City of Shelton Rolls Out B&O Increase

The City of Shelton Business & Occupation Tax will increase to 0.02 percent of gross receipts beginning January 1, 2024.

The City Council adopted Ordinance 2016-1023 at its November 21 business meeting, setting the new rate and striking some antiquated exemptions. According to the City, “The updated B&O tax rate will fund general governmental functions including public safety; police, fire and emergency medical services, street maintenance, animal control and other general services not supported by rates and fees.”

At its August study session and the November 21 business meeting, Council pointed to the B&O increase as just one strategy to fund essential services.

What are B&O Taxes?
B&O taxes support general governmental services. Every person, firm, association, or corporation doing business in the City is subject to the B&O tax based on gross receipts. All businesses report based on their gross receipts.

All businesses are subject to B&O tax unless exempted by Shelton Municipal Code. Businesses with gross receipts of less than $20,000 annually or $5,000 quarterly are not subject to B&O tax.

The City of Shelton's B&O tax is a different tax than the Washington State Department of Revenue's B&O tax. If you engaged in business in the City of Shelton, then you would be required to report to both the City and state. Business and occupation tax reports must be filed even if there is no business activity or no tax is due.

B&O Tax Classifications
For B&O tax purposes, businesses are divided into six classifications: Extracting; Manufacturing/Construction; Wholesaling; Retail Sales; Printing/Publishing; Retail Service & Other Business. All classifications pay the same B&O tax rate.

Businesses conducting multiple activities will report in more than one tax classification. There are also some exemptions.

Businesses are assigned a filing period: monthly, quarterly, or annually. Tax reports must be filed, even if there was no business activity during the taxable period.

See ordinances in Chapter 3.52 and Chapter 3.10 of the Shelton Municipal Code or call the City at (360) 426-4491 for additional details.

As always, we recommend that you consult your tax professional. Visit the local services directory at the back of this publication or visit masonchamber.com/members to search for local resources.