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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Seattle Proposition 2 passed, changing the city’s business and occupation (B&O) tax starting January 1, 2026. Election-night returns showed 67.8% support, but that was an early snapshot—not the certified result. The measure raises the gross-receipts threshold and adds a standard deduction, while increasing rates for businesses that remain liable.
What happened after the early returns?
Axios reported 67.8% support for Proposition 2 in election-night returns, while many ballots remained uncounted. That figure described the count at the time, not the final result. King County certified Seattle’s November 2025 general election on November 25, 2025, and the City’s November 26 budget announcement said its adopted 2026 budget included Proposition 2’s passage. The extracted official results information does not provide a final vote percentage. Axios’s election-night report and King County’s election results information provide the respective snapshots.
How does Seattle’s B&O tax change?
Seattle’s B&O tax is based on a business’s gross receipts, not its profit. Proposition 2 raises the annual gross-receipts threshold for paying the tax from $100,000 to $2 million and creates a $2 million standard deduction. It also increases rates for the two rate groups listed in the voter materials. The higher threshold and deduction therefore coexist with higher rates for businesses that remain taxable.
| Listed B&O rate group | Before Proposition 2 | Through 2032 | Beginning in 2033 |
|---|---|---|---|
| First listed group | 0.00222 | 0.00342 | 0.00273 |
| Second listed group | 0.00427 | 0.00658 | 0.00526 |
The King County ballot materials identify credits for comprehensive cancer centers and nonprofit pediatric hospitals. They also authorize up to $30 million for implementation and administration, plus mitigation tied to specified federal funding reductions or policy changes. The official ballot materials contain the measure’s explanatory statement and rate details.
Which businesses may pay more or less?
The City estimated that the change would reduce taxes paid by 90% of Seattle’s small and medium-sized businesses and generate approximately $81 million in new revenue. These are City estimates and do not determine any individual business’s tax bill. The $2 million threshold and deduction affect who remains liable; rates affect the amount due for businesses that are still subject to tax.
Axios also reported a City estimate that companies with more than $5.7 million in annual gross revenue were expected to pay more. Treat that as an estimate cited in Axios’s coverage, not as a statutory cutoff: the measure’s stated threshold is $2 million in annual gross receipts, and actual liability depends on the applicable rules and a business’s circumstances.
Supporters’ voter-pamphlet statement said 90% of employers would pay less and more than 75% of the smallest businesses would have no city B&O tax. Those are campaign-statement claims, distinct from the City’s estimate about small and medium-sized businesses.
What do supporters and opponents argue?
Supporters argued that the changes would reduce taxes for many small businesses while maintaining funding for public services. The measure’s explanatory statement says proceeds support General Fund investments in:
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- Gender-based violence services
- Small-business support, workers’ rights and protections, workforce development, and job readiness
- Emergency shelter and homelessness prevention
- Arts and culture, and services for immigrant and refugee communities
Opponent Eugene Wasserman argued that a gross-receipts tax can burden businesses with low profit margins because it is not based on income or profit. His rebuttal on the official ballot page states, “Seattle’s B&O tax system is not a business income tax; it is a gross receipts tax.” That is an opponent’s campaign argument; the relevant distinction is that gross receipts and profit are different measures.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When did the changes take effect, and when are returns due?
The City says the changes took effect January 1, 2026. Its filing guidance gives these deadlines:
- Quarterly filers: The first-quarter 2026 return was due April 30, 2026.
- Annual filers: The 2026 annual return is due April 30, 2027.
The City says some businesses shifted from quarterly to annual filing because of the higher threshold. Filing frequency and the applicable return date can depend on the business’s account; check Seattle Finance’s current B&O tax guidance for account-specific instructions.
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