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.
