Shoreline, WA Local Taxes & Fees: Business Tax Classification (2026)

Shoreline's business and occupation tax, SMC § 3.22.050, sorts every taxpayer into one of seven classifications. Extractors and manufacturers pay one-tenth of one percent of the value of what they extract or make within the city (§ 3.22.050(A)(1), (2)); wholesalers and retailers pay the same one-tenth of one percent rate on gross proceeds of sale (A)(3), (4); printers, publishers, and hire-basis extracting or processing pay one-tenth of one percent of gross income (A)(5); retail services pay one-tenth of one percent of gross proceeds (A)(6); and everything else, including custom software development, royalties, and commissions, falls into the catch-all classification taxed at two-tenths of one percent of gross income (A)(7).

A business that fits more than one classification is taxed under each applicable subsection (SMC § 3.22.070(A)), though a multiple activities credit prevents the same receipts from being taxed twice across cities. Service income is apportioned to Shoreline using a formula averaging a payroll factor and a service-income factor (SMC § 3.22.077). The small-business exemption in § 3.22.050(B) excuses any taxpayer whose citywide gross proceeds, gross income, or product value stays at or below $500,000 annually or $125,000 per quarter. Filing a false statement on a return, failing to pay, or continuing to operate after a license revocation is a gross misdemeanor under SMC § 3.23.220, carrying up to a $1,000 fine and a year in jail for most violations, rising to a $5,000 fine for operating post-revocation.