Washington Expands Sales Tax to New Professional Services Beginning October 1, 2025
- Summit Bookkeeping
- Sep 17
- 4 min read
Disclaimer: This post is meant for informational purposes only and should not be taken as legal, business, or tax advice. Please consult with your accountant or bookkeeper for more information based on your specific situation.
Big changes are coming for some Washington businesses this fall. Starting October 1, 2025, Washington state retail sales tax will apply to some professional services for the first time.
Until now, most professional services in Washington state have not been subject to sales tax. However, due to the Engrossed Substitute Senate Bill (ESSB) 5814 passed earlier this year, Washington is expanding the definition of “retail sales” to include several new service categories.
This also means that affected businesses will have their B&O tax classification moved from “Services and Other Activities” to “Retailing.”
What Services Already Have Sales Tax?
In the past, only a handful of services in Washington had to collect sales tax, including:
Construction, maintenance, repair, and cleaning
Recreational activities (including amusement parks, sports activities, and day trips for sightseeing purposes)
Personal services (such as tanning, tattooing, and personal training)
Now, more industries are being added to that list.
What New Services Are Affected by Sales Tax?
Here’s a breakdown of the professional services that will be subject to sales tax starting in October 2025:
Advertising
This applies to companies that provide both digital and traditional marketing services that relate to the creation, preparation, production, and distribution of advertisements.
Service examples include:
Campaign planning and ad management
SEO
Graphic design
Consulting and analytics
It does not apply to:
Web hosting services and domain name registration
Traditional media companies such as newspapers, radio, and television broadcasting.
Out-of-home advertising companies that sell ad space on billboards, transit, in-store displays, etc.
To clarify, if you design and manage an ad for your client that runs in a newspaper, your work is taxable. The newspaper’s ad space itself is not.
Live presentations
In-person and virtual presentations “that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time” will be subject to retail sales tax.
This includes:
Lectures
Seminars
Workshops
Courses
This does not include live presentations for school and higher education institutions.
Information technology (IT)
A lot of tech-related services will be affected by retail sales tax now, including:
IT training and support
Data entry and processing
Network operation and implementation
Custom website or software development
Customization of prewritten software
Learn more: Information technology, website, and software development services now subject to sales tax (DOR)
Investigation, security, and armored car
Services related to investigations and security will need to collect retail sales tax, including:
Background checks
Security guards and patrols
Personal and event security
Armored car transportation
Security system installation and monitoring
This does not include locksmith services.
Learn more: Investigation, security, security monitoring, and armored car services now subject to sales tax (DOR)
Temporary staffing
Businesses that assist in providing temporary staffing for a limited period of time, whether on a contract or fee basis, are subject to retail sales tax.
This does not apply to temporary staffing services for hospitals.
What is the Sales Tax Rate
Washington State is a destination-based state, which means that the sales tax rate depends on where your customer is located, not your business.
Currently, in Q3 of 2025, the sales tax rate in Washington state is 6.5%. In Bellingham, the local city tax rate is 2.5%, making the total tax rate in Bellingham 9.0%.
If your business is in Bellingham but you sell a product online to a customer in Seattle, the sales tax rate would increase to Seattle’s tax rate of 10.35%.
To determine the sales tax rate for a specific area, you can use the Department of Revenue’s Tax Rate Lookup tool.
What to Do Now
Here is how you can prepare for the new retail sales tax change coming up on October 1, 2025:
Audit your services to determine which ones are taxable.
Update your invoicing system to include sales tax on affected services.
Communicate with your clients about the new sales tax line item on their invoice.
File and pay sales tax through the Department of Revenue.
File B&O tax return under the Retailing B&O tax classification instead of Service and Other Activities.
Even if you don’t collect any sales tax during a filing period, you must still file a sales tax return by the due date
We’re Here to Help
Changes like this can feel overwhelming, but you don’t have to figure it out alone.
At Summit Bookkeeping, we stay on top of federal, state, and local tax laws, so you can have peace of mind when changes come. From bookkeeping to payroll and tax reporting, we can help you streamline your business operations and stay in compliance. Give us a call at (360) 756-5020 to learn more about our services.
