Taxes and Fees

The City collects revenues in the form of taxes to provide services to the community.  The City’s General Fund provides for most day-to-day city services, such as police services, parks and recreation, social services, financial services, community development, street maintenance, engineering services, court, jail services, etc. Property tax, sales tax, and utility tax revenues make up almost 50% of all City tax revenue. Other tax revenue sources include Business and Occupation (B&O) Tax, specific business activity taxes such as the  gambling tax, admissions tax, and other fees for services.

Business and Occupation (B&O) tax is collected either quarterly or annually. The amount due is based on the businesses’ gross income less certain deductions for that period. Any person, firm, or corporation conducting business within the City of Lacey is required to collect Washington State sales tax and remit the same to the State of Washington Department of Revenue.

Lacey’s sales tax number is 3402.

To learn more about specific taxes and fees in Lacey, select the tabs below.


Property Tax

Every year, the property tax levy in Lacey is determined by calculating the one percent (1%) allowable limitation and adjusting for the value of new construction, annexations, and refunds.

Preliminary values issued by Thurston County Assessor’s Office indicate that Lacey’s total assessed value increased 15.9% percent for a total of $9.13 billion in 2022. New construction value increased $221.4 million. This results in a $213,198 increase to property taxes.

In 2022, the total property tax rate in Lacey is $11.61 per $1,000 of assessed property value. Of this, only 8.2% (or $0.96 per $1,000 of assessed property value is for the City.

The remaining 92% of property tax is distributed between Washington State, North Thurston Public Schools, Lacey Fire District #3, Medic One, Timberland Library, Thurston County, Port of Olympia, and Public Utility District (PUD) #1.

In 2022, for a property with a total assessed value of $450,000 the City receives around $396.48 per year to pay for day-today operations of the City.


Sales Tax

The sales tax rate in the City of Lacey is 9.4%. Of this, the City receives a total of 0.85% with the remaining funds going to Washington State, Thurston County, InterCity Transit, and other entities. Sale tax revenues collected by the City go into the City’s General Fund.

Sales tax is applied to the sale of personal and business property. Retail sales tax is also assessed on some
services such as repairs and construction.

JurisdictionSale TaxExample
$100 purchase
State6.5%$6.50
Thurston County 0.15% $0.15
InterCity Transit1.20%$1.20
Chemical Dependency & Behavioral Health Services0.10%$0.10
Criminal Justice0.10%$0.10
Detention Facilities0.10% $0.10
TCOMM/911 Communications0.20% $0.20
Lacey0.85% $0.85
Lacey Transportation Benefit District0.2% $0.20
Total9.4%$9.40

Utility Fees

Utility fees typically make up around 14% of the City’s General Fund revenues.

This tax is similar to the business and occupation (B&O) tax, but is imposed on utility businesses. Business activities subject to this tax are cellular phone, garbage collections, gas distribution, light and power, sewerage, telephone, and water distribution. The utility tax rate is 6%. There is an additional 6.04% utility tax on water distribution.

Cities and towns in Washington State are authorized to levy a business and occupation tax (RCW 35.22.280(32)) on public utility businesses based on revenues they generate within the city or town, known as a utility tax. Utility taxes are levied on the gross income earned by private utilities from operations within City boundaries.

The rate of taxes for electric, phone, and natural gas utilities are limited to 6% (RCW 35.21.870) without voter approval. There is no limitation on tax rates on other public utilities.


Other Taxes

Property tax, sales tax, and utility taxes are the largest contributors to the City’s General Funds. Other taxes make up less than 5% of general fund revenues. The City collects the following taxes as authorized by the Lacey Municipal Code. A description of each tax is listed below.

Business & Occupation Tax

The City of Lacey collects taxes from businesses in the form of the business and occupation (B&O) tax.  B&O tax revenues go into the General Fund. Business and Occupation (B&O) tax is collected either quarterly or annually. The amount due is based on the businesses’ gross income less certain deductions for that period.

There are some exemptions, 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. Business and Occupation (B&O) tax is collected either quarterly or annually. The amount due is based on the businesses’ gross income less certain deductions for that period.

General B&O Tax Information:

  • 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.

If you’re interested in starting a new business, expanding your existing business, locating or relocating to the Pacific Northwest, Lacey is a great place! Learn more here.

Admissions Tax

Persons who pay an admission charge for entrance to an event or establishment are subject to the admissions tax. The admissions tax is collected by the business charging the admission and computed on the ticket price. The rate is equal to 5%.

Gambling Tax

Gambling activities are regulated by the state, with the Washington State Gambling Commission regulating and licensing most gambling activities under chapter 9.46 RCW. Cities and towns are limited in their authority to regulate gambling, but they may prohibit any or all gambling activities for which licenses are required.

In Lacey, a Gambling Tax is levied on all persons, associations, and organizations who engage in specified gambling activities. Gambling activities include bingo games, raffles, amusement games, punchboard, pulltabs, and social card games. The tax rates range between 2% and 7.5% percent.

Franchise and Utility Fees

Franchise fees are charges on private utilities for their use of City streets and other public properties to place utility
infrastructure. The franchise fees on light, natural gas, and telephone utilities are limited by state statute to the actual administrative expenses incurred by the City directly related to receiving and approving permits, licenses, or franchisees. Cable TV franchise fees are governed by the Federal Cable Communications Policy Act of 1996 and are negotiated with cable companies for an amount not to exceed 5% of gross revenues.


Department Contact
Troy Woo

Finance Director

TEL: 360-491-3212

EMAIL: TWoo@ci.lacey.wa.us

Department
Finance

email: Finance@ci.lacey.wa.us

phone: 360-491-3212

Hours
Monday - Friday: 9:00 am - 5:00 pm