Washington State is known for its vibrant technology, manufacturing, and clean energy sectors.  As one of the most economically diverse states in the U.S., Washington offers a variety of incentives to attract businesses, promote job growth, and foster innovation.  The following guide highlights key incentives available to businesses in Washington, with a particular emphasis on technology, manufacturing, energy, and sustainability.

Washington State Business & Occupation (B&O) Tax Credit

Overview

Washington’s B&O Tax is a key tax levied on businesses for the privilege of doing business in the state.  However, businesses can reduce or eliminate their B&O tax liabilities through various credits designed to incentivize certain business activities, such as job creation, research, and development.

Eligibility

• The business must be engaged in an eligible activity such as manufacturing, research, or technology innovation.

• The business must be operating within Washington State.

Incentive Value

• Businesses may be eligible for a credit up to 100% of the B&O tax liability for eligible activities, subject to annual limits and conditions.

• The value of the credit depends on the type of business activity, location, and amount of taxable income.

Application Process

Businesses must apply for credits through the Washington State Department of Revenue (DOR), demonstrating that their activities meet the requirements for the credit.

Washington State Sales and Use Tax Exemption for Manufacturing

Overview

Washington offers a sales and use tax exemption to businesses engaged in manufacturing and certain other qualifying activities.  This incentive helps reduce upfront costs for manufacturing operations, including the purchase of machinery and equipment used in production.

Eligibility

• The business must be engaged in manufacturing activities or producing products for sale.

• The equipment purchased must be directly used in the manufacturing process.

Incentive Value

• The exemption applies to both sales and use taxes on qualifying equipment, machinery, and raw materials.

• Eligible businesses can reduce or eliminate the state sales tax on these purchases.

Application Process

Businesses must apply to DOR, providing detailed information on the equipment purchased and how it is used in the manufacturing process.

Washington State Clean Energy Incentives

Overview

Washington State offers several incentives to encourage the adoption of clean energy technologies, including renewable energy systems, energy storage, and energy efficiency improvements.  These programs are designed to reduce the environmental impact of energy production while promoting sustainability.

Eligibility

• The business must be engaged in clean energy activities, such as the production of renewable energy or the implementation of energy-efficient technologies.

• The business must be located in Washington and adhere to state environmental standards.

Incentive Value

• Incentives can include tax credits, grants, and rebates for renewable energy systems, energy-efficient upgrades, and green building projects.

• The value of the incentives depends on the type of technology, scale of the project, and environmental impact.

Application Process

Businesses must apply through the Washington State Department of Commerce (DOC) or the Clean Energy Fund, providing project details and an environmental impact assessment.

Washington State Research & Development (R&D) Tax Credit

Overview

Washington State offers a R&D Tax Credit to encourage businesses to invest in innovation.  This credit is available to companies engaged in the development of new products or technologies, particularly in high-growth industries like technology, manufacturing, and clean energy.

Eligibility

• The business must conduct qualifying research and development activities in Washington State.

• The R&D must lead to new or improved products, processes, or technologies.

Incentive Value

• The R&D tax credit is worth up to 3.5% of eligible R&D expenditures made in Washington.

• The credit applies to wages, supplies, and contract costs directly related to R&D activities.

Application Process

Businesses must apply through DOR, submitting a detailed report of their R&D activities and qualifying expenditures.

Washington State High Technology Sales and Use Tax Deferral

Overview

The Washington State High Technology Sales and Use Tax Deferral program is designed to encourage the growth of technology businesses in the state.  The program provides a deferral on sales and use taxes for high-tech manufacturing, research, and development projects.

Eligibility

• The business must be involved in high-tech manufacturing, research, or development activities.

• The business must commit to creating jobs and making substantial capital investments in Washington.

Incentive Value

• The program allows businesses to defer sales and use taxes on machinery and equipment purchases related to qualified high-tech activities.

• The deferral is up to 100% of the tax, with no interest charged as long as the project is completed within the agreed-upon timeline.

Application Process

Businesses must apply through DOR, providing information about their project, the number of jobs to be created, and capital investments to be made.

Washington State Opportunity Zone Tax Incentives

Overview

Washington State participates in the federal Opportunity Zone program, which provides tax incentives to encourage investment in economically distressed areas.  Businesses that invest in Opportunity Zones may be eligible for state and federal tax benefits.

Eligibility

• The business must invest in a qualified Opportunity Zone in Washington.

• The investment must contribute to the economic revitalization of the area, such as through job creation, infrastructure development, or capital improvements.

Incentive Value

• Businesses may be eligible for state-level tax deferrals and exemptions, in addition to the federal Opportunity Zone incentives.

• The state provides tax relief for capital gains and property taxes, depending on the type of investment and the area targeted for redevelopment.

Application Process

Businesses must apply through DOC, submitting details about the Opportunity Zone investment and its anticipated economic impact.

Washington State Film Incentive Program

Overview

Washington offers tax credits and rebates to encourage film, television, and digital media production in the state.  The Washington Film Incentive Program is designed to attract entertainment industry projects, creating jobs and boosting local economies.

Eligibility

• The production must meet minimum spending thresholds on eligible in-state expenditures.

• The production must take place within Washington State, utilizing local labor and services.

Incentive Value

• The program offers a 30% tax credit on eligible production costs, including labor, services, and equipment rentals.

• There is also a rebate option available for certain production-related expenses.

Application Process

Businesses must apply through the Washington Film Office, providing a production budget, expenditure breakdown, and other required documentation.

Washington State Rural Jobs Tax Credit

Overview

The Washington State Rural Jobs Tax Credit incentivizes investments in rural communities by providing tax credits to businesses that create jobs and invest in underserved areas.

Eligibility

• The business must operate in one of Washington’s designated rural areas.

• The business must create new jobs and make substantial capital investments.

Incentive Value

• Businesses can receive up to 25% of their qualifying investment as a tax credit.

• The credit applies to investments in infrastructure, equipment, and other capital expenditures that create jobs in rural areas.

Application Process

Businesses must apply to DOR, providing details of their investment and job creation plan.