Home to tech giants and breathtaking national parks, Washington thrives on innovation and commerce. But to succeed here, businesses must also navigate sales tax in Washington, ensuring compliance and avoiding costly penalties.
This guide breaks down everything you need to know about Washington’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Washington’s sales tax with confidence and ease.
Sales Tax Nexus in Washington
When a business creates either a physical or economic nexus, it is required to collect sales tax in Washington.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require collecting and paying sales tax. The factors that determine a physical nexus in Washington include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Presence at Trade Show: An out-of-state seller’s trade show participation in Washington creates a nexus if it establishes or maintains a market. However, attending one convention yearly without making retail sales or taking orders does not count.
To stay informed about the current criteria for establishing a physical sales tax nexus in Washington, take a look at the official regulations available right here!
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Effective March 14, 2019, the threshold for economic nexus in Washington is $100,000 in gross revenue in the previous or current calendar year’s sales.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing economic sales tax nexus. To access a comprehensive list of these rules, please refer to the
governing laws for economic sales tax nexus requirements in Washington.
Washington Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Washington.
Tangible Products
Almost all goods are taxable in Washington, including:
The goods that are exempt from sales tax are:
Services
In Washington, the majority of service-based transactions, such as advertising, janitorial, and storage services, are not subject to sales tax.
However, there are specific situations where certain services are taxable. For instance, taxable services are:
- Construction services
- Installation, cleaning, and repair services
- Landscaping and landscape maintenance
- Retail recreation services – Fishing charters, day trips for sightseeing, and service charges on tickets to professional sporting events.
- Personal services – Personal training at athletic and fitness facilities.
- Miscellaneous services – Car wash, catering, personal chefs, extended warranties and maintenance agreements, vehicle towing, and automobile parking.
Software as a Service (SaaS)/Digital Products
SaaS is taxable in the state of Washington.
Digital products (i.e., ebooks, downloadable video content, mobile apps) are also taxable. Washington imposes sales and use tax on downloaded digital goods, digital products, codes, and automated services, including streaming, regardless of ownership rights or payment structure.
Shipping/Handling
Shipping and handling charges in the state of Washington are taxable. Charges incurred after the buyer receives the goods and fees for delivering exempt items are not included.
Sales Tax Permits and Licenses in Washington
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Washington, the next important step is getting your Washington Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
You can register for a seller’s permit online through the Washington Department of Revenue or follow our detailed step-by-step guide for assistance.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale, or the expected date to start dates)
- NAICS Code
Registration fee
There is no fee to register for a sales tax permit. However, additional fees may apply based on the endorsement type required for your Business License.
Renewal
In Washington, you have to renew your sales tax permit annually. It must be renewed annually for $5, with a renewal notice sent before expiration.
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In Washington, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
Reseller permits issued by the Department are typically valid for 48 months but may be limited to 24 months under certain conditions. The Department may deny or revoke permits due to misuse, tax liabilities, or incomplete applications. Misusing a reseller permit incurs penalties, and sellers must maintain records verifying permit validity.
You can fill out the form provided by Washington after you receive your sales tax permit. You can also fill out the Streamlined Sales and Use Tax Certificate of Exemption if you would like to get sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. Washington is a party to this program, meaning it follows the uniform rules and definitions established by SST but has its own sales tax regulations.
Check with the Washington Department of Revenue for the most current information on Washington’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in Washington
Sales Tax Computation
In Washington, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs..
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Washington and sells to a customer in Seattle, WA, with a ZIP code of 98101. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
Washington |
6.50% |
| County: |
King County |
0.10% |
| District: |
Seventh District |
0.00% |
| City: |
Seattle |
3.75% |
| Combined Sales Tax Rate = |
10.35% |
|
Origin-based vs. Destination-Based
When making in-state sales, it is important to determine if you are located in an origin-based state or destination-based state to figure out what rate to charge for sales tax.
Washington is a
destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a Washington-based seller, sales tax is generally based on the location of the buyer when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Alabama to a customer in Lincoln, Washington, where you have nexus, you’d apply Lincoln’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in Washington
The next step after collection is filing and remitting your Washington sales tax returns. Filing and remittance can vary in frequency, typically
monthly, quarterly, or annually.
- Annual Filing: If annual tax liability is $1,050 or less
- Quarterly Filing: If annual tax liability is between $1,051 and $4,800
- Monthly Filing: If annual tax liability is $4,801 or greater
Due Dates
In Washington, the due date falls on the 25th day of the following month. For instance, sales tax collected in January is due by February 25th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 25th deadline falls on a holiday or weekend, you’ll have until May 26th, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for Washington, a few options are available:
- File online through the Washington Department of Revenue.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. However, Washington does not offer a discount.
Sales Tax Holiday
Currently, for 2024-2025, there are no planned sales tax holidays in Washington.
Sales Tax Penalties in Washington
Like in most states, sales tax is a big part of how Washington generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in Washington:
- Civil penalties: 9% of tax due if unpaid by the due date, 19% after one month, 29% after two months (minimum $5 penalty).
- Criminal offenses: Classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
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