business in two classifications be taxed twice?
Sources & Official References
Other rules in Issaquah
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How other cities in King County handle business tax classification.