Key figures
Washington receivables
2026, with sources
SaaS has long been taxable here
Washington is one of the states that taxes SaaS. DOR treats remote access software as a retail sale, and services delivered electronically using software are digital automated services, also retail sales. A Washington customer’s subscription is taxed at the combined state and local rate where the customer uses it: 6.5% state plus local, 10.55% in Seattle in the first quarter of 2026.
Remote sellers register once their gross receipts sourced to Washington exceed $100,000 in the current or prior year. That threshold counts all Washington income, not just retail sales, and there is no transaction count.
ESSB 5814 widened the base
From October 1, 2025, Washington’s definition of a retail sale took in a list of services that were previously B&O-only. It also removed exclusions from the digital automated services definition — including for services that primarily involve human effort and for data processing — so more “tech-enabled services” became taxable.
Example: a dev shop billing a Seattle client $40,000 for a custom integration in 2026 now charges Seattle sales tax on the invoice and reports the receipts under Retailing B&O rather than Service and Other Activities.
- IT services, training and technical support
- Custom software and customization of prewritten software
- Custom website development
- Advertising services
- Temporary staffing
- Investigation and security services, and live presentations
In the books
Sales tax collected is a liability, never revenue; B&O is an expense. Invoices need a service address per customer to pick the right location code, and annual prepayments are taxed when billed, not as deferred revenue is recognized.
Deadlines
- Monthly (25th of the next month), quarterly or annually, as assignedSales tax collected, by location code, with B&OCombined Excise Tax Return
The federal baseline
This page covers what Washington adds. The federal rules underneath it apply here too.
Common questions
Is SaaS taxable in Washington?
Yes. Washington treats remote access to prewritten software as a retail sale, and digital automated services are retail sales too, so a SaaS subscription delivered to a Washington customer is subject to sales tax at the customer’s location rate and to Retailing B&O.
What changed for services in October 2025?
Since October 1, 2025, ESSB 5814 made IT services, custom software and customizing prewritten software, custom website development, advertising, temporary staffing, security and live presentations retail sales. A services startup that implements or customizes software for Washington clients now collects sales tax on that work.
Receivables next door
- IDIdaho receivablesIdaho charges 6% sales tax but excludes SaaS, downloaded and custom software by statute; out-of-state retailers register once Idaho sales exceed $100,000 in 12 months.
- OROregon receivablesOregon has no sales tax, so SaaS sold to Oregon customers is untaxed at the register, but Oregon receipts over $1 million carry the 0.57% Corporate Activity Tax.
Founder guides on this
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
- RevenueDeferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.
- StripeHow to reconcile Stripe payouts to your booksA Stripe payout is charges less fees, refunds and disputes, batched across days. How to book it gross, tie it to the bank, and keep revenue right.
More of the Washington guide
- AccountingAccounting and state tax in WashingtonCorporate tax, conformity to federal rules, apportionment and what it does to your books
- PayablesPayables and contractors in WashingtonPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in WashingtonWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in WashingtonRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in WashingtonCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.