Beginning July 1, 2024, an occupation tax credit for costs related to converting a qualifying business to an employee ownership structure is established. The total amount of credits may not exceed $2 million per year and are available on a first-come, first-served basis. Unused credits may be carried over for up to 12 months from the end of the tax reporting period in which the credit was earned.
You can learn more by visiting the Washington Department of Revenue (DOR) website Tax Credits section. If you have further questions about the credit, please call the DOR Taxpayer Account Administration division at 360-705-6214.
Tax credit availability
Qualified businesses may receive up to:
- 50% of the conversion costs, not to exceed $25,000, for converting to a worker-owner cooperative or an employee-ownership trust.
- 50% of the conversion costs, not to exceed $100,000, for converting to an Employee Stock Ownership Plan (ESOP).
The WA Department of Revenue administers the Employee Ownership Program B&O Tax Credit. Information about the credit is available from the WA Department of Revenue June 6, 2024 Special Notice (PDF).
Requirements for businesses
Businesses will be required to submit the application through their My DOR account. The listed documentation will be required with the application.
To qualify for a tax credit, the conversion or adoption date of the business to an employee ownership plan must be on or after July 1, 2024.
- A completed expenditure worksheet documenting all qualifying costs associated with the conversion
- Notarized Corporate Resolution establishing the new employee ownership structure type or Notarized Stock Purchase Agreements
- Articles of Incorporation
- A letter signed by a third-party CPA that attests the expenses listed on the Expenditures Worksheet were in conjunction with the employee ownership program, the amount spent on the conversion is accurate, the costs incurred by the applicant, and the expenses are qualified and eligible.
Reference materials
- Download a WA-EOP Tax Credit summary and fact sheet (PDF) .
- Download a WA-EOP summary and fact sheet (PDF).