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Washington Retail Services Sales Tax

Active / changingSource checked: 2026-06-26

Watch: DOR guidance, ESSB 6113, ESSB 6346, litigation

Overview

ESSB 5814 expanded Washington retail sales tax to a set of services, effective October 1, 2025. DOR's interim guidance may be relied on until final guidance, cancellation, or new legislation changes the answer. Most newly-taxed services are scheduled to be repealed January 1, 2029 — except advertising services.

Do this first: Map each service you sell or buy to a DOR category, exclusion, or non-retail position, and keep sourcing documentation — contracts, statements of work, invoice allocation, purchaser address data, and usage data where relevant.

Sources: ESSB 5814 bill page · ESSB 5814 session law · ESSB 6113 bill page · ESSB 6346 bill page · DOR ESSB 5814 services hub · DOR interim guidance & rulemaking

Existing contracts: DOR interim guidance on contracts existing before October 1, 2025

Advertising services

Generally taxable. DOR's advertising guidance treats digital and nondigital services related to creating, preparing, producing, or disseminating ads as the main category — including online referrals, search engine marketing, lead generation optimization, web campaign planning, internet media acquisition, and website traffic analysis.

Key sourcing / exclusion: For sourcing, DOR points to the retail-sales-tax hierarchy in RCW 82.32.730 — seller business location if received there, known receipt location, purchaser address in business records, purchaser address obtained at sale, then a seller-provided location. For disseminated advertising, DOR focuses on where the result is first used — where ads are disseminated, viewed, or interacted with. Pre-dissemination creative services can require a different receipt analysis. MPU applies only when the service also qualifies as a digital automated service (DAS) and is used concurrently inside and outside Washington.

Current guidance links

Information technology services

ESSB 5814 makes certain information technology services subject to retail sales tax. Verified taxability and exclusion summary in progress — confirm scope against DOR interim guidance before relying on a position.

Current guidance links

Custom website development

ESSB 5814 brings custom website development into the retail-sales-tax base. The line between custom development and prewritten/customized software matters here. Verified taxability and exclusion summary in progress — confirm against DOR interim guidance.

Current guidance links

Live presentations

Live presentations (in-person and virtual) are newly subject to retail sales tax, with education- and school-related considerations. A special notice and 2026 changes apply. Verified taxability and exclusion summary in progress — confirm against DOR interim guidance.

Current guidance links

Investigation, security, and armored car services

Investigation, security, and armored car services are newly subject to retail sales tax. Verified taxability and exclusion summary in progress — confirm against DOR interim guidance.

Current guidance links

Temporary staffing

Temporary staffing services are newly subject to retail sales tax and carry a dedicated DOR special notice, with modifications in 2026. Verified taxability and exclusion summary in progress — confirm against DOR interim guidance.

Current guidance links

Custom software and customization of prewritten software

Custom software and the customization of prewritten software are addressed by ESSB 5814. Verified taxability and exclusion summary in progress — confirm against DOR interim guidance.

Current guidance links

Digital automated services (DAS) changes

DOR's FAQ says digital advertising services may use MPU only when they meet the DAS definition and are used concurrently inside and outside Washington. If eligible, use tax is apportioned based on first use, generally where viewers or interactors are located. This is a cautious tracker item, not a blanket rule — bundling, records, due diligence, and the DAS definition can change the analysis.

Current guidance links

Sourcing and place of receipt

Retail sales tax uses sourcing and place-of-receipt concepts to decide where a retail sale occurs. Service-income apportionment uses attribution to decide where service receipts belong for B&O apportionment. Do not collapse those two analyses into one rule — advertising is a common place they get mixed up.

What to do first

Sellers

  • Map each service line to a DOR category, exclusion, or non-retail service position.
  • Update invoice, POS, and customer-notice workflows for taxable sales made on or after October 1, 2025.
  • Keep sourcing support: contracts, statements of work, invoice allocation, purchaser address data, and usage data where relevant.

Buyers

  • Expect vendors to add sales tax on listed services when no exclusion or exemption applies.
  • Ask how multistate services, especially advertising, are being sourced before approving the charge.
  • Preserve exemption, reseller permit, direct-pay, or MPU documentation before relying on it.

CPAs / advisors

  • Keep retail-sales-tax sourcing separate from B&O service-income attribution.
  • Screen existing contracts, bundled services, affiliate transactions, and resale/subcontractor arrangements.
  • Treat interim guidance, rulemaking, and litigation as required status checks before final advice.

2026 updates and special notices

ESSB 6113 is the verified 2026 retail-services source handle. It clarifies definitions and exclusions (temporary staffing, live presentations, advertising sourcing) and addresses use tax for newly enacted retail services. ESSB 6346's bill reports connect the millionaires-tax package to tax relief and state that most ESSB 5814 retail-services sales and use taxes are repealed effective January 1, 2029, except advertising services.

Special notices to watch: live presentations; schools and libraries exemptions; temporary staffing modifications.

Sources: ESSB 6113 bill page · ESSB 6113 final bill report · ESSB 6346 bill page · ESSB 6346 final bill report · DOR schools and libraries exemption special notice · DOR temporary-staffing hospital-modification special notice

Watchlist

  • DOR final guidance — interim guidance may be relied on until final guidance, cancellation, or new legislation. See DOR interim guidance and upcoming rulemaking.
  • Rulemaking — DOR identified several WACs and interpretive statements affected by ESSB 5814. See DOR public feedback listening-session report.
  • Penalty relief — DOR has a penalty relief program for some ESSB 5814 retail-service reporting periods.
  • ESSB 6113 — 2026 technical and administrative changes, including use-tax and sourcing clarifications.
  • ESSB 6346 — connects the millionaires-tax package to the 2029 repeal of most ESSB 5814 retail-services taxes, except advertising.
  • Litigation — DOR flags ongoing proceedings involving constitutional and electronic-commerce arguments, including Internet Tax Freedom Act arguments. Verify current status before relying on this page.

FAQ

Is every listed service automatically taxable? No. Read this as a category screen, not a final answer. A transaction still needs to fit the statutory category, avoid exclusions, and be checked against DOR interim guidance.

Is retail-sales-tax sourcing the same as B&O attribution? No. Retail sales tax uses sourcing and place-of-receipt concepts; B&O service-income apportionment uses attribution. Advertising is a common place those get mixed up.

Can digital advertising use the MPU exemption? Sometimes — DOR's FAQ and advertising guidance point to MPU only when the service also qualifies as a DAS and is used concurrently inside and outside Washington.

Does the 2029 repeal remove all of these taxes? Not as currently described. ESSB 6346 materials say most ESSB 5814 retail-services sales and use taxes are repealed effective January 1, 2029, except advertising services.

What records matter most? Contracts, statements of work, invoices, purchaser location records, allocation support, viewer/targeting data for advertising, exemption certificates, reseller permits, and direct-pay or MPU support.

Sources

Legislation

DOR general administration

DOR service-specific guidance

Not legal advice. Specific decisions still need professional review.