Effective October 1, 2025, Washington State will implement significant changes to its tax structure that directly affect businesses providing professional services. Under Senate Bill 5814, the state is expanding its sales tax base to include a broad range of services that were previously exempt—among them, custom website development, graphic design, custom programming, training, technical support, and tutorial services.
As a result of this new legislation, our firm will be required to assess and collect Washington State sales tax on all invoices for services provided after October 1, 2025.
Location-Based Sales Tax: What You Need to Know
Perhaps the most important detail for clients to understand is that Washington uses a destination-based sales tax system. This means that the applicable tax rate is determined by the location of the client receiving the service, not by the location of the service provider.
For example, although our firm is based in Tacoma, Washington, if your business is located in Seattle, Spokane, Vancouver, or any other Washington jurisdiction, your invoice will reflect the sales tax rate applicable to your location.
This change ensures that the correct local jurisdiction receives its share of sales tax revenue, but it also means that tax rates may vary from client to client depending on where they are located within the state.
How This Affects You
If you are a current or prospective client located in Washington State, the following will apply to any work initiated or billed on or after October 1, 2025:
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Sales tax will be added to all invoices for services including but not limited to design, development, coding, consulting, and training.
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The rate will match the combined state and local sales tax applicable to your business address.
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Out-of-state clients will not be assessed Washington State sales tax, but may be subject to tax regulations in their own jurisdiction.
Preparing for the Change
We understand that taxation on professional services may be unfamiliar territory for many clients, and we are committed to transparency and compliance. To help prepare:
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We will clearly itemize sales tax on all invoices starting in October.
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Our team is available to answer questions and provide clarifications specific to your location.
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We will be updating our contracts and service agreements to reflect these regulatory changes.
Final Thoughts
This change is part of a broader legislative effort to increase revenue and bring greater parity between tangible goods and digital/professional services. While it does mean a slight increase in cost to our clients, we remain committed to providing the same high level of service and support you’ve come to expect.
If you have questions about how Senate Bill 5814 affects your business, or would like help understanding the new billing structure, please don’t hesitate to reach out. We’re here to help.
UPDATE June 6, 2025:
Pursuant to the Washington State Department of Revenue’s Tax Ruling in response to SB 5814, non-profit organizations are now subject to retail sales tax on web-based services. This includes—but is not limited to—website design, development, consultation, maintenance, and graphic design services regardless of the organization’s tax-exempt status for other purposes.
Non-profit organizations engaging in contracts for web services should account for this tax obligation in their budgets and procurement planning.
