The Tacoma, WA tax rate is currently 10.200%. This remains unchanged from the end-of-year 2019 tax rate. There are several factors that go into calculating this rate.
Washington state’s overall tax rate is 6.500%. Meanwhile Pierce County charges a 2.800% tax. That leaves the Tacoma, WA tax rate of 0.900%, which makes up the rest. However, for those in certain zip codes, there is no county tax, but simply a Tacoma local city tax of 3.700% in addition to Washington’s base tax rate, for the same total of 10.200%
It is worth noting that the Tacoma WA tax rate of 10.200% is one of the highest for the state, which currently sees a maximum 10.400% tax rate within the state. Tacoma has a higher tax rate than 98% of localities within Washington. Their tax rate is just 0.6% lower than the maximum sale tax within Washington.
A History of the Tacoma Washington Tax Rate
Washington first instituted a state sales tax in 1933. Since that time the base rate throughout the state has risen to 6.500% with some localities paying up to 10.400% when factoring local and special district taxes.
How Does Paying Sales Tax Work
For a business determining whether or not they need to collect sales tax, there are three questions that can help them find the answer:
- Do you do business in Washington state?
- Are you selling things to Washington residents that are taxable goods or services?
- Are your customers required to pay sales tax?
Answering yes to these questions, means you should be collecting sales tax. The Department of Revenue of Washington State has several resources for helping you learn more about paying taxes. Here is information about what items are subject to a retail sales tax. Of note, groceries are exempt from a sales tax. Prepared foods, however, are subject to the sales tax. Additionally, if 75% of what a business sells are considered prepared foods, then sales tax must be collected on all of the business sales. This is particularly applicable to restaurants.
There are several additional factors that go into determining how much sales tax to charge. These include the location of the sale, whether there is a product being shipped and if tangible goods or services are being provided. Different categories such as lodging may operate at a different tax rate.
There are a few other sales tax exemptions. These include sale to a diplomat with proper ID, prepared food delivery across state lines (such as a pizza delivery from within Washington state to across state lines), and the sale of food to a non-profit engaged in fundraising activities. Additionally, it is not necessary to collect sales tax on bad debt, such as a bounced check. If the bad debt is recovered, the sales tax must be paid.
What to Keep in Mind About the Tacoma Washington Tax Rate
Unlike the majority of states, Washington has no income tax. This means that sales tax plays a hugely important role in keeping the government running and funded. When looking for more information about paying sales tax, it is best to contact the City of Tacoma Washington for additional tax information. While the physical location of the tax and license office is temporarily closed because of COVID, the staff is working remotely, and they are reachable by phone. The Washington State Department of Revenue is another important resource.
If you have any questions at all about taxes in Tacoma, please free to email us or give us a call and we’ll be happy to help you out!