Beginning October 1, 2025, Washington State will impose retail sales and use tax on several professional service categories, including information technology (IT) training, website development and custom software development. This marks a significant expansion of the sales tax base, bringing many technology-focused businesses into the scope of retail sales tax for the first time.
What’s Changing
- Newly taxable IT services: Services such as IT training, custom software development, website design and development, advertising services, digital automated services, and technical support will now be subject to sales tax.
- Digital services with human effort: Digital processing and other human-delivered digital services will also fall under the new taxable categories.
- Investigation and security services: Private security, alarm monitoring and investigative services, excluding cybersecurity services
- Live presentations: Real-time workshops, seminars and webinars — both in-person and virtual, with some educational/school exemptions
- Temporary staffing services: Workforce supplemental staffing
Certain services, including telehealth and temporary staffing for hospitals, remain exempt from retail sales tax.
Why It Matters
This expansion represents a fundamental shift in how Washington applies the retail sales tax. Many service providers who have never had to collect or remit sales tax will now need to update billing systems, adjust contracts and prepare for new compliance requirements. The changes may also affect pricing models and how services are delivered.
Looking Ahead
These updates are part of Washington’s broader 2025 – 2027 budget, which also includes increases to the Business and Occupation (B&O) tax, capital gains tax, and estate tax. While those changes affect a wide range of businesses and individuals, the October 1 expansion of sales tax to IT and digital services is one of the most immediate compliance challenges for technology providers.
Your Guide Forward
Cherry Bekaert’s Sales & Use Tax team can guide you through these new requirements. Whether you are evaluating exposure, updating billing processes or adapting compliance strategies, our professionals are ready to assist with your next steps.
