The vast beauty of Wyoming isn’t the only lure of the state for small business owners and entrepreneurs—it also boasts a very low tax burden overall. But, even as a business-friendly state, Wyoming does have some business taxes (and, of course, businesses still have to deal with federal income taxes and the IRS). Read on to learn the answers to common FAQs about the tax environment small businesses can expect in Wyoming.
Does Wyoming tax business income?
No. Wyoming doesn’t have a corporate income tax or franchise tax. It also doesn’t impose state income taxes on individuals, so owners of pass-through entities don’t need to worry about filing personal income tax returns.
Does Wyoming have sales taxes and use taxes?
Without any revenue from business or personal income taxes, Wyoming’s largest sources of revenue are sales taxes and use taxes.
The sales tax is an “excise tax,” meaning a tax imposed on consumption. Vendors must have a license and are responsible for collecting and remitting the tax to the state.
The sales tax is applied to the retail sales and leases of tangible personal property, admission fees, and some services to Wyoming purchasers. The tax is based on the sales price paid, with the exception of leases, where the sales tax is based on the gross rental paid. Wyoming’s state sales tax rate is 4%.
The use tax is complementary to the sales tax and has the same tax rate. It’s applied to out-of-state purchases between a Wyoming purchaser and an out-of-state seller not licensed to collect Wyoming sales tax. Business entities must pay use tax if:
- No sales tax is paid at the time of purchase, or
- Another state collected sales tax at a lower tax rate than the rate in effect in the Wyoming county where the item is used.
In addition, the 23 counties in Wyoming may impose two optional local taxes, either for general or specific purposes. Each option tax is limited to a maximum of 2%. Counties may also impose an option tax for economic development purposes; those local taxes are limited to 1%. The combined option taxes are capped at 3%.
Small businesses may also incur an optional municipal sales and use tax of up to 1%.
Are remote sellers subject to sales tax in Wyoming?
Remote sellers with no physical presence in Wyoming are nonetheless subject to the sales tax and tax filing if, for the current calendar year or the immediately preceding calendar year, they have:
• Gross revenue from sales of tangible personal property, admissions, or services delivered into Wyoming that exceeds $100,000, or
• 200 or more separate transactions for delivery into Wyoming.
For sales tax purposes, gross revenue refers to the total revenue in Wyoming, including taxable, exempt, and wholesale sales.
Each invoice is a transaction. If the sale involves a yearly subscription and the purchaser can make payments over time, it counts as only a single transaction.
How should businesses remit their sales taxes and use taxes?
Wyoming has two sales tax and use tax returns vendors should use to remit collected taxes:
- Form 41-1, “Sales and Use Tax Return for Licensed Vendors,” for monthly or quarterly filers
- Form 42-1, “Sales and Use Tax Return for Licensed Vendors,” for annual filers
The forms are pre-printed with your “Doing Business As” (d/b/a) name, address, license number, filing period, and due date. A barcode on the form identifies the particular filing period.
The estimated sales volume you declare on your Wyoming Sales/Use Tax License Application will initially determine your tax return filing frequency:
- Annual filing: $0 — $50 in collected tax per month (returns are due on or before the last day of January following the year the sales/purchases were made)
- Quarterly filing: $50 – $150 in collected tax per month (due on or before the last day of the month following the month the sales/purchases were made)
- Monthly filing: More than $150 in collected tax per month (due on or before the last day of the month following the quarter the sales/purchases were made)
Your tax filing frequency may be changed by the Wyoming Department of Revenue if your taxable sales increase or decrease significantly.
Vendors can file their sales tax and use tax returns and make payments online or by mail:
Wyoming Department of Revenue
122 West 25th Street, Suite E301
Cheyenne, WY 82002
Even if no sales occurred during the filing period and no tax was collected, a small business must file a tax return reflecting zero sales and zero tax collected.
What is the vendor compensation credit?
Business owners can take a credit on their sales tax and use tax returns to help offset the cost of filing and reporting the taxes. To qualify, your tax return and payment must be postmarked by the 15th of the month the tax is due. For example, a January 2024 tax return and payment must be postmarked by February 15.
The credit is equal to 1.95% of the first $6,250 due in tax plus 1.0% of the tax due for any amount exceeding $6,250. This amount can’t exceed $500 per tax filing period.
For example, suppose a small business has a total sales tax due of $7,500 for the filing period. In that case, the credit is computed as follows:
1.95% x $6,250 = $121.88
1% x $1,250.00 (amount exceeding $6250) = $12.50
$121.88 + $12.50 = $134.38
The total vendor compensation credit allowed for the tax filing period would be $134.38.
The $500 limit is applied on a for-vendor basis, not for-business. For example, if a corporation owns several businesses, the vendor compensation credit allowed for that corporation is $500 total, not $500 per business.
To qualify for the credit, a business owner’s sales tax account must be in good standing, with all tax returns currently due filed and paid in full. The account may not have any outstanding balances.
Does Wyoming have any exemptions from the sales taxes and use taxes?
- An entity-based exemption, based on who purchases the product, service, or admission,
- A product-based exemption. based on the description of the product, service, or admission, and
- A use-based exemption, based on the purchaser’s use of the product.
- Food for domestic home consumption (as opposed to food designed for immediate consumption),
- Over-the-counter medications and remedies, and
- Certain products sold by prescription.
Does Wyoming have any other excise taxes?
Yes, although they’re generally referred to as “surcharges.” For example, Wyoming imposes surcharges on:
· Fuel, and
Does Wyoming tax business personal property?
Tax rates, or “mill levies,” are set by the various governmental entities with the legal power to levy taxes, including counties, school districts, cities, towns, and special taxing districts (for example, water and sewer districts and cemetery districts).
Taxes are due and payable at the office of the County Treasurer of the county in which the taxes are levied. Fifty percent of the taxes are due by November 10 every year, and balances are due by May 10 of the succeeding calendar year.
How do unemployment insurance taxes work in Wyoming?
Any business conducting work in Wyoming or hiring a Wyoming resident as an employee must register with the Division of Workers’ Compensation and Unemployment Insurance (part of the Department of Workforce Services) to have their unemployment insurance tax rate determined (the state unemployment insurance tax is on top of the federal unemployment tax).
New employers (with less than three years of “experience”) are assigned a base rate calculated on their specific industry and three additional rate factors. The additional factors are the:
- Noncharged/ineffectively charged factor (to replenish the unemployment insurance trust fund for benefits paid that weren’t charged to an employer),
- Employment Support Fund factor (to fund special programs and support employment programs throughout the state), and
- Fund balance factor (to maintain the trust fund balance at a balance sufficient to cover benefits but not more than is needed).
The base rate and these three factors when added together will equal the total tax rate for the calendar year.
Once you complete your Joint Business Registration (and Out of State Questionnaire for businesses not residing in Wyoming), you’ll receive a notice of your rate. If you don’t complete the registration before you submit a quarterly wage report (see below), you’ll be assigned the highest base rate possible, 8.5%.
After you have at least three years of experience on your account with the department, you’ll be assigned a base rate calculated on your specific benefit ratio. The benefit ratio equals 1) total benefits charged to your account and paid during the preceding experience period, divided by 2) total taxable wages payable for that experience period.
You’ll also be assigned three additional rate factors, which are combined with the base rate to compute your total tax rate for the calendar year. Annual rate notices are mailed no later than December 31 of the prior year.
The taxable wage base for 2024 is $30,900—so you apply your assigned tax rate to only the first $30,900 of an employee’s annual wages.
Quarterly wage reports are due:
- April 30
- July 31
- Oct. 31
- Jan. 31
Some wages are exempt from unemployment insurance taxes, though, including those for:
- Sole proprietors,
- A sole proprietor’s spouse, parents, and dependents under age 21,
- Partners in a partnership,
- Minor-aged children of husband/wife partnerships, and
- Members of a limited liability company (unless they elect optional coverage).
Staying up-to-date on all of your federal and state tax obligations can eat up a lot of a small business owner’s time and resources. Gusto’s payroll service can simplify matters by making it easier to pay employees and automatically file your payroll taxes.