Operating a business in Washington requires a solid understanding of the state's tax framework. The base state sales tax rate is 6.5%, with local jurisdictions adding up to 4%. LLC formation costs $200 in 2026.
Economic Nexus in Washington
Remote sellers must collect Washington sales tax if they exceed $100,000 in annual sales within the state. This threshold has been in effect since 2019-10-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Washington State Department of Revenue enforces these provisions and provides registration guidance at https://dor.wa.gov.
LLC Formation in Washington (2026)
Forming an LLC in Washington costs $200 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $60. Washington has no state income tax, making it attractive for LLC owners seeking tax efficiency.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Washington State Department of Revenue.
Key Tax Rules
• Washington has a 6.5% state sales tax with local rates adding up to 4%.
• No state income tax, but Business & Occupation (B&O) tax applies to gross receipts.
• Marketplace facilitators must collect sales tax on third-party sales.
• Economic nexus threshold: $100,000 in sales.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Washington: groceries, prescription drugs, trade-in value of vehicles. Businesses should maintain proper documentation for exempt transactions.