Does Washington charge sales tax on services?
by July 11, 2023
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about which services are taxable in the state of Washington, which has a state sales tax rate of 6.5%.
Does Washington charge sales tax on services?
Services are generally taxable in Washington state, including the following:
- Construction services
- Installing, cleaning, repairing or otherwise altering or improving personal property of consumers (including interior cleaning services)
- Landscaping and landscape maintenance (including horticulture services)
- Providing tangible personal property with an operator (including leases or rentals of tangible personal property, bailments)
- Retail recreation services (including amusement park admissions, bowling, fishing charters, day trips for sight-seeing and service charges on tickets to professional sporting events)
- Personal services (including personal training at athletic and fitness facilities, sunless tanning, tattooing, Turkish and steam baths in addition to hot tubs, and dating and escort services)
- Car wash (including vending machines for car washes, vacuums, air and water) or detailing cars, trucks, campers, boats, etc.
- Catering and personal chefs (including items purchased or rented by caterers, and services performed by other types of food service contractors, sales of meals and food service management, and wholesale sales of prepared meals)
- Extended warranties and maintenance agreements (can also be known as service contract)
- Vehicle towing
- Automobile parking fees (including hourly metered parking; although city/county metered parking and monthly parking is not taxable, if you use monthly parking and have no designated space, that is taxable)
- Competitive telephone, telecommunications and ancillary services
- Digital products (including including digital automated services, remote access software and digital goods)
- Escrow services and abstract and title insurance
- Credit bureau services, including credit worthiness and tenant screening services
- Alarm monitoring services
- Domain name registration services
- Restaurants, cocktail bars, taverns and similar businesses
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Washington sales tax, TaxJar’s guide to sales tax in Washington and the Washington Department of Revenue has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
