Musicians & B&O Tax in Washington State?

Staying Compliant: What Do Musicians Actually Have to File in Washington State?

This post is a continuation of the topic of being a musician and taxes in Washington State. Bottom line, if you are getting paid to perform or if you are teaching lessons, you are going to need to pay B&O taxes. You need a business license and an excise tax account with the Washington State Department of Revenue (DOR). More on that in my previous post. More on amounts and what’s what in this post.

Yes, Musicians need to Pay B&O Tax in Washington State on ALL Gross Revenue

Next, let’s get into the details of how B&O tax works.
This is where a lot of musicians get overwhelmed. Filing taxes. B&O returns. Deadlines. It sounds complicated, but let’s break it down in a way that actually makes sense.

What Do You Actually Have to File?

Once you’re registered with the Department of Revenue, you’ll need to file excise tax returns. These returns cover your B&O tax (and sales tax if you’re selling merchandise). More on that later.

Excise Tax – That’s the One

The Department of Revenue will assign you a filing frequency – either monthly, quarterly, or annual. Most small musicians will probably be assigned a quarterly or annual filing.

Here’s what that means:

Quarterly filers: You file four times a year, and returns are due at the end of the month following the tax quarter. So your Q1 return (January-March) is due April 30th.

Monthly filers: Returns are due the 25th of every month. So your June return is due July 25th. Most musicians won’t be on monthly filing unless you’re making serious money.

Annual filers: You file once a year. This is probably where most part-time or casual musicians will land.

Here’s the thing though – you have to file even if you didn’t have any business activity that period. So if you didn’t play any gigs in Q2, you still need to file a return showing zero income. Don’t skip it.

How Does B&O Tax Work for Musicians?

B&O tax is weird if you’re not used to it. It’s a tax on your gross income – that means your total revenue before expenses. No deductions for gear, gas, strings, studio time, nothing.

The rate depends on what classification your business falls under. For most musicians performing live or doing session work, you’re probably in the “Service and Other Activities” classification. B&O tax rates range from 0.138 percent to 1.5 percent depending on the classification.

For service businesses like musicians, the rate is typically 1.5% (0.015). So if you made $10,000 in gross income from gigs, you’d owe $150 in B&O tax.
Yeah, I know. You’re thinking “but I spent $5,000 on gear and only netted $5,000!” Doesn’t matter to Washington State. They tax the gross.

The good news? 1.5% isn’t that high compared to income tax in other states. The bad news? You can’t deduct your expenses. This is off of GROSS Revenue. Yeah, that’s GROSS. So if you are making your living as a musician, this is effectively just like an income tax. That’s a simple way to think of it.

Do I Need a License in Every City I Perform In?

Ugh again. This is a big question, and honestly, probably not, but it can get messy. If you perform a lot in a specific city and your income is over their threshold for minimum income, then yes. The good news is that some cities don’t have it, and some have really high thresholds. Here’s how that works.

Washington State has your state business license covered. But cities can also have their own B&O taxes and licensing requirements. Some do, some don’t.

Here’s what I’ve learned:

State level: Your state business license and B&O tax (1.5% for service businesses) cover you for performing anywhere in Washington.

City level: Some cities have their own B&O taxes ON TOP of the state tax. If you’re performing in those cities and you exceed their tax threshold, you need to register and file with them too.

But Maybe Not? Do you have to pay B&O in every city? The answer is probably not. Most cities that have a B&O tax have a threshold that you need to make more than to have to pay their B&O tax. That is the revenue in that city. So, as an example, Seattle has a threshold of $100k. I would need to make more than $100 just in Seattle gigs to pay the Seattle B&O tax as a musician.

Cities with B&O Tax (as of January 2025):
Here are the major cities musicians perform in and their B&O tax rates for services:

Seattle: 0.427% – only owe if you make $100,000+ in Seattle
Bellevue: 0.1596% – threshold $210,000
Mercer Island: 0.1% – threshold $150,000
Tacoma: 0.102% – threshold $250,000
Everett: 0.1% – threshold $5,000 quarterly / $20,000 annual
Bellingham: 0.44% – threshold $5,000 quarterly / $20,000 annual
North Bend: 0.2% – threshold $5,000
Snoqualmie: 0.15% – threshold $5,000

Cities WITHOUT general B&O Tax (as far as I can verify): Edmonds, Lynnwood, Ellensburg, Yakima, and Leavenworth. Those are only the ones that I checked.

What does “threshold” mean? It’s the minimum you need to earn IN THAT CITY before you owe them tax. So if you play a few gigs in Seattle and make $10,000 there, you’re under their $100,000 threshold, you need to pay state B&O but nothing to Seattle.

Practical reality: If you’re playing one or two gigs in a city, you’re probably under their threshold. But if you’re playing regularly in Seattle, Bellingham, or North Bend and hitting those thresholds, you need to register with that city and file separate returns. Ugh!

Important: My list is not complete. If you’re doing significant business in a city, it’s worth checking its website or calling its finance department to ask what local taxes apply. Don’t just assume.

What About Different Types of Gigs?

All your music income gets reported, but how you report it can vary:

Live performances: This is your main B&O income. Whether you’re playing a wedding, a jazz club, a corporate event, or a coffee shop – it all goes on your excise tax return as gross income.

Private Music Lessons: If you are teaching music lessons, that revenue counts and you have to pay B&O tax on it if you are above the threshold.

School workshops and clinics: If you’re getting paid by a school or district to do a workshop or clinic, that’s also reportable B&O income. Same classification as performance work.

Session work: Getting paid to play on someone’s recording? That’s B&O income too.

Streaming and royalties: Income from Spotify, Apple Music, mechanical royalties – that’s also reportable. It all counts.

The key is: if money is coming in from your musical activities, it needs to be reported.

If Money is Coming in = Pay B&O Taxes

What About Sales Tax on Merchandise?

So far we have only been talking about B&O tax, so this is separate from B&O tax, but important. But if you sell merchandise – CDs, vinyl, t-shirts, downloads – you need to collect sales tax from your customers and remit it to the state.

Plus you need to pay Retail B&O Tax Too!

The Retailing B&O tax rate is 0.471 percent of your gross receipts, and you must also collect retail sales tax on all sales unless a specific exemption applies. Yes, this is different than Sales Tax and it is supposed to come out of your pocket. Notice that it’s also a different rate than the other B&O tax, as if that wasn’t confusing enough.

Sales tax rates vary by location. In Seattle it’s over 10%, in other areas it might be around 8-9%. You charge your customers the sales tax rate for where the sale happens, collect it, and then remit it when you file your returns.

So if you sell a $20 t-shirt in Seattle (10.35% sales tax), you charge the customer $22.07 total. You keep your $20, and the $2.07 goes to the state when you file. Plus you have to pay $0.09 for retailing B&O tax on the $20.

Yes. And if you owe City B&O tax, the fun continues at their tax rates.

How can you get around this? If you don’t sell CD’s directly, but only through an online retailer, then you won’t have to collect and pay the sales tax. But the income you receive from it is subject to B&O tax.

Band Income vs. Solo Income

This is where it gets well, more confusing.

If you’re a solo act: Pretty straightforward. All the income you earn goes on your personal business tax return.

If you’re in a band: You have options, and honestly, this is where you might want to talk to an accountant. Here are the common scenarios:

Each member operates independently: The venue pays the band $1,000, you split it four ways, each person reports $250 on their own business return. Simple, but requires trust that everyone actually reports their share.
One person is the “business”: One band member has the business license, receives all the income, and pays the other members. That person reports the full $1,000 and can potentially deduct what they paid the other members as a business expense… but remember, B&O tax is on gross income with no deductions. So this doesn’t actually help with B&O tax. It might help with federal taxes, but we’re not talking about that here.
The band is a legal entity: You form an LLC or partnership. The band gets paid, files taxes as a business entity, and distributes money to members. This is cleaner but more complicated to set up.
Most working musicians and bands I know just do option 1; everyone reports their own share. It’s not perfect, but it works.

What Records Do I Need to Keep?

The Department of Revenue can audit you, and they can look back several years. So you need to keep good records.

Here’s what you should keep: Income records:

Invoices you sent to clients,
Contracts for gigs,
Payment receipts (bank records, checks, Venmo, PayPal records, whatever),
1099 forms from clients who paid you $600+
Streaming income statements,
Merchandise sales record,
All your expenses, even though you can’t deduct them from B&O, good to have.

Keep everything for at least 5 years. I know that’s a pain, but if you get audited, you’ll be glad you did.

I use a simple Google spreadsheet to track income and a folder (physical and digital) for receipts. Nothing fancy, just organized enough that I can find stuff if I need to.

What Happens If You’re Late?

Let’s say you miss a filing deadline. What happens?

Penalties start at $5 or 9% of the tax due, whichever is higher, and can increase to 29% if the return remains unpaid after 105 days. So if you owe $100 in B&O tax and you’re late, you’re paying at least $109. If you’re really late, that could go up to $129. Plus interest that accumulates monthly.
My advice? Set reminders on your phone for filing deadlines. Even if you didn’t make any money that quarter, file the return showing zero. It’s better than getting hit with penalties.

The Bottom Line

Filing complicated once you get into a rhythm:

Keep track of all income throughout the year (Spreadsheet),
File your returns on time (quarterly or annual, whatever you’re assigned),
Report gross income – everything you made from music,
If you sell merch, collect and remit sales tax,
Keep good records for at least 5 years.

Is it annoying? Yes. Is it one more thing to manage? Absolutely. But it’s part of being a professional musician in Washington State.

Try to do it as a routine. Like the last day of every month, total up everything so you have it in your spreadsheet. You’ll figure out your system.

Sorry to be the bearer of bad news. Welcome to Washington State.

Useful Links:

Business Licensing Wizard: https://secure.dor.wa.gov/gteunauth/?Link=wiz
Secure Access WA Login: https://secureaccess.wa.gov/
DOR Main Site: https://dor.wa.gov/open-business/apply-business-license

Note: This covers Washington State requirements. Federal taxes (IRS) are separate and we’ll tackle those in another series. Private music lessons have some specific rules we’ll cover in a future post. When in doubt, consult a tax professional familiar with Washington State.

Note #2; The math and policies I am talking about on this page may change. Consult with someone else to stay up to date on it all.

Disclaimer: I’m a musician figuring this out, not a tax advisor. This is based on my research and experience, but your situation might be different. Check with a tax professional for your specific circumstances.