2025 Bill Expands Services Subject to Retail Sales Tax

During this last legislative session, SB 5814 was passed, which expands the types of services that are subject to retail sales tax beginning October 1, 2025. In doing so, the legislature has raised many questions among local government staff and elected officials, like “Which specific services apply?” and “Which tax rate should be used?”

While this blog is not intended to be an exhaustive review, it will offer an overview of a few services that will be subject to retail sales tax beginning October 1, 2025. It is important to note that this blog is not intended to be an exhaustive list of new services subject to sales tax. MRSC is not an authority on sales taxes and only provides limited guidance. For services not specifically mentioned below, the Washington State Department of Revenue (DOR) will be the authority to determine whether a service is taxable.

New Services Subject to Retail Sales Tax

Services currently subject to retail sales tax are covered on the DOR’s Services subject to sales tax webpage.  For information regarding the retail sales tax changes resulting from SB 5814, you can check out the DOR’s Services newly subject to retail sales tax webpage.

In the meantime, here are a few examples of new services local governments should be aware of that are now subject to retail sales tax.

Advertising services

All digital and non-digital services related to advertising services will be subject to retail sales tax, including services related to the creation, preparation, production, or dissemination of advertisements. Examples include:

• Layout
• Art direction
• Graphic design
• Placement
• Referrals
• Acquisition of advertising space
• Advising on methods of advertising products and services

The DOR’s Interim guidance statement regarding changes made by ESSB 5814 for Advertising Services gives additional examples of taxable advertising services.

Live presentations

Live presentations that are in-person or online will be subject to retail sales tax. Examples include lectures, seminars, workshops, or courses where participants can interact with the presenter/instructor in-person or via the internet to give, receive, and discuss information with each other in real time.

MRSC has received numerous inquiries already regarding live presentations. I highly recommend reviewing the DOR’s Interim guidance statement regarding changes made by ESSB 5814 for live presentations. Examples of live presentations include:

• Courses, classes, seminars, workshops, or other programs for personal or professional enrichment such as art, music, choir, pottery, business and marketing, cooking, and CPR classes or lessons
• Continuing professional education, including continuing legal education, continuing medical education, continuing education for trades, continuing education for teachers, etc.
• Driving education courses or lessons
• In-person and online instructional classes, lessons, workshops, seminars, or other programs that are provided in real time

Such activities would not be taxable if provided as part of a learning program by a public or private elementary or secondary school, or part of an accreditation program of a higher education institution.

IT-related services

IT support services, custom website development services, and custom software services will all be subject to retail sales tax. The DOR’s Special Notice on IT-related services indicates “website development services” includes “design, development, and support of a website provided by a website developer to a customer.” Examples include:

• Technical support
• Training services
• Help desk services
• Network support services
• Data entry services
• Data processing services
• Custom website design, development, and support
• Custom software and customization of pre-written software

For further discussion and examples, check out the DOR’s Interim guidance statement regarding changes made by ESSB 5814 for information technology services.

Investigation and security services

Services related to investigation and security will now be taxable, including:

• Investigation
• Security monitoring
• Armored car services
• Background checks
• Security guard and patrol services
• Personal and event security
• Security system services and monitoring (excluding locksmith services)

Check out the DOR’s Special Notice on this topic as well as the Interim guidance statement regarding changes made for investigation, security, security monitoring, and armored car services for further discussion and examples.

Temporary staffing services

Services that provide workers to businesses/agencies for a limited period of time are also now taxable. This includes the provision of staffing to supplement a workforce or to fill employment vacancies on a contract or fee basis. As stated in the DOR’s Special Notice on temporary staffing services, there is an exception for hospitals licensed under chapter RCW 70.41 or RCW 71.12.

The DOR also has issued an Interim guidance statement regarding changes made by ESSB 5814 for Temporary Staffing Services.

Which Retail Sales Tax Rate Should Be Used?

The sales tax rate to be collected from a customer is based on where the customer receives the product or service.

• If a customer is receiving a service at the place of business, the sales tax rate at the location of the business would apply.
• If the customer receives a service at their location, the sales tax rate of the customer’s location would apply.

Local governments can use the DOR’s Determine the location of my sale webpage to find the correct retail sales tax rate.

Conclusion

The DOR has held several listening sessions and will be providing updates to the interim guidance, rules, and interpretive statements. I recommend periodically checking the DOR’s Services newly subject to retail sales tax webpage for updated information. If you haven’t already done so, you can sign up for updates and alerts from the DOR.

And as always, you can reach out to me and other MRSC consultants with general sales tax-related questions.