Washington’s governor recently signed three pieces of legislation which will have a major impact on retail sales tax in the state.
Senate Bill 5794 would repeal the exemption from sales tax (as well as business and occupation taxes) of sales of precious metal bullion and monetized bullion effective January 1, 2026.
Senate Bill 5801 makes several changes to taxes on sales and rentals of motor vehicles. The bill will increase the sales tax on passenger car rentals to 11.9% in 2026 and then decrease it to 9.9% in 2027. The additional sales tax on motor vehicle sales will increase to 0.5% in 2026. The replacement vehicle tire fee will increase to $5 per tire in 2026. Finally, the bill also imposes new additional taxes on peer-to-peer car sharing services and sales of “recreation vessels” subject to the watercraft excise tax, motor vehicles valued over $100,000, and luxury aircrafts.
Senate Bill 5814, an earlier version of which was discussed here, will expand the number of services subject to sales tax. Included in this expansion are sales of custom software, software customization services, information technology training services, technical support. data entry services, data processing services, custom website development services, investigation services, security services, temporary staffing services, select advertising services, live presentations, and digital automated services involving the application of human effort by the seller. The bill also creates exemption for telehealth and telemedicine. Please note provisions related to the prepayment of sales taxes and increasing the cigarette tax were dropped from the final version of the bill.
