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.
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 33.1% percent for a total of $12.54 billion in 2023. New construction value increased $176.7 million. This results in a $155,648 increase to property taxes.
In 2023, the total property tax rate in Lacey is $9.47 per $1,000 of assessed property value. Of this, only 7.7% (or $0.73 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 2023, for a property with a total assessed value of $500,000 the City receives around $366.13 per year to pay for day-today operations of the City.
The sales tax rate in the City of Lacey is 9.5%. 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.
|Chemical Dependency & Behavioral Health Services||0.10%||$0.10|
|Housing and Related Services||0.10%||$0.10|
|Lacey Transportation Benefit District||0.20%||$0.20|
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.
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.
The City of Lacey collects taxes from businesses in the form of the business and occupation (B&O) tax. Business and occupation tax is a gross receipts tax imposed on a business based on their taxable business activities. These tax revenues contribute to the General Fund. Chapter 3.02 of the Lacey Municipal Code provides additional information about the imposition of this tax.
How Often Do I Have to File B&O Tax Returns?
Based on your business activities and gross income, your business will be assigned an annual or quarterly filing frequency.
What is the B&O Tax Rate in Lacey?
There are four taxable business classifications subject to B&O tax in the City of Lacey. The rate for each is as follows:
Printing & Publishing: 0.00100
Service & Other Activity: 0.00200
Which Business Classification Should I Report Under?
The City of Lacey’s four defined business classifications are as follows:
Retailing: Every person engaging in the business of making sales at retail of articles, commodities or merchandise held for sale or to be delivered within the City, including competitive telephone service; sales of the business without regard to the place of delivery of articles, commodities or merchandise sold.
Contractor: Building, repairing or improving any publicly owned street, place, road, highway, bridge or trestle within this City which is used, or to be used, primarily for foot or vehicular traffic; every person directly or by contracting with others, removing any mineral or other natural resource product from his or her own land or from land of another under a right or license granted by lease or contract.
Printing & Publishing: Every person engaging in the business of printing and of publication within this City of newspapers, periodicals or magazines.
Service & Other Activity: Every person engaging in any business venture other than those specified above and other than those specifically designated as Retail.
For questions about your tax reporting classification, please contact BandOTaxes@ci.lacey.wa.us.
How Much B&O Tax Will I Owe?
The amount of tax due is determined using your business’s taxable gross receipts and is calculated at the rate assigned to your tax classification.
For businesses filing quarterly: B&O taxes are not due if gross receipts are less than $5,000, but a return must still be filed.
For businesses filing annually: B&O taxes are not due if gross receipts are less than $20,000, but a return must still be filed.
Are There Any B&O Tax Deductions?
Yes. There are four tax deductions that a business may qualify for: bad debts, cash & trade discounts, motor vehicle fuel tax, and liquor sales.
What If My Business is Exempt?
All business activity is subject to the B&O tax unless specifically outlined per Lacey Municipal Code 3.02.100.
The City of Lacey offers a Small Business Startup B&O Tax Exemption to new small business within Lacey city limits. This exemption is offered only to new business, within city limits, which have gross income under $500,000 per calendar year and may only be claimed during the first three years of business. If a business exceeds $500,000 during the calendar year and has already claimed the exemption for prior periods within that year, the business will be liable for B&O tax for the entire year and may be required to amend previous returns.
How Do I File a B&O Tax Return?
You will receive your tax return in the mail quarterly or annually depending on your filing frequency. Completed returns and applicable payments should be mailed to:
City of Lacey
420 College St. SE
Lacey, WA 98503
At this time, the City of Lacey only accepts paper tax returns.
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 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 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.
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