What makes B&O different
An income tax takes a share of profit. The B&O tax takes a share of revenue. A business with $500,000 of receipts and $490,000 of costs owes B&O on the $500,000 — the loss is irrelevant to the calculation. Rates vary by classification of activity, with retailing, wholesaling and service classifications each carrying their own rate.
- Assessed on gross receipts attributable to Washington
- Rate depends on the classification of the activity, not on the entity type
- A business with several activity types may owe under several classifications
- Deductions, exemptions and credits exist, including a small business credit that eliminates the liability for many small filers
- Cities including Vancouver may levy their own B&O tax on top of the state one
When an Oregon business owes Washington B&O
Washington asserts taxing authority over out-of-state businesses with sufficient economic connection to the state, not just those with an office there. For an Oregon business selling across the river, the practical triggers are:
- 1Physical presence in Washington — an office, employees, inventory, or regular in-person service delivery
- 2Receipts attributable to Washington above the economic nexus threshold
- 3Registration and reporting obligations that follow from either of the above
Thresholds and nexus rules change, so confirm current figures with the Washington Department of Revenue before concluding you are under them.
Sales tax is a separate obligation again
Washington has a retail sales tax; Oregon does not. An Oregon business selling taxable goods or certain services to Washington customers may be required to register, collect and remit Washington sales tax — a genuinely unfamiliar obligation for a business that has never dealt with sales tax at all. Marketplace facilitator rules may shift the obligation to a platform for some sellers.
Do I owe B&O if I just ship products to Washington customers?
Possibly, once Washington-attributable receipts exceed the economic nexus threshold. Selling into a state is enough these days; you no longer need a warehouse there.
Is B&O deductible on my federal return?
State and local business taxes are generally deductible business expenses on a business return. That is different from the individual SALT cap, which applies to itemized personal deductions.
Can I owe both Oregon CAT and Washington B&O?
Yes, on different receipts — Oregon CAT on Oregon-sourced commercial activity, Washington B&O on Washington-attributable receipts. They are structurally similar taxes levied by different states.
What if I have been trading in Washington without registering?
Come and talk about it. Voluntary disclosure programs generally produce a far better outcome than being found, including limits on the look-back period.
Get the sourcing right before you file
Cross-border returns turn on facts nobody asks you about until it is too late. An appointment settles which state taxes what.
Written by
Enrolled Agent, Oregon Licensed Tax Consultant
License number: Enrolled Agent 00160070-EA · Oregon Licensed Tax Consultant 35746-C
Heather has spent more than a decade preparing individual and business returns across the Portland metro and the Columbia Gorge, and holds unlimited rights to represent taxpayers before the IRS.
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This page is general information about Oregon, Washington and federal tax rules, not advice about your own return. Thresholds and rates change every year. Figures were verified as of August 2026 — check the linked official sources, or talk to us about your situation.