In late 2025, Washington reclassified a long list of services as taxable retail sales. Less than a year later, the Legislature began narrowing that expansion. If you restructured contracts or pricing to deal with the 2025 change, some of those assumptions have already shifted.
What 2025 did
Under ESSB 5814 (Chapter 422, Laws of 2025), effective October 1, 2025, Washington added a range of services to the definition of retail sale—information technology and technical support, custom website development, investigation and security services, temporary staffing, advertising services, live presentations, and custom software. Businesses in those fields had to begin collecting sales tax. The Department’s services newly subject to sales tax page catalogs them.
What 2026 changed
The 2026 legislation (ESSB 6346) modified the retail-sale definition and created new exclusions. The Department has issued special notices narrowing the reach of the tax in specific areas—including new exclusions for certain live presentations, a modification to the temporary staffing exclusion for hospitals, and an exemption for certain retail services purchased by schools and libraries. Several of these changes took effect July 1, 2026.
Why this matters for planning
If you sit in one of the affected fields—training and consulting, staffing, security, or presentations—the taxability of a given engagement may have changed between the fall of 2025 and mid-2026. Contracts that baked in a sales-tax assumption from October 2025 should be re-checked against the current exclusions, and you should confirm you are not over-collecting (or under-collecting) on categories that have since been narrowed.
What to do
- Re-verify whether each service line you sell is still taxable under the current DOR guidance, not the October 2025 version.
- If you narrowed or expanded taxable categories mid-2026, update invoices and your tax collection accordingly.
- Watch for further DOR special notices—this area is still moving.
- Keep documentation supporting how you classified each service in case of audit.
The 2025 expansion was sweeping, and the walk-back is piecemeal. The safe course is to treat the taxability of services as a live question and check the current guidance rather than last year’s.
If you have questions about whether your services are subject to Washington sales tax, have other compliance questions, or need other services, you can reach us at martinkreshon.com or northcitylaw.com or call (206) 929-0609. You can also find reviews for Martin on Google and Avvo.