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The City of Tacoma is currently faced with a $40 million budget deficit. To help close this gap, officials are now proposing a restructure of the city’s business licensing fee system, aiming to generate an extra $6.2 million in revenue.  

Because of the unique ways the city calculates gross income for licensing, these changes directly impact independent agents and managing brokerages, alike, even if your physical office is based outside Tacoma limits. 

While the city states that 80% of local businesses will see fees decrease or remain flat, high-volume operations face a newly segmented tiering system. The proposed restructuring divides the highest revenue brackets into two distinct paths: 

  • Under $1 Million: The three lowest revenue tiers will see a decrease in annual fees by 8% to 20%. 
  • Gross Income under $12,000: Proposed to decrease from $37 to $30 per year. 
  • Gross Income of $12,000 to $250,000: Proposed to decrease from $190 to $150 per year. 
  • Gross Income of $250,000 to $1,000,000: Proposed to decrease from $435 to $400 per year. 
  • $1 Million to $5 Million: $1,500 license fee (unchanged from current rate). 
  • $5 Million+: Instead of a single flat rate for all entities making over $5 million, currently set at $2,000 per year, the city is proposing to split this tier to hit ultra-high-revenue businesses: 
  • $5 million to $10 million: $2,600 per year 
  • $10 million+: $3,000 per year 

The “One-Transaction” Trap for Out-of-City Agents & Brokerages 

If your brokerage office is in Bellevue, Seattle, or Puyallup, you might assume Tacoma’s local fee shifts won’t affect you. However, Tacoma enforces a strict and unique policy regarding real estate activities: 

  1. The “Worldwide” Gross Income Rule: The City of Tacoma defines “gross income” for a business license as worldwide business income meaning all revenue generated both inside and outside city limits, regardless of your physical office address. 
  1. The Single-Transaction Trigger: If an outside real estate agent conducts even a single transaction within Tacoma corporate city limits, they are required to pay a license fee based upon their total gross income across all transactions (including those completely outside the city).  

Example: If an agent based out of Olympia closes just one home in Tacoma, they cannot simply pay a fee based on that single commission. Tacoma requires them to secure a business license, and the fee tier they fall into will be calculated using their entire annual gross income earned across the state.  

Note: For general out-of-city businesses, there is a technical minimum threshold of $4,000 generated within Tacoma before registration is required. However, because a single residential real estate commission almost always exceeds $4,000, one closed deal in Tacoma automatically triggers full licensing requirements based on your total gross volume.  

Brokerage vs. Agent: Who Pays? 

Real estate offices are required to pay a license fee based on the collective gross income of their agents.  

Furthermore, the City demands that individual brokers making over a certain threshold pay B&O taxes on gross commissions unless the primary brokerage office remits the tax on the full gross commission earned by the firm. 

TPCAR encourages its brokerage owners to review their corporate policies as brokerages have the authority to choose whether the firm will cover these municipal expenses for transactions occurring within Tacoma, or if those specific licensing and B&O tax burdens will be pushed directly onto the individual agent handling the transaction. 

Key Dates to Watch 

The City Council is actively reviewing this package. Ensure your voice is heard or your budget is adjusted before these dates pass: 

  • October 27, 2026: First public hearing on the proposed biennial budget. 
  • October & November 2026: City Council budget review and revisions. 
  • November 17, 2026: Scheduled final vote and adoption of the budget. 
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