Taxes & Incentives

Taxes & Incentives

Too many high-tax places have complex and expensive tax systems that over-burden businesses. They then have to develop complex business incentive programs to offset the very problems they have created, as well as to mitigate other competitive disadvantages specific to their market.  While the State of Washington and the City of Lacey must charge some taxes in order to provide essential public services, we try to minimize them, keep them straight forward, and fair.   For example, neither the City of Lacey, nor the State of Washington charges a corporate or personal state income tax; a state or local inventory tax; nor a state or local tax on interest, dividends, or capital gains.

Adding to the value equation for businesses locating in Lacey is that there are quality sites available, and the City of Lacey has a streamlined development process.  There are still hundreds of acres of competitively-priced, fully-served light-industrial and prime-commercial land available for development within the City, much of it with easy Interstate-5 access. Lacey’s development process is customer-friendly, customer-focused, clear, predictable, fast, and efficient.

Workforce assistance is available through a partnership between The Pacific Mountain Workforce Development Council and the Thurston Chamber of Commerce. This includes FREE assistance with recruitment and screening of employees, as well as financial and technical assistance with on-the-job training for your workers.  For more information, please call 360-357-3362 or e-mail

Business Licenses & Taxes–Every business operating in the City of Lacey must be registered with the City. This includes home-based businesses, businesses with locations in the City, and those located outside of the City, but operating within the City of Lacey. This also applies to temporary businesses (for example, fruit stands, tree sales, car sales, etc.).  For more information on the City’s business license requirements, process, or fees, please follow this link to the Finance Department website.

The City contracts with the State Department of Revenue’s Business Licensing Service (BLS) to help streamline and provide better benefits to local businesses. BLS acts as a one-stop-shop for business licensing requirements and offers an online application and renewal process option, including credit card and e-payment options. BLS also offers services that can help businesses to open, re-open, renew, and change ownership, and/or locations, as well as a myriad of other options for businesses. Here is a link to the City of Lacey’s BLS web page.

Certain business activities such as daycare services, mechanical music machines, for-hire vehicles, towing services, and pawnbrokers have additional registration requirements. For complete information regarding the business activities that require additional registration requirements, please review the Lacey Municipal Code Title 5: Business Licenses, Registration, and Regulations. Please contact the Finance Department if your business activity requires additional registration requirements.


Business Occupancy (B&O Tax)–The City of Lacey collects taxes from businesses in the form of the business and occupation (B&O) tax. B&O tax revenues support general government functions.

There are some exemptions, at both the State and City level, but generally, every person, company, corporation, and association that engages in business in Lacey is subject to the City’s B&O tax.   The B&O tax is based on gross receipts.

Chapter 3.02 of the Lacey Municipal Code provides additional information for specific businesses.

  • All businesses conducting transactions in Lacey, whether or not the business is physically located within the City, must be registered with the City of Lacey.
  • All business activity is subject to the B&O tax unless specifically exempted by Lacey Municipal Code.
  • For customers filing quarterly: B&O taxes do not apply if gross receipts are less than $5,000.
  • For customers filing annually: B&O taxes do not apply if gross receipts are less than $20,000.
  • The New Business Registration Pamphlet can provide answers to your questions. You may also contact the Finance Department.


State & Federal Taxes–The Washington State Department of Commerce has excellent information for businesses, especially for new businesses, or businesses opening for the first time in Washington, on taxes including real estate taxes, personal property taxes, sales taxes, and taxes withheld and paid when a business has employees. For that information, please click here.


If you don’t see what you’re looking for here, please contact us.  We will be very happy to locate the data—the information—that you’re seeking!