Seattle City Council has approved a proposal to overhaul the city’s business and occupation tax system, sending the measure to voters for a decision in November.
The “Seattle Shield Initiative” would exempt businesses earning up to $2 million annually from paying the B&O tax, up from the current $100,000 threshold. Companies exceeding the exemption would not pay tax on the first $2 million of gross revenue. City officials estimate that 76 percent of small- and medium-sized businesses would no longer owe the tax, while about 90 percent of all businesses would pay less than they do now.
Larger businesses would see higher rates. Retail, wholesale, and manufacturing companies above the threshold would pay 34 cents per $100 in revenue, up from 22 cents. Service companies would see an increase from 43 cents to 65 cents per $100.
The proposal is projected to generate an additional $80 million annually, with funds dedicated to human services, including programs addressing food insecurity, immigrant support, and substance abuse.
City leaders noted the measure would reduce the B&O tax base from about 21,000 taxpayers to 5,000, potentially affecting revenue predictability. If approved by voters, the changes would take effect in 2026.
