What You’ll Learn in This Post
- What the new Washington State sales tax law (ESSB 5814) means for service-based businesses.
- Which industries are now required to charge retail sales tax.
- How to adjust your contracts, pricing, and accounting systems to stay compliant.
Did You Get a Letter From the Department of Revenue?
If you opened your mail recently and saw an envelope from the Washington Department of Revenue, you’re not alone. The state sent out more than 90,000 letters to business owners across Washington to alert them about a major change to sales tax laws that took effect on October 1, 2025.
Even if you didn’t get one of those letters, these changes could still apply to your business —especially if you work in marketing, IT, event planning, or any kind of contract service.
The Short Version: Many Services Are Now Taxable
For years, service-based businesses didn’t have to collect sales tax on most of their work. That changed with Engrossed Substitute Senate Bill 5814, which expands what the state considers “retail sales.”
Here’s the new list of services now subject to sales tax:
- Advertising services
- Live presentations
- IT services
- Custom website development
- Investigation and security services
- Temporary staffing
- Custom software and software customization
The law also broadened the definition of digital automated services, meaning more online and tech-related work will now be taxed.
Why This Matters to Tacoma and Pierce County Businesses
If you’re used to sending invoices without sales tax, this new rule can quickly create confusion. Here’s what’s at stake:
Client relationships: If you don’t prepare clients for higher invoices, you might eat the cost or strain trust.
Cash flow: Misclassifying taxable sales can cause shortfalls when you file your next return.
Audit risk: If your bookkeeping system doesn’t separate taxable and non-taxable sales, it’s easy to end up out of compliance.
Across Tacoma and Pierce County, businesses of every size are feeling the impact — from single-person consultancies to larger firms.
What You Should Do Right Now
Check your mailbox (and your email).
If you received a letter from the Department of Revenue, don’t ignore it. It includes links to interim guidance and examples that explain how to apply sales tax correctly.
Review your contracts.
For ongoing projects that began before October 1, 2025, some temporary relief may apply — but only if the contract wasn’t modified after that date. Now’s the time to clarify who’s responsible for paying sales tax on new or renewed agreements.
Update your accounting and invoicing systems.
Make sure your software can apply sales tax by service type and location. Even small differences between Tacoma, Lakewood, and Gig Harbor rates can add up.
Communicate with your clients.
Transparency helps. Let them know the change comes from the state, not from you. Most will understand once they realize it’s a statewide law, not a price increase.
Get professional help before year-end.
If you’re unsure how these rules apply to your business, now is the time to sit down with a local accounting advisor who understands Washington’s new legislation. Josh Ott and his team at J. Ott Business Solutions work with businesses across Tacoma and Pierce County to make sure their books, contracts, and systems stay compliant — and stress-free.
A short year-end review can help you confirm which of your services are taxable, update your invoicing system, and make sure you’re collecting and remitting correctly before your next filing. Taking action now avoids confusion later, and helps you start the new year on solid ground.
The Bottom Line
Washington’s new sales tax rules mark a major shift for service-based businesses. If you’re among the 90,000 owners who got that notice, or if you suspect you should have, now is the time to get your systems in order.
At J. Ott Business Solutions, we’re already helping Tacoma and Pierce County businesses adapt to these new requirements, update their billing systems, and protect their margins. You don’t have to navigate these changes alone! Reach out today for help reviewing your accounts before your next reporting period.