Earlier this year Washington enacted Engrossed Substitute Senate Bill 5814 (published as Chapter 422, Laws of 2025) which changed the state’s definition of retail sales to include custom software and several newly taxable services. As a result, the retail sales tax and the retailing business and occupation tax will apply to sales of custom software and specified services beginning October 1st.
Newly taxable services include:
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Software customization
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Advertising services.
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Live presentations.
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Information technology services.
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Custom website development services.
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Investigation, security, and armored car services.
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Temporary staffing services.
Additionally, the following digital automated services, which were previously exempt from the application of sales tax, are now subject to sales tax:
· Services involving primarily human effort.
· Live presentations.
· Advertising services.
· Data processing services.
The Washington DOR has consolidated their guidance on this change at: Services newly subject to retail sales tax | Washington Department of Revenue .
