‘Seattle Shield’ proposal: 90% of Seattle businesses paying B&O tax would no longer pay the tax or see tax reductions
Today, Mayor Bruce Harrell and Councilmember Alexis Mercedes Rinck (Position 8, Citywide) announced a new proposal to lower city taxes for approximately 90% of Seattle businesses that currently pay the Business & Occupation (B&O) tax and raise needed new progressive revenue to protect funding to essential services and programs threatened by the Trump administration.
The City of Seattle currently faces a $251 million deficit across all fund balances, with further financial risk stemming from Trump administration threats to federal funding and economic uncertainty. This proposal would temporarily raise B&O rates to bring in $90 million in net revenues for the City annually with funding dedicated to backfilling essential human services threatened by the Trump administration and maintaining effective ongoing City programs. These include investments in housing vouchers and shelter, food and nutrition access, services for survivors of gender-based violence, and more. With current financial forecasts, this revenue would also allow the City to protect and maintain needed investments in affordable housing.
The proposal would raise the B&O tax threshold exemption from $100,000 to $2,000,000 in gross revenue and create a new B&O deduction up to $2,000,000. About 76% of current B&O taxpayers – small and medium sized businesses – would no longer owe the tax, and approximately 90% of businesses would owe less than they do today. B&O tax relief has been highlighted by small business leaders as a way to support Seattle’s economy, make the city more competitive with neighboring jurisdictions, and help small businesses thrive.
“This plan would reduce taxes for 90% of Seattle businesses while raising a needed $90 million to protect City investments against Trump threats to federal funding and to our local economy,” said Mayor Harrell. “Seattle’s small businesses create jobs and build communities – and they need our help. This balanced approach delivers tangible relief for small- and medium-sized businesses and puts Seattle in the best position to prepare for Trump’s economic chaos and continued ideological bluster, while we further provide essential services and maintain critical housing investments for our residents.”
“The Trump Regime continues to slash and burn essential programs that working families and our most vulnerable neighbors depend on. Everything from affordable housing and emergency shelters to food programs and worker protections are under threat. Seattle has no choice but to take action to protect our communities. We have a plan to fight back – the Seattle Shield Initiative,” said Councilmember Rinck. “Under Seattle Shield, voters would have a choice this November to give small-and-medium mom and pop shops the ability to stay open, while ensuring the largest corporations contribute more to safeguard our city and residents from the Trump Administration. This fairer tax system would raise an estimated $90 million each year to fund the type of essential services that are under attack.”
How the proposal works:
- In 2026, the B&O tax exemption would be increased from $100,000 to $2,000,000, exempting approximately 16,500 small and medium-sized businesses (76% of current taxpayers) from the B&O tax. The City would also create the new B&O deduction, allowing all businesses to only pay B&O taxes on gross receipts above $2 million.
- To offset the reduced B&O tax revenues caused by the exemption and deduction, and to address the deficit and Trump administration threats, the B&O tax rate will increase in 2026 from 22 cents per $100 of taxable receipts to 34 cents per $100 for retail, wholesale, and manufacturing companies and from 43 cents per $100 to 65 cents per $100 for service companies.
- For the median taxpayer business that has $5 million in gross receipts, they would only pay the B&O tax on $3 million in gross receipts after the $2 million B&O deduction. In this example, their City B&O obligation would go from $15,200 in 2025 to $13,972 in 2026, a decrease of over $1,200.
- For a business with $12 million in gross receipts – in the highest quartile of taxpayers – their B&O obligation would go from $31,920 in 2025 to $39,587 in 2026, an increase of $7,667. Approximately 90% of small and medium-sized businesses would see their tax obligation reduced or would be exempted altogether from the tax.
- These changes would be effective for four years, from 2026 though 2029, with a councilmanic option to renew them for four additional years from 2030 through 2033.
If approved by the City Council, this proposal will require approval by the voters in the 2025 November general election.
What people are saying
Eric Chan, Owner, Jade Garden Restaurant
“As a small business for over 22 years our employees are the backbone and everything for us. Most of our employees have been with us over a decade if not longer. Being able to reinvest these funds back to them would mean everything for us!“
Matt and Elyssa Cichy, Owners, West Seattle Arcade + Gary’s Place
“The expense of running a small business in Seattle is exorbitant, and this proposal will be a much-needed relief for us and other entrepreneurs, while still helping to reduce the deficit. We strongly support Councilmember Rinck and Mayor Harrell’s advocacy for the small business community!”
Laura Clise, Founder & CEO, Intentionalist
“Over the past five years, Seattle small businesses have had to navigate a myriad of challenges that have made it increasingly difficult to survive. In the context of macroeconomic uncertainty and cumulative financial strain, B&O tax relief means more than just savings—it’s a meaningful step toward stability, recovery, and long-term resilience. By exempting the majority of small and medium-sized businesses, this proposal offers critical support to the small businesses at the heart of our communities.”
Jamila Conley, Owner, WeRise Wine
“Mayor Harrell has worked tirelessly to revitalize our city, engage small businesses, and make downtown a safer place. I appreciate how he turns his words into action and while large scale change takes time he is continuously looking for and pushing through small changes that make big impact on the city.”
Sokha Danh, Founder, mam’s books
“As a small business owner in Seattle’s CID, this proposal will provide transformational savings for our bottom line. I wholeheartedly am in support of Mayor Harrell and Councilmember Rinck’s progressive taxing model to make taxes less burdensome for small businesses to thrive and support their local communities.”
Karen Estevenin, Executive Director, PROTEC17
“PROTEC17 members know firsthand how city services are essential to keeping Seattle safe, healthy, and thriving. Modernizing the B&O tax is a smart way to help protect our city’s services from both harmful federal cuts and the structural issues in the general fund, so that our city can continue to meet the needs of all residents.”
Ollie Garrett, Founder & CEO, Tabor 100
“Now more than ever, we must use every tool available to support our local businesses. Restructuring our local B&O tax is a chance to deliver meaningful relief to small businesses—while generating new revenue to meet our city’s most pressing needs. For many small and mid-sized businesses, especially those owned by entrepreneurs from communities facing systemic barriers, every dollar counts. This change—paired with other tools and investments from the City and the services Tabor 100 provides —can make a real difference for the businesses we know, love, and depend on.”
Katie Garrow, Executive Treasurer Secretary, MLK Labor
“We applaud Councilmember Alexis M. Rinck and Mayor Bruce Harrell for putting forward a revised B&O tax proposal that strikes the right balance—supporting small businesses while funding the services our communities and workers rely on. This is how we keep our city’s promise: by investing in working families, immigrant communities, and the essential services that make Seattle a safe, livable place for all.
“At a time when worker protections are under attack—especially from the far-right and Trump-aligned forces that would rather see labor silenced—this proposal is a firm stand for dignity, fairness, and economic justice. The inclusion of funding for the Office of Labor Standards is critical. Our city can’t protect what it doesn’t fund, and vulnerable workers—especially immigrants, women, and low-wage earners—deserve enforcement that actually works.
“This measure ensures that businesses doing well contribute their fair share, so we can expand access to food, shelter, safety, and opportunity. From human services to gender-based violence programs, this is a proposal rooted in care, equity, and good governance.
“We urge the Council to act swiftly—Seattle’s workers, families, and small businesses can’t afford to wait.”
Theo Martin, Owner, Island Soul
“B&O taxes can be regressive for small businesses like Island Soul, in these uncertain times, this is an opportunity to invest revenue back into my employees and restaurant. For me, the Mayor and Councilmember Rinck are responding to this unique moment in time and that the City is reinvesting back into me and my small business.”
Meaghan Haas, Owner, Highland Park Corner Store
“This proposal to reduce or exempt the B&O tax for small businesses reflects the City’s commitment to local economic growth. It supports and strengthens our neighborhood economies, and helps preserve the diverse independent businesses of Seattle.”
Ryan Catabay, Owner, Drag & Drop Creative
“As a small business owner in Little Saigon, this B&O tax exemption is the relief we need right now to stay open and thrive. This is moving in the right direction, and I hope this is just the tip of the iceberg in small business support.”
Jen Muzia, Executive Director of the Ballard Food Bank & Co-Chair of Seattle Human Services Coalition
“Right now, critical programs are at risk in our community. The need for essential services such as food, meals, rental assistance, housing, and more is only going to increase. These programs are at risk with the city projecting a revenue shortfall and federal programs and funds being cut. Progressive revenue is an important steps in ensuring these programs are funded at the local level and can meet the needs of our community. Councilmember Rinck and Mayor Harrell’s proposal to restructure the B&O tax is a creative solution to addressing the budget shortfalls.”
Nhung Nguyen, Co-Founder, Adam Tailor
“I came to this country as a refugee and started our tailor shop with just a sewing machine and my hands. For over 40 years, we’ve worked hard to keep our doors open. Mayor Harrell’s proposal helps small shops like ours continue – not just for me, but for my daughter and granddaughter, who are now carrying on this work.”
Amarinthia Torres, Co-Executive Director of Coalition Ending Gender-Based Violence
“Abuse of power at the federal level is forcing local gender-based violence programs to make an impossible choice; deny lifesaving services to immigrant and LGBTQ survivors or get cut off from funding. It’s unacceptable, it’s an affront to our values and it’s one reason why we’re supportive of the Shield Seattle Initiative. This proposal is a step in the right direction towards fair and much needed local revenue to protect our values and ensure that programs can keep their doors open to all survivors in our city as they seek safety, dignity, and self-determination from the impacts of abuse.”
Gabe Virgen Solorio, Founder, RAIN Ceramics
“I started RAIN, a small ceramics studio in Capitol Hill to share my work that gravitates towards the simplicity of the functional form and build a community of like-minded artists striving to share their expression of pottery. The Mayor and Councilmember Rinck’s proposal supports small businesses like mine in continuing to support and grow our communities.”
Marcia Wright-Soika, Executive Director, FamilyWorks Seattle
“Social services that meet basic needs are in real danger due to a troubling city economic forecast and the systematic dismantling of our federal social safety net. At a time when food insecurity, poverty, and unaffordable housing are at crisis levels in our region, now is not the time to cut back. Now is the time for all of us to pitch in and protect the safety net that our most marginalized neighbors depend on. Shield Seattle is a critical step toward protecting and insulating our city from harmful federal actions and cuts to basic needs.”
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