Local guides / Washington / Seattle
Bartenders & Servers in Seattle, WA: taxes and retirement for 2026
For bartenders, servers, baristas and other workers paid largely in tips in Seattle, WA. Washington has no state income tax on wages or self-employment income. Here are the 2026 rules, a worked example and the official sources.
What's different in Seattle
- Local income tax
- No city income tax in Seattle.
- Seattle Business License Tax Certificate
- Anyone doing business in Seattle needs a business license tax certificate, renewed every year by Dec. 31. The 2026 fee is $73 if annual Seattle taxable revenue is under $20,000 and $147 for $20,000-$499,999.99. Effective 2026, people with $4,000 or less in Seattle gross income who do not maintain a place of business in the city do not need one.
- Seattle Business & Occupation (B&O) Tax
- Starting Jan. 1, 2026 (Seattle Shield Proposition 2), the B&O tax threshold rose from $100,000 to $2 million, so businesses with less than $2 million in Seattle taxable revenue owe no B&O tax. They still must file their B&O returns and report gross revenue, even when no tax is due.
- City business license
- Yes, usually. The City says businesses based in a Seattle home usually need a Seattle business license tax certificate, and even new businesses that are not yet profitable must apply and renew each year.
- Seattle App-Based Worker Minimum Payment Ordinance (SMC 8.37)
- Covered app-based workers (such as delivery workers) must be paid at least the greater of a per-minute plus per-mile amount or a per-offer minimum. For 2026, that is $0.47 per minute plus $0.80 per mile, or $5.34 per offer (up from $0.45, $0.77 and $5.20 in 2025); the law took effect Jan. 13, 2024.
- Seattle App-Based Worker Paid Sick and Safe Time Ordinance (SMC 8.39)
- App-based workers at network companies with more than 250 workers earn 1 day of paid sick and safe time for every 30 days with at least one work-related stop in Seattle. Each day used is paid at the worker's average daily compensation for days worked in Seattle over the prior 12 months. It covered food delivery workers from May 1, 2023 and all app-based workers from Jan. 13, 2024.
- Seattle App-Based Worker Deactivation Rights Ordinance (SMC 8.40)
- Since Jan. 1, 2025, network companies must give workers their deactivation policies, notice before most deactivations, access to the records behind them, and an internal challenge process; workers have 90 days from notice to challenge and may file a private lawsuit. Starting June 1, 2027, the city can investigate whether a deactivation was for a permissible reason.
- Seattle Independent Contractor Protections Ordinance (SMC 14.34)
- Since Sept. 1, 2022, commercial hiring entities must give self-employed independent contractors with no employees (who expect $600 or more from them in a year) a notice of rights, a written pre-work notice of terms, itemized payment info, and payment on time or within 30 days of finishing the work.
- Washington State ride-hail (TNC) driver minimum pay, Seattle rates (state law, enforced by L&I)
- For 2026 (effective Jan. 1, 2026), rideshare trips that start in Seattle must pay the greater of $0.70 per passenger platform minute plus $1.63 per passenger platform mile, or $6.12 per dispatched trip (trips elsewhere in Washington: $0.40 per minute plus $1.38 per mile, or $3.55). This state law replaced Seattle's own TNC minimum pay ordinance on Jan. 1, 2023.
- Also worth knowing
- No city income tax (Washington taxes capital gains only at the state level and no local income tax is listed; Tax Foundation 2026, secondary). Seattle's former TNC Minimum Compensation Ordinance stopped applying to Uber and Lyft on Jan. 1, 2023 because of Washington HB 2076 (https://www.seattle.gov/laborstandards/ordinances/tnc-legislation/minimum-compensation-ordinance). Covered network companies remit a $0.10 fee to the City for each covered order (https://www.seattle.gov/laborstandards/ordinances/app-based-worker-ordinances/app-based-worker-minimum-payment-ordinance).
Washington rules for bartenders & servers
- State income tax (2026)
- Washington has no state income tax on wages or self-employment income. Washington has no individual income tax in 2026. Senate Bill 6346 (2026 session) adds a 9.9% tax for individuals and married couples filing jointly with adjusted gross income over $1 million, starting January 1, 2028, with first returns due in April 2029. A separate capital gains tax already applies: 7% on long-term gains above the standard deduction ($278,000 for 2025), plus 2.9% more (9.9% total) on gains over $1 million from tax year 2025.
- Washington business and occupation (B&O) tax
- A gross receipts tax on almost every business, including sole proprietors. The service rate in 2026 is 1.5% if the prior year's service income was under $1 million (1.75% from $1 million to $4,999,999.99, and 2.1% at $5 million or more). A small business credit of up to $160 a month for mainly service businesses ($55 a month for others) reduces or wipes out the tax. The Department of Revenue can excuse businesses under $125,000 a year in B&O gross income that owe no other DOR taxes from filing returns; SB 6346 raises this filing threshold to $250,000 for businesses that do not collect retail sales tax or public utility tax.
- Minimum wage (2026)
- $17.13 an hour; no tip credit, so tipped workers get the full minimum before tips. No tip credit: tips and service charges cannot count toward minimum wage. The state rate rises to $17.73 on January 1, 2027. Several cities have higher local minimums, including Seattle, SeaTac, Tukwila, Renton, Bellingham, Everett and Burien, as does unincorporated King County.
- Rideshare (TNC) driver minimum pay and rights (RCW 49.46.300 to 49.46.350)
- Rideshare drivers get state minimum pay, trip receipts and other rights enforced by L&I. 2026 minimums: trips starting in Seattle pay $0.70 per minute plus $1.63 per mile (at least $6.12 per trip); trips starting and ending outside Seattle pay $0.40 per minute plus $1.38 per mile (at least $3.55). Companies must pay at least every two weeks, including tips.
- Seattle App-Based Worker Minimum Payment Ordinance (city law)
- Since January 13, 2024, covered app-based (gig) workers in Seattle must get at least $0.47 per minute plus $0.80 per mile, or $5.34 per offer, whichever is greater, in 2026. They also have rights to upfront offer details and pay records.
- Six-part independent contractor test for workers' comp (RCW 51.08.195)
- A worker is outside workers' comp coverage only if all six conditions are met: free from control; outside the usual course or places of business (or pays for their own place of business); independently established business; files a Schedule C (or similar) with the IRS; registered with DOR and holds a UBI number; and keeps separate business books.
- Noncompete earnings threshold for independent contractors
- In 2026, a noncompete is enforceable against an independent contractor only if they earn more than $317,147.09 a year from the business enforcing it ($126,858.83 for employees) (RCW 49.62.020 and 49.62.030).
- State retirement program
- Washington Saves (and the Washington Small Business Retirement Marketplace) is launching. It is built around W-2 employers and does not cover 1099 contractors through the employer mandate.
Federal rules for 2026
No tax on tips (2025 to 2028)
Eligible workers in occupations that customarily receive tips can deduct up to $25,000 of qualified tips a year from federal taxable income, whether or not they itemize. The deduction shrinks for modified AGI over $150,000 ($300,000 joint). It is income tax only: Social Security and Medicare still apply to tips.
Tips must be reported
Employees must report cash tips of $20 or more in a month to their employer by the 10th of the next month. Tips you did not report go on Form 4137. Only reported tips count toward the deduction.
Overtime deduction
W-2 workers who are owed overtime under federal law can also deduct the overtime premium, up to $12,500 a year ($25,000 joint), with the same income phase-out.
Roth IRA
Without a workplace plan, a Roth IRA lets you save up to $7,500 in 2026 ($8,600 at 50 or older) and withdraw qualified money tax-free in retirement, subject to income limits.
A worked example
| Tips deduction | $15,000 |
|---|---|
| Federal income tax without the deduction | $3,220 |
| Federal income tax with it | $1,420 |
| Federal income tax saved | $1,800 |
Single filer, standard deduction, 2026 brackets. Payroll taxes on tips are unchanged. Computed from 2026 IRS limits (Notice 2025-67, Rev. Proc. 2025-32) and the SSA wage base.
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Questions
Is there a local income tax in Seattle?
No city income tax applies in Seattle. Washington has no state income tax on wages or self-employment income.
What local business taxes apply to self-employed bartenders & servers in Seattle?
Seattle Business License Tax Certificate: Anyone doing business in Seattle needs a business license tax certificate, renewed every year by Dec. 31. The 2026 fee is $73 if annual Seattle taxable revenue is under $20,000 and $147 for $20,000-$499,999.99. Effective 2026, people with $4,000 or less in Seattle gross income who do not maintain a place of business in the city do not need one. Seattle Business & Occupation (B&O) Tax: Starting Jan. 1, 2026 (Seattle Shield Proposition 2), the B&O tax threshold rose from $100,000 to $2 million, so businesses with less than $2 million in Seattle taxable revenue owe no B&O tax. They still must file their B&O returns and report gross revenue, even when no tax is due.
Do I need a business license to freelance from home in Seattle?
Yes, usually. The City says businesses based in a Seattle home usually need a Seattle business license tax certificate, and even new businesses that are not yet profitable must apply and renew each year.
What Seattle rules protect gig workers and freelancers?
Seattle App-Based Worker Minimum Payment Ordinance (SMC 8.37): Covered app-based workers (such as delivery workers) must be paid at least the greater of a per-minute plus per-mile amount or a per-offer minimum. For 2026, that is $0.47 per minute plus $0.80 per mile, or $5.34 per offer (up from $0.45, $0.77 and $5.20 in 2025); the law took effect Jan. 13, 2024. Seattle App-Based Worker Paid Sick and Safe Time Ordinance (SMC 8.39): App-based workers at network companies with more than 250 workers earn 1 day of paid sick and safe time for every 30 days with at least one work-related stop in Seattle. Each day used is paid at the worker's average daily compensation for days worked in Seattle over the prior 12 months. It covered food delivery workers from May 1, 2023 and all app-based workers from Jan. 13, 2024. Seattle App-Based Worker Deactivation Rights Ordinance (SMC 8.40): Since Jan. 1, 2025, network companies must give workers their deactivation policies, notice before most deactivations, access to the records behind them, and an internal challenge process; workers have 90 days from notice to challenge and may file a private lawsuit. Starting June 1, 2027, the city can investigate whether a deactivation was for a permissible reason. Seattle Independent Contractor Protections Ordinance (SMC 14.34): Since Sept. 1, 2022, commercial hiring entities must give self-employed independent contractors with no employees (who expect $600 or more from them in a year) a notice of rights, a written pre-work notice of terms, itemized payment info, and payment on time or within 30 days of finishing the work. Washington State ride-hail (TNC) driver minimum pay, Seattle rates (state law, enforced by L&I): For 2026 (effective Jan. 1, 2026), rideshare trips that start in Seattle must pay the greater of $0.70 per passenger platform minute plus $1.63 per passenger platform mile, or $6.12 per dispatched trip (trips elsewhere in Washington: $0.40 per minute plus $1.38 per mile, or $3.55). This state law replaced Seattle's own TNC minimum pay ordinance on Jan. 1, 2023.
Do bartenders & servers in Washington pay state income tax?
Washington has no state income tax on wages or self-employment income. Washington has no individual income tax in 2026. Senate Bill 6346 (2026 session) adds a 9.9% tax for individuals and married couples filing jointly with adjusted gross income over $1 million, starting January 1, 2028, with first returns due in April 2029. A separate capital gains tax already applies: 7% on long-term gains above the standard deduction ($278,000 for 2025), plus 2.9% more (9.9% total) on gains over $1 million from tax year 2025.
Are there other Washington taxes for self-employed bartenders & servers?
Washington business and occupation (B&O) tax: A gross receipts tax on almost every business, including sole proprietors. The service rate in 2026 is 1.5% if the prior year's service income was under $1 million (1.75% from $1 million to $4,999,999.99, and 2.1% at $5 million or more). A small business credit of up to $160 a month for mainly service businesses ($55 a month for others) reduces or wipes out the tax. The Department of Revenue can excuse businesses under $125,000 a year in B&O gross income that owe no other DOR taxes from filing returns; SB 6346 raises this filing threshold to $250,000 for businesses that do not collect retail sales tax or public utility tax.
What is the tipped minimum wage in Washington in 2026?
Washington's 2026 minimum wage is $17.13 an hour. Employers cannot take a tip credit, so tipped workers get the full minimum wage before tips. No tip credit: tips and service charges cannot count toward minimum wage. The state rate rises to $17.73 on January 1, 2027. Several cities have higher local minimums, including Seattle, SeaTac, Tukwila, Renton, Bellingham, Everett and Burien, as does unincorporated King County.
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Sources
- dor.wa.gov/taxes-rates/income-tax
- www.lni.wa.gov/workers-rights/wages/minimum-wage
- dor.wa.gov/forms-publications/publications-subject/special-notices/service-and-other-activities-rate-changes
- lni.wa.gov/workers-rights/industry-specific-requirements/transportation-network-company-drivers-rights/getting-paid
- www.seattle.gov/laborstandards/ordinances/app-based-worker-ordinances/app-based-worker-minimum-payment-ordinance
- app.leg.wa.gov/RCW/default.aspx?cite=51.08.195
- lni.wa.gov/news-events/article/25-27/
- taxfoundation.org/data/all/state/state-income-tax-rates-2026
- www.seattle.gov/city-finance/business-taxes-and-licenses/business-licenses
- www.seattle.gov/city-finance/business-taxes-and-licenses/business-taxes/seattle-shield-business-and-occupation-(bando)-tax-changes
- www.seattle.gov/laborstandards/ordinances/app-based-worker-ordinances/app-based-worker-paid-sick-and-safe-time-ordinance
- www.seattle.gov/laborstandards/ordinances/app-based-worker-ordinances/app-based-worker-deactivation-rights-ordinance
- www.seattle.gov/laborstandards/ordinances/independent-contractor-protections-
State and local facts researched from official sources and independently re-checked; last verified October 2026, next scheduled review 2027-01-02. Educational information for 2026, not tax, legal or investment advice. Rules change; check the official sources listed and a tax professional for your situation. Gigaverse AI, Inc. is a financial technology company, not a bank, and not itself a registered investment adviser or broker-dealer.