BUSINESS AND OCCUPATION TAX
Effective July 1, 2024, the City of Poulsbo implemented a Business and Occupation (B&O) tax. This tax will apply to the gross receipts measured on the value of products, proceeds of sales, or gross income of businesses. There will be no deductions for labor, materials, or other costs of doing business.
The City of Poulsbo B&O tax is not the same as Washington state B&O tax and will be filed separately from state taxes.
As a reminder, to do business in the City of Poulsbo the following are required:
- Have an endorsed City of Poulsbo business license, issued by the state of Washington in good standing. Business Licenses are applied for through WA Department of Revenue Business License Service (BLS).
- File a Washington state excise tax return.
Effective January 1, 2026, the City of Poulsbo Council updated the program beginning with the tax year of 2026:
- The new annual filing due date is April 15 of each year.
- The new threshold for paying B&O tax is for businesses who generate more than $125,000.00 annually.
- A B&O Active Non Reporting Form is available for businesses who generate less than $125,000.00 annually. 2025 and 2024 tax forms must be on file to receive approval.
- From 2026 forward, there will no longer be a two-tier system of deductions. There is a single deduction for all classifications (Retail, Manufacturing, Wholesale and Services & Other).
- Quarterly filers in all classifications receive a one-time deduction of $31,250.00
- Annual filers in all classifications receive a one-time deduction of $125,000.00 (this is for new businesses who are unsure of their gross income, and end up generating over $125,000.00).
QUICK FACTS
· Semi-annual 2024 and 2025 businesses are exempt from paying the City’s B&O tax if annual gross revenue is less than $20,000. In 2026, businesses will be exempt from paying B&O tax if annual gross income is less than $125,000, but must file an Active Non-Reporting form to the City for review.
· Businesses who gross over $125,000 annually will submit B&O tax quarterly, businesses who gross under $125,000 annually are able to file an Active Non-Reporting form to the City for review.
· Non-profit organizations who are exempt from paying the City’s B&O tax, are able to file a B&O Active Non Reporting Form to the City for review. However, if a non-profit business has a retail location, sells merchandise, collects retail sales tax, and/or remits tax to the state, then that income is B&O taxable.
· The tax rate for all classifications of business is .2%, (.002).
B&O TAX CLASSIFICATIONS
Retail/Retail Service – Retailing businesses sell tangible personal property at retail to the end user or operate in the activity of stalling, repairing, cleaning, altering, imprinting, improving, constructing, or decorating real or personal property for customers. Retail Service includes the sale of or charge made for personal, business, and some professional services. This classification also includes income generated from interest, rents, and other services.
New retail classifications for 2026: advertising services; live presentations; information technology services; custom website development services; investigation, security and armored car services; temporary staffing services; and sales of custom software and customization of prewritten software.
Example 1: A store located on Front Street selling clothing or other items.
Example 2: Rental of tangible personal property.
Wholesaling – Wholesalers sell goods and services to businesses who resell them in the regular course of business to customers.
Example 1: A food distribution company selling produce to markets, supermarkets, and other food distributors.
Example 2: A sub-contractor working on a construction site.
Manufacturing – Manufacturing businesses produce a new, different or useful substance, or article of tangible personal property from raw materials by applying labor or mechanical services.
Example: A furniture maker obtains raw materials and cuts and assembles the wood. They affix hardware to the doors and stain the cabinets into the final product.
Service & Other (Apportioned) – This classification is for businesses that provide personal and professional services. This is also a catch-all category for businesses not subject to another B&O tax classification.
Examples: Lawyers, doctors, financial institutions, real estate brokers, accountants, janitors, and tutors.
Note: If your business operates in multiple jurisdictions, you will need to apportion and file as Service & Other Apportioned; please see PMC 3.34.070.
Tax Rate and Exemptions
The tax rate for all categories of business is .2%, (.002).
A full listing of exemptions may be found in Chapter 3.34 of the Poulsbo Municipal Code (PMC), linked in the Resources section below.
How to Calculate Taxes Owed
The gross revenue will determine the amount of tax to pay. To calculate this amount, enter the taxable gross revenue, subtract the applicable exemption, multiply the balance by the tax rate (.002) and the new balance is tax owed.
Tax Periods
| Tax Period | Dates Covered | Due Date |
|---|---|---|
| Q1 | January 1 - March 31 | April 30 |
| Q2 | April 1 - June 30 | July 31 |
| Q3 | July 1 - September 30 | October 31 |
| Q4 | October 1 - December 31 | January 31 |
| Annual | January 1 - December 31 | April 15 |
*For due dates that will fall on holidays or weekends, returns will be due on the following business day.
- $5.00 minimum penalty.
- 9% penalty on the tax liability the first overdue month.
- 19% penalty on the tax liability the second overdue month.
- 29% penalty on the tax liability the third overdue month.
MAKING A PAYMENT
Per Revised Code of Washington 82.32.080 and Poulsbo Municipal Code 3.34.130, payment must accompany the tax return to be deemed received.
FileLocal: The preferred method for filing and paying Poulsbo B&O tax. https://www.filelocal-wa.gov/
Drop Box: Drop off completed form and payment either in the drive-up drop box located on 3rd Avenue or the walk-up drop box located at the top of the stairs just outside of the main entrance to City Hall located off Moe Street. These boxes are checked daily for payments.
In Person: Pay in person at Poulsbo City Hall with the 3rd Floor Cashier during City Hall Hours: Monday – Friday (8:00am – 4:30pm), excluding holidays. Please note the front counter is closed for lunch each weekday from 12:15pm – 1:15pm.
Mail: Completed form and payment to: City of Poulsbo – Cashier, 200 NE Moe St, Poulsbo, WA 98370. Ensure it is postmarked no later than the due date to avoid penalties.
Online: https://poulsbo.gov, scroll down and click Pay A City Bill, scroll down and click Other City Services Payment and when the payment portal opens, under Pay a bill, choose B and O Tax, click the Next arrow button, enter the UBI number under Account Number or Reference and fill in the balance of information to complete the payment. Email the completed B&O tax form to: EMAIL.
FILELOCAL
The City of Poulsbo joined FileLocal, a non-profit online filing program created and utilized by a dozen cities in Washington. FileLocal is an easy to navigate portal, where businesses can sign-up with their UBI number to create a business account and pay B&O taxes.
If your business has a current account with FileLocal, you will only need to choose Poulsbo when filing your B&O tax. If your business does not have a FileLocal account, please reference the Business User QuickStart Guide or the Tax Preparer QuickStart Guide for helpful instructions to set one up.
If your business annual gross receipts are less than $125,000, your business will be exempt from paying B&O tax, however, your business will need to submit a form, and no fee will be charged.
Online payments will be charged a $4.00 convenience fee + $1 ACH debit service fee or 2.49% credit card fee for each form. In the Making a Payment section above, a variety of options are offered to avoid the online filing fees.
Some banks require an Originator ID for electronic payments. Check with your bank and use these IDs if needed:
Originator IDs: 0000007041 and 1020401225
Note: Payments will be blocked without these IDs.
Please reach out to FileLocal Helpdesk for assistance if running into issues regarding logging in, navigating the website, creating a business account and/or tax form, and filing taxes.
- Call: (225) 215-0052 or 1 (877) 693-4435.
- Email: FileLocal@avenuinsights.com. Support hours are from 7:00am to 5:00pm Pacific Time, Monday through Friday.
Resources
- FORMS:
- B&O Quarterly Multipurpose Tax Form 2026
- B&O Annual Multipurpose Tax Form 2026 – for new businesses started in 2026, who are unsure of gross income projections for the year.
- B&O Annual Multipurpose Tax Form 2025
- B&O Semi-Annual Multipurpose Tax Form 2024
- Service-Income Apportionment and Payroll Factor Worksheets
- Multiple Activities Tax Credit Worksheet
- B&O Active Non-Reporting Form
- PMC Chapter 3.34 provides the code language for the Poulsbo B&O tax.
- FileLocal is the portal where businesses can create an account and pay B&O taxes. Please click the following link to access FileLocal: FileLocal-wa.gov [a Portal to e-File and Pay Business Taxes, Licenses, and Fees]
- Department of Revenue provides Washington state business licenses and endorsements for Poulsbo. Home | Washington Department of Revenue
- Alternatively, send an email to: EMAIL for further information.
Meetings
Two meetings were held regarding the B&O Tax program. The first was online and the second was in person.
Click for links to the Meeting Recording and copy of the Meeting Presentation.
Questions and Answers
Are gross sales generated from real estate sales B&O taxable?
Only the commission earned by the selling agent is used to calculate the tax owed.
Is rental income B&O taxable?
The fee a agent may collect for managing the properties is taxable, but rental of units for more than 30 days are exempt from B&O tax. Rental of units less than 30 days are taxable.
Are insurance premiums and interest earned from investments exempt from B&O tax?
The interest earned and insurance premiums are exempt, however the fees paid to the advisor are taxab;e.
Do I file returns quarterly, or annually?
Tax returns will be set up to file either quarterly or annually based on annual gross income generated within the city limits of Poulsbo. If a business gross is over $125,000 annually – a return will be submitted quarterly. If a business gross is under $125,000 annually – a B&O Active Non Reporting Form can be submitted to the City for review.
How do I pay tax on revenue not generated within the City of Poulsbo, with B&O taxes being paid to another jurisdiction?
RCW 35.102.130 requires the ability to allocate and apportion revenue between locations. The method uses a two-factor formula to determine how income is to be taxed and apportioned between multiple locations when engaging business in more than one jurisdiction.
When is the tax effective?
City Council passed the ordinance with an effective date of July 1, 2024.
Can I file online?
Yes, businesses will be able to file through FileLocal, an online payment portal. An account can be set up now with FileLocal. If your business currently has a FileLocal account, a new account does not need to be created. FileLocal-wa.gov (a Portal to e-File and Pay Business Taxes, Licenses, and Fees).
Do I have to file online?
No, businesses will be able to file manually by completing a tax return and submitting payment with the return to the City of Poulsbo. Options are provided above in Making a Payment.
Where do I get a City of Poulsbo business license? Can I apply through FileLocal which has a business licensing option?
City of Poulsbo business licenses will not be an option through FileLocal and must continue to be processed through the State of Washington Business License System (BLS). Home | Washington Department of Revenue
What is my Poulsbo Account Number in FileLocal?
Your Account Number will be your 9-digit UBI Number with a dash (-), the Business ID number and another dash (-) with the Business Location ID.