Redmond to raise out‑of‑city business license threshold from $2,000 to $4,000; ordinance to be adopted by mid‑October

Deputy Finance Director Harita Nara and program coordinator Denise Shanda briefed the council’s finance committee on Sept. 9 on a proposed ordinance to amend Redmond Municipal Code 5.04.080. The ordinance would increase the minimum gross‑receipts threshold that triggers a business license fee for out‑of‑city businesses from $2,000 to $4,000, establish a process to adjust that threshold by CPI every four years, and must be adopted by mid‑October to satisfy Washington State’s business license service 75‑day notice requirement for an effective date of Jan. 1, 2026.

Nara said the threshold increase was discussed during the 2025–26 budget deliberations and council had expressed consensus at that time. She said recent state legislative approval raised the state threshold from $2,000 to $4,000, which prompted this city ordinance update. Nara said staff is conducting an RFP for a business license audit that will start in the fourth quarter of 2025 and finish in the fourth quarter of 2026; the audit will review the ordinance more broadly and evaluate whether the exemption remains appropriate.

Council members asked about treatment of nonprofits and home‑based businesses. Denise Shanda said that Redmond does not charge nonprofits that provide an IRS tax‑exempt letter; the licensing fee does not apply to them. For businesses located within the city limits (including home‑based businesses), the fee currently applies and staff said there is no separate low‑threshold exemption for in‑city home businesses at this time.

Nara asked the committee to place the ordinance on the Sept. 16 consent agenda; the committee advanced the item to consent by general assent during the meeting. Staff noted the increase will reduce revenue relative to the prior plan only for the delay period, and that the city’s budget incorporated the projected effect.