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This Washington sales tax guide 2026 update reflects the biggest change to the state's sales tax base in years. On October 1, 2025, Washington started taxing a list of services that had always been outside retail sales tax, including IT services and temporary staffing. In 2026 the legislature added exemptions, carved out some activities and scheduled most of the expansion for repeal on January 1, 2029. The 6.5% state rate is unchanged, but local rates keep moving every quarter, and Seattle now sits at 10.55%.
Washington does not tax business income. It collects revenue through retail sales tax plus the business and occupation (B&O) tax on gross receipts, and most sellers deal with both on the same excise tax return.
The state portion is 6.5% everywhere in Washington. Cities, counties, transit districts and other local bodies add their own rates on top, and those local add-ons change on January 1, April 1, July 1 and October 1.
A few 2026 changes show how often this moves:
Because the rate is set by location code, two addresses in the same ZIP code can carry different rates. Use the DOR Tax Rate Lookup Tool or its downloadable rate tables rather than ZIP-based tables, and refresh your rates before each quarter starts.
| Line item | Rate | Amount |
|---|---|---|
| State retail sales tax | 6.5% | $65.00 |
| Seattle local sales tax | 4.05% | $40.50 |
| Total sales tax charged to customer | 10.55% | $105.50 |
| Retailing B&O tax (paid by seller, not added to invoice) | 0.471% | $4.71 |
The sales tax is collected from the customer and passed through. The B&O tax is the seller's own cost on gross receipts and does not appear as a separate line on the invoice. Our explainer on how gross receipts taxes like the B&O work covers why a business can owe B&O even in a month with no taxable sales.
Washington is a destination-based state. The rate is set by where the buyer receives the goods or service:
If you ship statewide, your system needs the street address and the location code for each order. Our article on destination-based and origin-based sourcing rules compares Washington with origin states such as Texas and Pennsylvania. Washington is also a full member of the Streamlined Sales and Use Tax Agreement, so remote sellers can use a certified service provider; see how Streamlined Sales Tax works.
Since October 1, 2025, the following are retail sales under ESSB 5814, according to the DOR page on services newly subject to retail sales tax:
Web hosting and domain registration are not on the list. DOR has also confirmed that accounting, legal, engineering and architecture services stay outside retail sales tax and continue to pay B&O under the Service and Other Activities classification.
The law also narrowed the digital automated services exclusions. Advertising, live presentations, data processing and services delivered mainly through human effort are no longer excluded, and telehealth is now specifically excluded.
The 2026 session changed the picture in three ways:
Until 2029, those services remain taxable. If you sell software development or managed IT to Washington clients, our article on whether SaaS and software are taxable by state shows how Washington compares with other states.
DOR runs a temporary ESSB 5814 penalty relief program for businesses that failed to collect or pay tax on these services. It covers reporting periods from October 1, 2025 through December 31, 2026, and applications are due by September 30, 2027. Penalties are waived, but the tax and interest are still due, and evasion or negligence penalties do not qualify. You apply through the Voluntary Disclosure Application, so the mechanics are close to a standard sales tax voluntary disclosure agreement.
| Category | 2026 treatment |
|---|---|
| Tangible goods (clothing, electronics, furniture) | Taxable |
| Groceries (food and food ingredients) | Exempt |
| Prepared food and restaurant meals | Taxable |
| Prescription drugs | Exempt |
| Digital products (downloads, streaming, digital automated services) | Taxable |
| Construction and repair of real property for consumers | Taxable as a retail sale |
| Accounting, legal and most professional services | Not subject to sales tax (B&O applies) |
| IT services, custom software, temporary staffing | Taxable since Oct 1, 2025 |
| Sales for resale | Exempt with a valid reseller permit |
Washington's treatment of construction surprises sellers from other states. A contractor building or repairing property for a consumer charges sales tax on the full contract price, labor included. The local rate is based on the job site.
Buyers purchasing for resale give the seller a Washington reseller permit, which DOR issues for free. Those buying the new retail services for resale must also provide one. Keep permits on file and check them for expiry; our article on resale certificates versus sales tax permits explains how to keep that file audit-ready.
You must register and collect if you have a physical presence in Washington, such as an office, employees, inventory or a warehouse. Inventory held at a third-party fulfillment center counts.
Remote sellers must register when gross receipts from Washington exceed $100,000 in the current or prior calendar year. There is no transaction-count test. The same $100,000 threshold applies to B&O tax and counts all Washington income: retail, wholesale, service and exempt sales, including sales made through a marketplace.
Marketplace facilitators such as Amazon collect and remit sales tax on facilitated sales. A seller who sells only through facilitators doesn't collect sales tax on those sales but may still need to register and file B&O returns once over the threshold.
Example: an Oregon IT consultancy billed $180,000 to Washington clients in 2025. That exceeds $100,000, so it must register, charge sales tax at each client's location on IT services and pay retailing B&O. Our article on economic nexus for growing businesses covers the threshold rules in other states.
| B&O classification | 2026 rate |
|---|---|
| Retailing | 0.471% |
| Wholesaling | 0.484% |
| Service and other: prior-year taxable income under $1 million | 1.5% |
| Service and other: $1 million to $4,999,999 | 1.75% |
| Service and other: $5 million or more | 2.1% |
| Surcharge on taxable income over $250 million (from Jan 1, 2026) | 0.5% |
The tiered service rates took effect on October 1, 2025, based on the prior calendar year's income for the business or its affiliated group, per DOR's service and other activities rate notice. Hospitals and certain advanced computing businesses stay at 1.5%. The surcharge on very large businesses is scheduled to expire on December 31, 2029.
New businesses register through the Business Licensing Service, which issues a Unified Business Identifier (UBI) and opens an excise tax account. Have these ready:
Out-of-state sellers that crossed the threshold in an earlier period should talk to DOR's Voluntary Disclosure Program before registering, as it can limit the look-back and waive some penalties.
DOR assigns your filing frequency, according to its filing frequencies and due dates page:
| Frequency | Typical annual tax liability | Due date |
|---|---|---|
| Monthly | $4,801 or more | 25th of the following month |
| Quarterly | $1,051 to $4,800 | Last day of the month after the quarter |
| Annual | $1,050 or less | April 15 of the following year |
A June return is due July 25. A first-quarter return is due April 30. Weekend and holiday due dates move to the next business day. You must file even when you owe nothing.
Late payment penalties step up quickly: 9% after the due date, 19% after the end of the following month and 29% after the second month. DOR can grant a one-time waiver if you have filed and paid on time for the prior 24 months.
On each return you report gross receipts under each B&O classification, list deductions (resale, interstate, exempt food), and report retail sales tax by location code. Errors in location coding are a frequent audit finding because local tax goes to the wrong jurisdiction. Our guide on handling a sales tax audit covers what DOR auditors ask for.
Washington requires you to keep records for at least five years, including invoices, reseller permits, exemption documentation and location-code support.
Use tax applies when you buy taxable goods or services without paying Washington sales tax, such as equipment bought from an out-of-state vendor that didn't collect. You report it on the excise return at the rate where you first use the item. Since October 2025 this includes IT services and custom software bought from out-of-state providers.
Most multi-location and online sellers use rate software tied to DOR's address-level data. Our sales tax automation software comparison covers the main options. For firms juggling Washington with several other states, our multi-state tax compliance guide sets out a workable monthly calendar, and online sellers can check the e-commerce sales tax nexus checklist.
What is the Washington sales tax rate in 2026? The state rate is 6.5%. Local add-ons push combined rates above 10% in much of the Puget Sound area, with Seattle at 10.55% since January 1, 2026. Always look up the rate by address because local rates change quarterly.
Do I charge Washington sales tax on IT services? Yes, since October 1, 2025, IT services, custom website development and custom software are retail sales in Washington. The 2026 law repeals that treatment from January 1, 2029, so tax applies until then.
Is there sales tax on groceries in Washington? No. Food and food ingredients for home consumption are exempt. Prepared food, restaurant meals and most hot food are taxable at the full combined rate.
Does Washington have a state income tax for businesses? Washington does not tax business income. It taxes gross receipts through the B&O tax instead, so a business can owe B&O even in a loss year. The 2026 legislature passed a 9.9% tax on individuals' Washington taxable income starting January 1, 2028, with a $1 million standard deduction per individual. It does not replace the B&O tax.
Can I get penalties waived for uncollected tax on newly taxable services? Yes, through DOR's ESSB 5814 penalty relief program for periods from October 2025 through December 2026. Apply by September 30, 2027 through the Voluntary Disclosure Application, and expect to pay the tax and interest.
Washington combines quarterly local rate changes, a new services base and a separate gross receipts tax, which is a lot to track alongside your other states. Madras Accountancy supports CPA firms and businesses with Washington registration, return preparation and voluntary disclosures, and our sales tax outsourcing service for CPA firms handles monthly filings under your firm's name. Contact our team to scope your Washington filings.
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