Taxable goods

What goods are subject to sales and use tax in your state (at both state and local level)?

Generally, all retail sales of goods are subject to sales tax. Sales tax is imposed on all activities defined by statute as a retail sale. The statutory definition of a “retail sale” begins by asserting that it includes every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons, irrespective of the nature of their business, and then proceeds to exclude certain sales from the definition, including sales for resale or sales of goods that the buyer incorporates into a manufactured product. Separate from the definition, there are a number of exemptions from sales tax. Groceries and prescription drugs are perhaps among the largest consumer goods exemptions, while manufacturing machinery and equipment is one of the larger business exemptions.

In addition to sales of tangible personal property to consumers, Washington imposes sales tax on pre-written software (regardless of medium), digital products, and a wide array of services.

Washington’s digital products statute extends sales tax broadly to “digital automated services,” a classification that may be unique to Washington. While the common understanding of the phrase is reflected in the DOR’s initial explanation in an early tax notice (i.e., services that have been automated), it has aggressively asserted that many services are subject to sales tax as digital automated services simply because some part of the service involves the use of software. The broad approach to sales taxation of digital automated services is problematic because there is no business use sales tax exemption.

Services subject to sales tax include, but are not limited to:

  • construction services;
  • repairing, cleaning, installing, or decorating personal property for others;
  • escrow services;
  • recreation services;
  • catering;
  • towing; and
  • telephone services.

State rate

What is the state sales tax rate?

The state sales tax rate is 6.5%. There is a separate state surtax on retail sales of vehicles at the rate of 0.3%. 

Local rates

What is the range of local sales tax rates levied in your state?

Local sales tax rates range from 1.1% to 3.6%. The DOR has numerous tools to assist taxpayers in determining the combined state and local tax rate based on the location of the sale, including an interactive tax rate lookup tool on their website


What goods are exempt from sales and use tax?

Major business sales and use tax exemptions include the manufacturing machinery and equipment exemption and exemptions for a variety of items used by the agricultural industry (including feed and seed, fertilizers and chemical sprays, and pollination agents). There are also numerous other industry-specific sales tax exemptions and deductions

On the consumer side, major sales tax exemptions include food and food ingredients (essentially groceries) and prescription drugs.  


Are any services taxed?

Yes. Sales tax applies to all activities defined as a “retail sale” in 82.04.050 RCW, which includes many different services. Services subject to sales tax in Washington include:

  • construction services (i.e., “labor or services rendered in respect to constructing”);
  • telephone services;
  • pre-written software (subject to sales tax regardless of the form it takes);
  • installing, repairing, cleaning, altering, imprinting, or improving tangible personal property of or for consumers;
  • cleaning, fumigating, razing, or moving existing buildings or structures (excluding janitorial services);
  • automobile towing;
  • automobile parking and storage garage services;
  • abstract, title insurance, and escrow services;
  • credit bureau services;
  • landscape maintenance and horticultural services;
  • service charges associated with tickets to professional sporting events;
  • operating an athletic or fitness facility; and
  • the provision of specified recreational activities, including:

o golf;

o ballooning;

o hang gliding or skydiving (indoor or outdoor);

o air hockey;

o billiards, pool, foosball, darts, shuffleboard, ping pong, “and similar games;”

o access to an amusement, theme or water park;

o batting cage activities;

o bowling;

o bungee jumping;

o zip lining;

o “riding inside a ball whether inflatable or otherwise;”

o horseback riding;

o fishing;

o guided hunting;

o swimming;

o go-karting;

o bumper cars;

o indoor or outdoor playground activities;

o shooting sports activities;

o paintball and airsoft activities;

o non-motorized snow sports activities;

o scuba diving;

o snorkelling; and

o river rafting.

Filing requirements

What filing requirements and procedures apply?

Sales taxes are reported, along with B&O taxes, on the combined excise tax return. The retailing B&O and sales tax are both imposed on retail sales and share the same statutory definition. Thus, the reported measure of retailing B&O tax should match the reported sales tax measure, unless the taxpayer claims an exemption that applies to only one or the other. 

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