Accounting and Tax Preparation Washington Businesses Should Plan For Before 2029

Early in 2026, Washington passed a law that will eventually raise the annual filing threshold and double the state's small business B&O tax credit, but "eventually" is the key word. For this year's filings, nothing changes, and the upcoming change includes a genuine contingency that the majority of the bill's coverage omitted.

Under Engrossed Substitute Senate Bill 6346, which Governor Bob Ferguson signed on March 30, 2026, the small business B&O credit will increase from $55 to $125 per month for nonservice businesses and from $160 to $375 per month for service businesses.


Additionally, the annual B&O filing threshold will rise from $125,000 to $250,000. That won't start working until January 1, 2029. The immediate value for a company that provides accounting and tax preparation for clients in Washington today isn't applying a credit that doesn't yet exist, but anticipating it and helping clients make three-year plans instead of assuming nothing has changed.


Why Is This Provision Bundled With a New Income Tax?

SB 6346 is not primarily a small-business relief bill, so it offers no immediate value to a company that currently handles accounting and tax preparation for Washington clients. Its main goal is to impose a new 9.90% Washington tax on personal income exceeding $1 million, starting in 2028 and with the first returns due in 2029. Revenue from that new income tax will fund the B&O credit increase, the filing threshold increase, and a sales tax exemption for hygiene products, all of which will take effect in 2029.


The official bill report states that the B&O credit increase and filing threshold increase are null and void if a court of final jurisdiction invalidates the new income tax. This affects how confidently anyone should plan around the B&O changes.

What Changes and What Stays the Same Right Now

The small business B&O credit is still available for the current filing period at its current level: up to $55 per month for non-service businesses, which will phase out entirely once B&O tax due exceeds $110, and up to $160 per month for service businesses, which will phase out entirely above $320 in tax due. The $125,000 annual filing threshold is still in place. The current rule still requires businesses close to that threshold to file; the higher $250,000 threshold has no bearing on any returns due before 2029.

Business Tax Preparation Issues Washington Firms Should Flag Now

Business Tax Preparation Washington firms handle shouldn't present this as a change to build current-year strategy around. Still, it is worth noting for clients whose revenue falls between $125,000 and $250,000 that they will transition from a filing obligation to no obligation at all once 2029 arrives, assuming the underlying law survives legal challenge. Washington firms should not present this as a change to build current-year strategy around.


Even though it has no bearing on this year's return, knowing that the threshold is set to shift is helpful context for long-term planning for a growing service company projecting revenue in that range over the coming years.

Why a Business Tax Professional Should Track the Legal Challenge and Not Just a Bill?

A Tax on Business Clients in Washington who receive professional advice should watch this closely: SB 6346 expressly exempts its new tax from Washington's Initiative 2111, which currently forbids state and local governments from taxing individual income. The B&O credit increase your clients may be anticipating for 2029 is written into the same bill and shares its fate, and whether that carve-out survives a legal challenge is truly unresolved. Giving a client only half the picture would be advising them to bank on the higher credit or threshold without mentioning that contingency.


For now, the practical conclusion is that SB 6346 has no bearing on a Washington company's B&O filing this year. Accurately informing clients about what's coming, when it's expected to arrive, and why it's not yet guaranteed is the value of understanding it today.


To review your current B&O filing requirements and learn how the 2029 changes under SB 6346 might eventually affect your company, schedule a free consultation with OptimizeTax LLC.

Location: Sammamish, WA, USA

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