First announced: Signed into law May 20, 2025; sections expanding sales tax effective Oct 1, 2025.
Submitted by: NYBACS Compliance Desk
Three-line brief
- Washington’s 2025 ESSB 5814 broadens the retail-sales tax base to include advertising, custom software, IT services and more.
- Affected businesses must evaluate nexus and update billing/tax collection.
- Prepare system and contract changes before Oct 1, 2025.
What changed: In 2025 the Washington Legislature passed Engrossed Substitute Senate Bill 5814, expanding the definition of “retail sale” to capture seven categories of previously exempt or differently-treated services (advertising services, information technology services, custom website development, custom software, temporary staffing, security/investigation and live presentations). Several sections of the law take effect Oct 1, 2025 (others on later dates). Law Files+1
Who’s affected: Service providers selling to Washington customers (including remote/digital sellers and marketplaces) — especially ad networks, web & software developers, managed-IT vendors, training/webinar hosts, temp-staffing agencies and security firms.
Immediate actions
- Map service catalogues (which SKUs/lines now fall under retail sales tax).
- Update tax rules in billing/ERP systems (sourcing rules, nexus logic, tax codes).
- Revise contracts (pass-through of taxes, repricing), and notify affected clients.
- Run a nexus review to see if your remote operations trigger WA registration.
Practical notes & timeline: ESSB 5814 was passed and signed in May 2025; the critical collection date is Oct 1, 2025. Washington DOR has published interim guidance and updated taxable-services lists — follow the DOR guidance and consider a readiness audit.
