The city of Poulsbo implemented a Business & Occupation tax July 1, which will apply to the gross receipts measured on the value of products, proceeds of sales or gross income of businesses.

There will be no deductions for labor, materials or other costs of doing business, the city’s monthly newsletter states. The city’s B&O tax is not the same as the state’s B&O tax and will be filed separately.

To do business in the city the following are required: have an endorsed city business license, issued by the state, in good standing; and file a state excise tax return.

In 2024, the tax rate for all categories of business is .2%. There are two exemptions: The first $20,000 of taxable gross revenue earned annually (or $5,000 per quarter) that is not subject to retail sales tax; the first $125,000 of taxable gross revenue earned annually (or $31,250 per quarter) that is subject to retail sales tax.

Businesses will be exempt from paying the city’s B&O tax if annual gross revenue is less than $20,000, per the newsletter. However, B&O tax filings are required, even if there is no balance due. Nonprofits are exempt from paying but are required to file a return.

The gross revenue earned by a business determines the amount of tax to pay. To calculate that amount, multiply the taxable gross revenue amount by the tax rate.

Example 1: If the business grosses $200,000 of taxable revenue deduct the allowed exemption of $20,000. The taxable revenue is $180,000 which is multiplied by the tax rate .2%, for an annual tax liability of $360.

Example 2: Alternatively, if the business grosses $200,000 of taxable revenue that is subject to retail sales tax in Poulsbo, deduct the allowed exemption of $125,000. The taxable revenue is $75,000, which is multiplied by the tax rate .2%, for an annual tax liability of $150.

Businesses will be required to submit B&O tax quarterly unless they do not meet the annual gross revenue amount of $100,000. Late returns will be subject to penalties and interest.