Washington Updates Sales Tax: New Exemptions, Service Changes, and Future Repeals Announced

• Significant Tax Repeal: Washington State’s Engrossed Substitute Senate Bill 6346 (ESSB 6346), enacted on March 30, 2026, and effective January 1, 2029, repeals numerous provisions of the earlier ESSB 5814. This earlier legislation, enacted in 2025, had broadened the retail sales tax and business and occupation (B&O) tax to include a wide range of services, such as custom software, website development, certain IT support, temporary staffing, and security services.
• Restoration of DAS Exclusions and Continued Tax on Advertising: ESSB 6346 specifically restores key exclusions related to Digital Automated Services (DAS), which were previously removed by ESSB 5814. However, a significant exception is that the tax on advertising services, which was also introduced under ESSB 5814, remains in effect and is not part of this repeal.
• Interim Compliance Period: Businesses are required to continue complying with the expanded service taxes introduced by ESSB 5814 until the repeal provisions of ESSB 6346 officially take effect on January 1, 2029. This means the taxes on the expanded services, excluding advertising services, will still be applicable for over two years after ESSB 6346’s enactment.

Source PwC

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Washington Updates Sales Tax: New Exemptions, Service Changes, and Future Repeals Announced

• Expands sales tax exemption for temporary staffing services in hospitals to include certain hospital-based clinical providers.
• Excludes specific activities (e.g., after-school care, tutoring, music lessons, nonprofit presentations, performances) from the tax on live presentations.
• Exempts sales of live presentations, custom software, and most newly taxable services to public libraries and K-12 educational institutions.
• Repeals the sales tax on live presentations, custom software, and many newly taxable services (except advertising services) starting January 1, 2029.
• Creates sales tax exemptions for grooming and hygiene products, diapers, and over-the-counter drugs beginning January 2029.

Source: sovos.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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