Seattle’s small business owners are once again bracing for potential financial changes as the City Council prepares to vote on a 0.1% public safety sales tax. The measure, expected to pass, would raise Seattle’s total sales tax rate to 10.55% by 2026. This’d make it one of the highest among major US cities.
The tax is intended to support public safety programs, including expanding Seattle’s non-police emergency response teams. While city officials describe the measure as essential to filling a projected budget gap of over $140 million by 2027, many business owners and residents worry that higher sales taxes could further strain affordability and consumer spending.
What This Means for Local Businesses
Sales tax increases often have ripple effects. For small retailers, restaurants, and service providers, a higher rate can lead to reduced customer spending, especially as consumers weigh every dollar amid inflation and rising living costs.
A Seattle café owner or boutique retailer, for example, might find it harder to keep prices competitive when nearby cities in King county maintain slightly lower tax rates. Even small differences can impact sales volume over time.
The proposed 0.1% increase may sound minor, but on large purchases—like a $25,000 vehicle—it adds about $25 in taxes. For customers already stretched thin, those small increments add up.
A Balancing Act: Safety vs. Affordability
City leaders supporting the measure argue that it’s a necessary investment in public safety and community well-being. Mayor Bruce Harrell’s 2026 budget proposal allocates $9.5 million to expand the Community Assisted Response and Engagement (CARE) department, doubling the city’s non-police crisis response team from 24 to 48 responders.
Opponents, however, emphasize that Seattle’s cumulative taxes (from transportation and education levies to property and business taxes) are squeezing both residents and small businesses. As Council member Maritza Rivera noted, “We’re essentially taxing people who are already struggling.”
What Small Business Owners Can Do
If you operate a small business in Seattle, now’s the time to plan ahead:
- Adjust pricing and cash flow forecasts. Even minor tax rate changes can alter your margin projections.
- Communicate clearly with customers. If price adjustments are needed, explain why. Transparency builds trust.
- Look for tax credits or deductions. Work with your CPA to identify federal or state incentives that can offset local tax burdens.
- Monitor upcoming city budget developments. New levies or restructuring (like business & occupation tax changes) could affect you further.
Seattle’s entrepreneurs are resilient, but every tax increase makes operating in the city more challenging. Balancing civic investment with economic sustainability remains one of the biggest issues facing the city’s business ecosystem.