Washington Self-Employed Taxes in 2026
Washington sounds like a tax haven for gig workers — no personal income tax at all — until you meet the Business & Occupation tax. Instead of taxing profit, Washington taxes your gross receipts, which means even a low-margin gig business can owe something. The small-business credit protects many part-time workers, but full-time drivers and freelancers in Seattle or Tacoma need to plan for both state and city B&O. Start with the federal side in the [Washington self-employed tax calculator](https://gigmytax.com/calculators/washington-self-employed-tax).
No income tax — but the B&O tax is real
Your 1099 income avoids state and city income tax entirely in Washington. In its place, the state levies the B&O tax on gross business receipts. Most gig services fall in the service-and-other-activities classification at 1.55% of gross receipts. Critically, the tax is on revenue, not profit: $60,000 of gross payouts with $20,000 of expenses still has $60,000 of receipts for B&O purposes.
The small-business B&O credit
Washington's small-business tax credit can reduce or eliminate the B&O bill for businesses under roughly $125,000 of annual service receipts. Many part-time gig workers end up owing zero after the credit, but you still file.
Retailing classification
If you sell goods — resale, crafts, merchandise — the retailing B&O rate is 0.471% plus sales tax collection duties, a different and cheaper classification than services.
Registration
You need a Washington state business license (UBI number) and to file the combined excise tax return, usually quarterly, through the Department of Revenue.
Seattle, Tacoma and Bellevue add city B&O
Several Washington cities stack their own B&O tax on top of the state's. Seattle requires a business license and charges city B&O once your Seattle-sourced receipts pass the annual threshold. Tacoma and Bellevue have their own rates and small-business thresholds. Spokane and Vancouver mostly stop at an annual license fee with no percentage tax. If you drive or deliver across city lines, B&O is generally sourced to where the service is performed — keep a note of which city your gigs ran in.
Worked example: a Seattle Instacart shopper at $48,000 gross
Gross batches of $48,000 with $12,500 of expenses (14,000 miles at $0.70 = $9,800, phone $900, insulated bags and supplies $500, parking $1,300). Net profit $35,500. Self-employment tax on 92.35% ($32,784) is about $5,016, half deductible. Federal taxable income after the $16,100 standard deduction is roughly $16,892, giving about $1,700 of federal income tax. No state income tax. B&O on $48,000 of service receipts at 1.55% would be $744 — but the small-business credit can shrink that substantially. Total effective set-aside: around 20% to 24% of profit, one of the lowest in the country.
Federal quarterly payments still apply
No state income tax does not mean no quarterly payments. If you expect to owe $1,000 or more of federal tax, you file Form 1040-ES on April 15, June 15, September 15 and January 15. The safe-harbor rule — 90% of this year's tax or 100% of last year's (110% above $150,000 AGI) — keeps you penalty-free. Size each payment with the [quarterly tax calculator](https://gigmytax.com/calculators/quarterly-tax), and log your miles from day one: at $0.70 per business mile in 2026, mileage is usually a Washington driver's largest deduction by far. See the [mileage deduction calculator](https://gigmytax.com/calculators/mileage-deduction) for the math.
Frequently asked questions
+Does Washington have a state income tax for self-employed workers?
No. Washington has no personal income tax, so 1099 income is taxed only federally. The state instead levies the B&O tax on gross business receipts.
+What is the B&O tax rate for gig workers in Washington?
Service businesses pay 1.55% of gross receipts. The small-business B&O tax credit reduces or eliminates the bill below roughly $125,000 of annual service receipts.
+Do I have to pay Seattle's business tax as a gig worker?
If you perform services in Seattle and your Seattle receipts exceed the annual threshold, yes — you need a Seattle business license and file city B&O returns. Tacoma and Bellevue have similar rules.
+How much should a Washington gig worker set aside for taxes?
Around 20% to 25% of net profit covers federal income tax and 15.3% self-employment tax, plus a small buffer for B&O once receipts pass the credit threshold.
+Does Washington require quarterly estimated tax payments?
No state estimates exist because there is no income tax, but federal Form 1040-ES payments are still due on the four IRS dates if you expect to owe $1,000 or more.
+Is mileage deductible in Washington?
Yes, federally. The $0.70 per business mile 2026 rate reduces your federal income and self-employment tax even though Washington has no income tax to apply it against.
About the author
Javed Niamat · Founder & Editor, GigTax
Javed Niamat founded GigTax to make self-employment tax math understandable for rideshare drivers, delivery couriers, creators and freelancers. He builds and maintains every calculator on this site and writes the guides that explain the numbers behind them.
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