Washington State Sales Tax Updates

Guidance has been provided for most everything regarding the new WA State sales tax:

Starting October 1, 2025 many additional things will be subject to Washington State sales tax. It was billed as being “digital services” but has morphed this month into including in-person items as well.

Things we know that ARE required to collect and remit sales tax are:

  • Advertising services

  • Live presentations*

  • Non-school classes (See #5 below)

  • Information technology services

  • Custom website development services

  • Investigation, security, and armored car services

  • Temporary staffing services

  • Sales of custom software and customization of prewritten software

*Live presentations do NOT include telemedicine. Nor are 1:1 sessions taxed.

Please note: You can ask for a “binding rule” about your specific business. This decision will be binding on you and the State of Washington. If you do not agree, you have 30 days to appeal: https://dor.wa.gov/contact/request-tax-ruling-0

  1. EXISTING CONTRACTS that are signed and go into effect by September 30, will NOT be subject to sales tax until April 1, 2026.

  2. If you are a CONSUMER of software products to produce your services you will not need to collect sales tax (for example, TAX PREPARERS, attorneys, appraisers, architects, engineers and lobbyists.

  3. Non-profits ARE subject to sales tax for some on-line and in-person classes that are not a school per say. For example, a CPR group class, a live in-person or on-line driver’s ed class via a private company, a ceramics workshop.

  4. Generally schools are exempt, but NOT if it’s an outside service. For example, if someone is contracted by the school to give voluntary class outside of school hours, that would be subject to sales tax.

  5. In-person courses, classes, seminars, workshops, or other programs for personal or professional enrichment such as art, music, choir, pottery, business and marketing, cooking, and CPR classes or lessons. This seems to include day camps. I’m keeping an eye out on this, but so far it seems to be included.

  6. It used to be that if you provided a “digital good” in a non-digital way (for example, giving something on a flash drive instead of a download) it was not subject to retail tax – that loophole is GONE. So graphic designers – you are going to be subject to sales tax.

  7. VIDEO PRODUCTION – this appears to be a case-by-case basis depending on what you are working on and whether or not you are selling an end product. If it has to do with advertising it is for sure subject to sales tax. Most other transactions are going to be service as usual unless you are selling an edited or unedited master copy. If that’s what you are doing, call me or reach out for a binding rule

  8. EXERCISE CLASSES were further clarified. Some are specifically exempted (Yoga, Tai Chi, Chi Gong and Martial Arts) Here is the link: https://dor.wa.gov/education/industry-guides/recreational-and-fitness-services

    The tax specialists at DOR thought that fitness classes and Pilates might also qualify but wouldn’t commit to that. Again, it might make sense to ask for the “binding rule” mentioned above. For now, use this as a way to get people to sign a contract (and maybe even prepay) by 9/30/25 which will exempt them from sales tax through March 31, 2026.