Yes, utilities are taxed in Washington State. The state imposes a Public Utility Tax (PUT) on the gross income of utility businesses operating within its borders. This tax applies to businesses providing services such as electricity, water, natural gas, sewage collection, and telecommunication services. The PUT is in lieu of the Business and Occupation (B&O) tax that applies to other businesses in the state.
Public Utility Tax (PUT)
Nature of the Tax:
The PUT is a gross receipts tax calculated on the total revenue of the utility company without deductions for operating expenses.
Authoritative Sources:
- Revised Code of Washington (RCW) 82.16.020: Defines the imposition of the Public Utility Tax.
- Washington Administrative Code (WAC) 458-20-179: Provides rules regarding the Public Utility Tax.
Tax Rates:
The tax rates vary depending on the type of utility service provided:
| Utility Service | Tax Rate |
| Distribution of Electricity | 3.8734% |
| Water Distribution | 5.029% |
| Gas Distribution | 3.852% |
| Sewage Collection | 3.852% |
| Telegraph Companies | 1.926% |
| Urban Transportation | 0.642% |
| Motor Transportation | 1.926% |
| Railroads | 1.926% |
Authoritative Source:
- Washington State Department of Revenue: Provides current tax rates for the Public Utility Tax.
Filing Frequency:
Utility businesses must file PUT returns monthly, quarterly, or annually, depending on their tax liability.
Authoritative Source:
- Washington State Department of Revenue: Offers guidelines on tax return filing frequencies.
Local Utility Taxes
In addition to the state PUT, many local jurisdictions in Washington impose their own utility taxes on services provided within their boundaries. These local taxes can vary significantly in rate and application. Utility providers typically add these taxes directly to customers’ bills.
Authoritative Sources:
- Washington State Department of Revenue: Information on local utility taxes and rates.
- RCW 35.21.870: Authorizes cities to impose utility taxes.
Sales Tax on Utilities
Certain utility services may also be subject to state and local sales taxes. For example:
- Telecommunication Services: Generally subject to sales tax unless specifically exempt.
- Solid Waste Collection: May be subject to sales tax depending on the local jurisdiction.
Authoritative Sources:
- RCW 82.08: Contains statutes on retail sales tax.
- Washington Administrative Code (WAC) 458-20-245: Discusses solid waste collection tax.
- Washington State Department of Revenue: Provides guidelines on sales tax applicability.
Key Takeaways
- Utilities are taxed in Washington State through the Public Utility Tax.
- Tax rates vary by the type of utility service.
- Local utility taxes may also apply, increasing the overall tax burden.
- Sales tax may be applicable to certain utility services.
Disclaimer: The information provided is for general informational purposes and should not be considered legal or tax advice. Tax laws are complex and subject to change. For advice specific to your situation, consult a qualified tax professional or refer to official IRS resources.