The square footage B&O tax was implemented to tax support space of offices whose business activities are not directly attributable to the generation of gross receipts to such activity. Generally, the tax applies to businesses that perform administrative activities or activities that support sales delivered to locations outside the city. Examples of administrative activities include, but are not limited to accounting, payroll, human resources, legal, and other activities that are of only indirect support to the activity subject to the gross receipts B&O tax.
If a business has both an administrative office and a sales office that generates gross receipts, they may need to report the gross receipts reportable to Bellevue and both square footage of the administrative office and the square footage of the sales office that supports sales delivered to locations outside the city. This is true whether personnel performing administrative activities share office space with those that generate gross receipts or sit in separate offices in the city. Examples of businesses that pay the tax include headquarter offices and businesses that make out-of-city sales.
The square footage B&O tax is reported under the Square Footage Tax Classification on the multi-purpose tax return and is measured on the taxable floor area of office space computed to the nearest square foot. The 2025 square footage B&O tax rate is $0.3203227 per taxable square foot per quarter. As an example, for each 1,000 square feet of taxable office space, $320.32 tax is due each quarter. This rate is adjusted each January based on the change in the Consumer Price Index to reflect the effects of inflation or deflation on the local economy.
Exemptions and deductions:
- Offices with taxable square feet of 250 or less (Exemption).
- Offices which support business activity, all or a portion of which is taxed under one of the gross receipts tax classifications (Deduction). For example, a retailer who sells in Bellevue, as well as outside the city Limits, may deduct the percentage of office space which has been taxed under another classification as noted in the following example:
In-city sales $600,000 60% taxed under Retailing
Out-of-city sales $400,000 40% deduction under Retailing
Total sales $1,000,000 100%