Seattle officials have unveiled a sweeping reform to the city’s business and occupation (B&O) tax, aimed at closing a looming budget deficit while shielding small businesses from tax burdens. The measure — called the Seattle Shield Initiative — would increase the B&O tax exemption from $100,000 to $2 million in gross receipts and hike rates for high-revenue firms.

Key changes under the proposal:

• Exemption increase: Businesses earning less than $2 million would owe no B&O taxes; those above that threshold would pay only on revenue beyond $2 million.
• New rates:
  • Retail/wholesale/manufacturing: Tax rises from 0.22% to 0.34%
  • Service firms (e.g., law, tech): Tax rises from 0.43% to 0.65%
• Who pays: About 2,300 high-earning firms, including Amazon and Expedia, would see increases. The city estimates 90% of businesses will pay less than they do now.
• Revenue impact: Generates an estimated $90 million annually.
• Duration: Applies from 2026 through 2029, with a possible four-year extension by the council.

The funds would be earmarked for housing stability, human services, and support for vulnerable workers. Mayor Bruce Harrell and Councilmember Alexis Rinck framed the tax as a response to federal cuts proposed by the Trump administration and a way to support local resilience.

Business groups praised the small business relief but warned the timing of tax hikes is risky amid economic uncertainty and rising commercial vacancies.

The City Council must approve the measure before it appears on the November ballot. If passed by voters, the new tax structure would take effect January 1, 2026.