Tax Compliance

Washington State Sales Tax Changes 2025: New Rules for More Services

September 18, 2025

A Big Shift in Washington State Sales Tax

Beginning October 1, 2025, many Washington businesses must charge sales tax on additional services. This shift means IT firms, advertising agencies, staffing providers, and live event organizers need to review their contracts, pricing, and compliance processes.

If you operate in Washington, understanding these changes is critical to avoid penalties and interest.

Types of Taxes Affected

Businesses must now account for three categories:

  • Retailing B&O Tax - Washington’s business tax on gross revenue from sales
  • Retail Sales Tax - Collected from customers on taxable goods and services
  • Local Sales Tax - Based on the customer’s location (city/county)

IT, Website & Software Development Services

Now taxable under retail sales tax:

  • Training, technical support, help desk services
  • Network operations and data processing
  • Custom software development (licensed, hosted, or subscription-based)
  • Website development and support
  • Customization of prewritten software

Advertising Services

Newly Taxable:

  • Graphic design, ad layout, production prep
  • Online referrals, SEM, lead generation, campaign planning
  • Digital ad placements, traffic monitoring, and analytics
  • Out-of-home ads: billboards, event signage, naming rights

Not Taxable:

  • Web hosting and domains
  • Printing and publishing activities
  • Radio/TV broadcasting within Washington
  • Direct mail advertising

Security & Live Presentations

Taxable Security Services: background checks, patrols, personal/event security, armored transport, monitoring

Exclusions: locksmith services

Taxable Live Events: ticketed seminars, workshops, and interactive online events

Exclusions: recorded/on-demand courses

Temporary Staffing Now Taxable

  • Workers provided under a contract or fee → taxable
  • Applies regardless of type of work
  • Exception: staffing for licensed hospitals

Telehealth Carve-Out

Telehealth and telemedicine services are not classified as retail sales.

  • Still taxed under Service & Other B&O Tax
  • Excluded: email, text, IM, fax-only services

What This Means for Washington State Businesses

  • Review your service categories and identify taxable areas
  • Update contracts, pricing, and invoices
  • Add Retailing B&O + retail sales tax to filings
  • Adjust accounting systems to calculate based on customer location

With the expansion of Washington sales tax compliance to IT, advertising, staffing, and events, businesses must act now to avoid under-collection and penalties.

At FinStackk, we help businesses:

  • Classify taxable services correctly
  • Update invoicing and reporting systems
  • Stay compliant with B&O, state, and local sales tax rules

Reach out to FinStackk today to prepare for the October 1, 2025 Washington tax changes.