The Washington Employee Ownership Program Tax Credit

Beginning in July 2024, specific costs related to converting a qualifying business to an employee ownership structure qualify for an occupation tax credit. 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.

Available for qualified businesses

• 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 Washington State Department of Revenue (DOR) administers the Employee Ownership Program B&O Tax Credit. Information about the credit is available from their  Special Notice (PDF) issued June 6, 2024.

Requirements

Submit the application through your My DOR account.

To qualify for any Employee Ownership Program structure, the conversion or adoption date must be on or after July 1, 2024. The documentation to accompany your application includes the following.

• A completed expenditure eorksheet documenting all qualifying costs associated with the conversion.
• Notarized corporate resolution establishing the new employee ownership structure type or Notarized Stock Purchase Agreements.
• Your organization’s articles of Incorporation.
• A letter signed by a third-party certified public accountant (CPA) that confirms the expenses listed on the expenditures worksheet were part of establishing 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.

Learn more

You can learn more by visiting the 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.

Visit the Access to Capital page to learn more about the Employee Ownership Program and if it might be right for your organization.

Visit the The Washington Employee Ownership Commission page to learn more about the program’s advisory board.