A Washington State Musician Tax & Licensing Guide

A Pretty Comprehensive Guide for Performers, Teachers, and Workshop Leaders, and what Taxes they have to pay in Washington State

Based on research October 2025.

The following information has been compiled to help musicians, both performers and teachers in Washington State understand B&O and Sales Tax and what they must do to be compliant with the states tax laws. I am not a tax expert so check with a real tax advisor or do the research yourself. I tried to make it easy with all the links below.

Here is an audio version that you can listen to of this information. Click the … to Download the MP3.

Washington State Musician Tax Guide Download MP3

Here is the following information in a Downloadable / Printable PDF.

Washington State Musician Tax & Licensing Guide Download PDF

Do You Need a Business License?
Understanding the $12,000 Threshold
Do You Need an LLC?
How to Set Up Your Business License
Understanding B&O Tax
Sales Tax on Group Instruction
City-Level Requirements
What You Need to File
Merchandise Sales
Record Keeping
Penalties for Non-Compliance
Quick Reference & Resources

Do You Need a Business License?

The Short Answer

If you’re regularly making money from music in Washington State, you almost certainly need a business license. Here’s when you need to register:

You MUST register if:

Your gross music income is $12,000 or more per year
You operate under any name other than your full legal name (band names, stage names, “DBA” names)
You plan to hire anyone within 90 days
You sell merchandise and need to collect sales tax

You might be okay if:

You made under $12,000 gross income
AND you use only your legal name
AND you don’t sell any merchandise
AND you truly only play for free (open mics, jam sessions with zero compensation)

Important: Gross Income Means BEFORE Expenses

The $12,000 threshold is based on gross income, not profit. If you made $15,000 from gigs but spent $8,000 on gear and expenses, you’re still over the threshold. Gas, reeds, new equipment, mic purchases—none of that matters for determining if you need to register.

“But It’s Just a Hobby…”

Washington State considers you a business when you engage in any activity for “gain, benefit, or advantage.” It doesn’t matter if you’re making a profit or if music is your full-time career or just something you do on weekends.

“I Have a Day Job…”

Your W-2 job and your music income are completely separate in the state’s eyes. Having a day job doesn’t exempt you from needing a business license for your music activity. When you’re at your day job, you’re an employee. When you’re gigging, you’re a business owner—two different things.

The $12,000 threshold applies specifically to your music income, not your total income. However, if you operate under a band name, trade name, or stage name, you still need a business license regardless of income level.

Understanding the $12,000 Threshold

What Counts as Music Income?

All of these count toward your gross income threshold:

Live performances – weddings, jazz clubs, corporate events, coffee shops
Private music lessons – both one-on-one and group instruction
School workshops and clinics – paid by schools, districts, or booster clubs
Session work – recording sessions for other artists
Streaming and royalties – Spotify, Apple Music, mechanical royalties
Merchandise sales – CDs, vinyl, t-shirts, downloads
Jam session hosting – when you’re hired to host/lead
Any workshop or course you design and sell

The Triggers Beyond Income

Remember, the $12,000 threshold is just ONE trigger. Most regular working musicians hit at least one of these:

Operating under a name that isn’t your full legal name
Planning to hire anyone
Selling merchandise

So even if you’re under $12,000, check whether any other trigger applies to you.

How to Set Up Your Business License

Before You Start

Make sure you have:

Your Social Security Number (if you’re a sole proprietor)
Your business name (or just use your legal name)
Your business location/address
An estimate of your expected annual income
A debit/credit card for the application fee
About 30 minutes of uninterrupted time

Step 1: Use the Business Licensing Wizard

Start here: Business Licensing Wizard

The wizard will ask questions about your business and tell you:

What licenses or endorsements you need
What the fees will be
What forms you need to complete

For most solo musicians and music teachers, this will be straightforward. You’re a sole proprietor providing services.

Step 2: Create Your Secure Access WA Account

You’ll need to create an account in Secure Access Washington: https://secureaccess.wa.gov/myAccess/saw/select.do

This will be your main login to access all state tax systems.

Step 3: Complete the Business License Application Online

Once you’re logged in:

Click “Apply for a new business license”
Select “I want to start a business in WA State”
Fill out the application with your business information

Key information you’ll need to provide:

Business structure: Most musicians choose “Sole Proprietor”
Business name: You can use your legal name or a “doing business as” (DBA) name
Business location: Your home address is fine if that’s where you operate from
Start date: When you first started earning money from music (be honest)
Business activities: Select “Services” and describe your musical activities
Expected annual gross income: Make your best estimate
Application fees: Not very much—you’ll see the exact amount before you submit

Step 4: Receive Your UBI Number

Once your application is approved, you’ll receive:

Your Unified Business Identifier (UBI) number – this is YOUR business ID number
Your business license (physical copy mailed to you)
Your excise tax account set up automatically

Save your UBI number! You’ll need it for:

Filing taxes
Opening business bank accounts
Working with professional organizations, schools, etc.

Step 5: Set Up Your Filing Schedule

The Department of Revenue will assign you a filing frequency:

Annual – if you have lower income
Quarterly – most working musicians get this
Monthly – if you’re making significant income

Mark those filing deadlines on your calendar immediately.

Do You Need City Licenses Too?

Some cities have their own B&O taxes and licensing requirements. When you go through the DOR wizard to apply for your business license, it will ask you what cities you’re doing business in, and you can complete city licenses in the same process for some locations.

Important Reminders

Start date matters: Be honest about when you started earning music income. Don’t say “today” if you’ve been gigging for two years.
Keep your contact info current: The DOR will send important notices about filing deadlines
Save everything: Print or save copies of your application, approval, and UBI number
Set up reminders: Put tax filing deadlines in your calendar NOW

Need Help?

Department of Revenue Business Licensing:

Phone: 360-705-6741 (Option #3, then Option #6)
Website: https://dor.wa.gov/open-business

The account setup people at the DOR are very helpful if you’re nice to them. They can walk you through the process.

Understanding B&O Tax

What is B&O Tax?

B&O (Business and Occupation) tax is Washington State’s main business tax. Unlike income tax in other states, B&O tax is calculated on your gross revenue (total income before expenses), not profit.

The Rate for Musicians

For most musicians performing live or doing session work, you fall under the “Service and Other Activities” classification. The B&O tax rate for service businesses is 1.5% (0.015).

Example: If you made $10,000 in gross income from gigs, you’d owe $150 in B&O tax.

Why Can’t I Deduct Expenses?

This is the frustrating part. You spent $5,000 on gear but only netted $5,000? Doesn’t matter to Washington State. They tax the gross revenue.

The good news: 1.5% isn’t that high compared to income tax in other states. The bad news: no deductions for expenses when calculating B&O tax.

However, you CAN deduct B&O tax payments from your federal income tax return as a business expense.

All Music Income is Subject to B&O Tax

This includes:

Live performances
Private music lessons (one-on-one and group)
School workshops and clinics
Session work and recording
Streaming income and royalties
Merchandise sales (but this also involves sales tax—see below)
Jam session hosting
Any workshop or course you design and sell

Bottom line: If money is coming in from musical activities, it needs to be reported and B&O tax paid on it.

Sales Tax on Group Instruction

The New Reality
(Effective October 1, 2025)

As of October 1, 2025, Washington State added sales tax to “live presentations.” This includes most group instruction activities that musicians do.

What Counts as a “Live Presentation”?

According to Washington State DOR, live presentations include lectures, seminars, workshops, or courses where participants attend either in person or via the internet, and where people can give, receive, and discuss information with each other in real-time.

Activities NOW subject to sales tax:

School band workshops (paid by the district)
Booster club coaching sessions
Regular rehearsals with student groups (when you’re paid to lead them)
Jam sessions where you’re hired to host
Any workshop you design and sell yourself
Group music lessons (more than one student at a time)
Masterclasses
Clinics for band directors or students

What is NOT Subject to Sales Tax?

Performances are NOT considered “live presentations”:

Concerts
Plays, musicals, comedy shows, opera
Jazz gigs, wedding performances, corporate events

One-on-one private lessons are also exempt from sales tax. They’re not considered “live presentations” because they’re not group instruction.

How Sales Tax Works

You must:

Determine the correct sales tax rate for the location where the service occurs
Add that tax to your invoice as a separate line item
Collect it from your client
Remit it to the state when you file your excise tax returns

Example: You charge $500 for a workshop in Seattle (10.35% sales tax rate):

Your fee: $500
Sales tax collected: $51.75
Total client pays: $551.75
You keep your $500; the $51.75 goes to the state

Note: You also still owe B&O tax on the $500 gross income.

The Impact on Schools and Nonprofits

This effectively increases costs by 9-10% for schools, booster clubs, and nonprofits hiring guest artists and clinicians. In an era where music programs are already stretched thin, this is significant.

City-Level Requirements

State vs. City B&O Tax

Your Washington State business license and B&O tax (1.5% for service businesses) cover you for performing anywhere in Washington. However, some cities have their own B&O taxes ON TOP of the state tax.

Do You Need to Register in Every City?

Probably not. Most cities that have a B&O tax have a threshold—a minimum amount you need to earn IN THAT CITY before you owe them tax.

Cities WITH B&O Tax (and their thresholds)

Major cities musicians perform in:

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

Cities WITHOUT General B&O Tax

Not all cities have B&O tax. For example from what I looked up online, it looks like Edmonds, Lynnwood, Ellensburg, Yakima, and Leavenworth do not.

Note: This list is not complete. If you’re doing significant business in a city, check its website or call its finance department to see if you need to pay B&O tax, and what their threshold is.

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 a city like Bellingham or North Bend and hitting their thresholds, you need to register with that city and file separate returns.

What You Need to File

Excise Tax Returns

Once you’re registered, you’ll need to file excise tax returns. These cover your B&O tax and sales tax (if applicable).

Filing Frequency

The Department of Revenue assigns you a filing frequency:

Annual filers: File once a year (most part-time or casual musicians)
Quarterly filers: File four times a year; returns due at the end of the month following the tax quarter (Q1 = Jan-Mar, due April 30th)
Monthly filers: Returns due the 25th of every month (for higher-income musicians)

Important: You must file even if you didn’t have any business activity that period. If you didn’t play any gigs in Q2, you still need to file a return showing zero income. Don’t skip it.

What Gets Reported?

For B&O Tax (all musicians):

All gross income from performances
All gross income from teaching (private and group lessons)
All gross income from workshops, clinics, session work
All streaming and royalty income
All merchandise sales (gross amount)

For Sales Tax (if you do group instruction or sell merchandise):

Sales tax collected on group instruction/workshops
Sales tax collected on merchandise sales

Band Income vs. Solo Income

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

If you’re in a band: You have options:

Each member operates independently: The venue pays the band $1,000, you split it four ways, each person reports $250 on their own return. Simple, but requires trust that everyone reports their share.
One person is the “business”: One band member has the business license, receives all income, and pays other members. That person reports the full amount. (This doesn’t help with B&O tax since it’s on gross income, but may help with federal taxes.)
The band is a legal entity: Form an LLC or partnership. The band files taxes as a business entity and distributes money to members. Cleaner but more complicated to set up.

Most working bands use option 1—everyone reports their own share.

Merchandise Sales

You Need to Collect Sales Tax

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 Retailing B&O Tax

In addition to collecting sales tax, you must also pay Retailing B&O tax on merchandise sales. The rate is 0.471% of your gross receipts. This comes out of your pocket, not from what you collect.

Example: You sell a $20 t-shirt in Seattle (10.35% sales tax):

You charge customer: $22.07 ($20 + $2.07 sales tax)
You keep: $20
Sales tax remitted to state: $2.07
Retailing B&O tax you owe: $0.09 (0.471% of $20)

How to Avoid This Complexity

If you don’t sell merchandise directly but only through an online retailer (like Bandcamp, CD Baby, etc.), you won’t have to collect and remit sales tax—the retailer handles it. However, the income you receive is still subject to B&O tax.

Local Sales Tax Rates Vary

Sales tax rates vary by location:

Seattle: 10.35%
Many other areas: 8-9%

You charge customers the sales tax rate for where the sale happens. Use the DOR Tax Rate Lookup Tool.

Record Keeping

The Department of Revenue Can Audit You

They can look back several years, so keeping good records is essential.

What to Keep

Income Records:

Invoices you sent to clients
Contracts for gigs
Payment receipts (bank records, checks, Venmo, PayPal records)
1099 forms from clients who paid you $600+
Streaming income statements
Merchandise sales records

Expense Records: Even though you can’t deduct expenses from B&O tax, keep them for federal tax purposes:

Receipts for gear, transportation, supplies
Professional development costs
Marketing and promotion expenses

Keep everything for at least 5 years.

Simple System

Use a simple spreadsheet to track income and a folder (physical and digital) for receipts. Nothing fancy—just organized enough that you can find things when needed.

Tip: Last day of every month, total up everything for your spreadsheet. Develop a routine and stick to it.

Penalties for Non-Compliance

“I’m Not Going to Do It. This is Crazy.”

Don’t ignore these requirements. The temptation might be to hope it goes away or think “I’m too small for them to care about.”

Reality: If you’re required to collect sales tax and you don’t, you’re personally liable for that tax—even if you never collected it from clients and even if you didn’t know you were supposed to.

The Penalties Are Brutal

For late filing:

Penalties start at $5 or 9% of tax due (whichever is higher)
Can increase to 29% if the return remains unpaid after 105 days
Interest accumulates monthly

For not collecting sales tax:

Up to 39% penalty on tax you didn’t collect or pay
Mandatory 9% late penalty if you don’t pay by due date
Penalties start at 5% but can climb to 25% depending on how long you’ve been non-compliant

Example: You owe $100 in B&O tax and you’re late:

Minimum penalty: $109
If really late: $129+
Plus monthly interest

How They Find Out

Any client who pays you $600+ must file a 1099 (paper trail)
Any legitimate business that gets audited and has you listed as an expense (paper trail)
Even if paid less than $600, you’ll show up as a vendor/expense
The DOR can audit you going back several years

What If You Didn’t Know?

If you’ve been gigging for years without registering, you’re not alone. Many musicians don’t know about these requirements.

The good news: You can register now. The DOR would rather have you come into compliance on your own than catch you in an audit. When you register, you’ll need to start filing returns going forward.

If you’ve had significant income in past years, talk to a tax professional about how to handle it. But the most important thing is to get compliant starting now.

Quick Reference & Resources

At a Glance: What Do I Owe?

All Musicians (over $12K gross or using business name):

Business license registration (one-time)
B&O tax: 1.5% on ALL gross music income (performances, lessons, workshops, streaming, merchandise)
File quarterly or annually (as assigned)

If You Do Group Instruction/Workshops:

Sales tax: 8-10% (varies by location) – collect from clients and remit to state
Add this to your invoices starting October 1, 2025

If You Sell Merchandise Directly:

Sales tax: collect and remit
Retailing B&O tax: 0.471% (comes out of your pocket)

If You Perform in Specific Cities Above Their Threshold:

City B&O tax (in addition to state)

Key Filing Deadlines

Quarterly filers: End of month following tax quarter (Q1 due April 30, Q2 due July 31, etc.)
Monthly filers: 25th of following month
Annual filers: As assigned by DOR

File even if you had zero income that period!

Essential Links

Washington State DOR:

Main site: https://dor.wa.gov/open-business
Business Licensing Wizard: https://secure.dor.wa.gov/gteunauth/?Link=wiz
Secure Access WA: https://secureaccess.wa.gov/
B&O Tax Information: https://dor.wa.gov/taxes-rates/business-occupation-tax
Tax Rate Lookup: https://dor.wa.gov/taxes-rates/sales-and-use-tax-rate-lookup
Penalty Information: https://dor.wa.gov/file-pay-taxes/late-filing/penalty-waivers

For Specific Questions:

Request a ruling: https://dor.wa.gov/about/contact-us/rulings-request
Phone support: 360-705-6741 (Option #3, then Option #6)

Checklist for Getting Compliant

[ ] Determine if you need a business license (check thresholds and triggers)
[ ] Gather required information (SSN, business name, address, income estimate)
[ ] Complete Business Licensing Wizard
[ ] Create Secure Access WA account
[ ] Submit business license application
[ ] Save your UBI number when approved
[ ] Set up calendar reminders for filing deadlines
[ ] Determine correct tax rates for locations where you work
[ ] Update invoice templates to include sales tax line (if doing group instruction)
[ ] Set up simple record-keeping system (spreadsheet + receipts folder)
[ ] Talk to clients about tax changes
[ ] Consider consulting with a tax professional familiar with WA State

Final Thoughts

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

The hardest part is just making yourself do the initial setup. Once you’re registered and have a routine for tracking income and filing returns, it becomes manageable.

Remember:

Getting compliant now is better than facing penalties later
The DOR staff are helpful if you need assistance
You’re not alone—many musicians are figuring this out together
This covers state requirements only; federal taxes (IRS) are separate

Start with registration, develop a routine, and stay on top of it.

Disclaimer

This guide is based on research and experience from working musicians in Washington State. It is not legal or tax advice. Tax laws and regulations change. For advice specific to your situation, consult with a tax professional familiar with Washington State business and tax requirements.

Information current as of October 2025. Policies and rates may change. Always verify current requirements with the Washington State Department of Revenue.