Taxes

Local, state and federal taxes apply to farm businesses. Many of these taxes require payment, reporting and recordkeeping. In addition, there are some tax benefits that reduce or refund tax paid by you such as sales tax for farming equipment and supplies or open space tax reduction. The hands-on workshops, guides, and tax benefits below are listed to help navigate tax requirements and benefits for farm businesses. This information does not replace professional advice from lawyers and Certified Public Accountants.

Classes and workshops

Washington State Department of Revenue offers monthly workshops on taxes for new businesses.

• Learn the basics of Washington State taxes.
• As a small business or new business owner, this workshop will help you understand your tax reporting responsibilities.

Educational guides

Washington State Department of Agriculture
Handbook for Small and Direct Marketing Farms fact sheet on Taxes

This comprehensive fact sheet is intended to help you navigate the world of taxes and your responsibilities and exemptions as a farm business. This fact sheet covers the following taxes:

• Federal taxes:
  • IRS Schedule F: Profit or Loss From Farming;
  • Self-employment tax;
  • Payroll taxes; and
  • Unemployment insurance taxes.
• Washington State and local taxes:
  • Business and Occupation Tax;
  • Retail Sales Tax;
  • Use Tax;
  • Litter Tax;
  • State Payroll Taxes;
  • Workers’ Compensation Insurance;
  • Unemployment Insurance Tax;
  • Property Tax and Open Space Designations; and
  • Purchasing goods without paying tax – Reseller Permit.

Washington State Governor's Office for Regulatory Innovation and Assistance (ORIA)

Washington State’s The Small Business Guide chapter on Start your Business

• Offers guidance on the tax implications of purchasing a business and when starting a business, as well as how taxation affects business structures differently from sole proprietorships to LLCs.

Washington State Department of Revenue

"Agricultural Tax Guide" highlighting all of the relevant taxes for different farm businesses.

• This guide helps farmers and those who sell goods or services to farmers understand how state taxes apply to Washington’s agricultural industry.

New Business Tax Basics Guide

• Walks step-by-step through different applicable taxes. While not a specific agricultural resource, it offers both an overview and specific information for businesses.

Internal Revenue Service

Farmer’s Tax Guide

• This publication explains how the federal tax laws apply to farming. Use this publication as a guide to figure your taxes on the Schedule F farm tax return.

Tax benefits

King County

Current Use Taxation Programs

• There are two current use taxation programs in King County that offer an incentive (a property tax reduction) to landowners to voluntarily preserve open space or farmland on their property:
  • Public Benefits Rating System and
  • Farm and Agricultural Lands
• Once enrolled, a participating property is assessed at a "current use" value, which is lower than the "highest and best use" assessment value that would otherwise apply to the property. These programs encourage the conservation of natural resources in King County by conserving its land and water resources, which include important wildlife habitat, wetland and streams, working forests and productive farmlands.

Washington State Department of Agriculture

Handbook for Small and Direct Marketing Farms fact sheet on Taxes
Includes information on tax benefits (refunds or reduced payments) on property tax and sales tax.

• Property Tax and Open Space Designations; and
• Purchasing goods without paying tax – Reseller Permit. Recommended one stop-shop links: Business Planning

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