Washington Sales Tax Guide 2024: Compliance, Rates, and Regulations for Businesses

Sales tax at a glance

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Washington sales tax rates & calculations in 2023

The Washington sales tax rate in 2023 is between 6.5% and 10.4%. This comprises a base rate of 6.5% plus mandatory local rates up to 4%. Depending on the local sales tax jurisdiction, the total tax rate can be as high as 10.4%.

List of local sales tax rates in Washington

You can look up the full table of sales tax rates in each city and county in Washington. Here’s a snippet of the same:

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Recent tax rate changes in Washington

There have been no recent changes to Washington's state or local sales tax rates. The state sales tax rate has remained at 6.5% since 1983. Local rates vary but have generally remained steady.

FAQs

How do you calculate Washington sales tax?

To calculate Washington sales tax, you can use the following formula:

Sales tax = (6.5% base rate + local rate) * purchase price

For instance, if the local rate is 3%, and the purchase price is $100, then the sales tax would be $9.50.

What are the penalties for not paying Washington sales tax?

If the tax due is not paid by the last day of the month after the due date, a 19% penalty is imposed. If the tax is still unpaid by the last day of the second month after the due date, the penalty increases to 29%. The minimum late payment penalty is $5.

What’s the difference between destination-based and origin-based sales tax states?

Destination-based sales tax states collect tax based on where the purchase is delivered, while origin-based states collect tax based on where the sale originated.

Is the Washington sales tax destination-based or origin-based?

Washington is a destination-based sales tax state. Sales tax is collected based on where the purchase is delivered or shipped.

Is Washington a streamlined sales tax state?

Washington became a Streamlined Sales Tax state on July 1, 2008.

The Streamlined Sales Tax Project (SSTP) aims to simplify sales tax collection across states that adopt its Streamlined Sales and Use Tax Agreement (SSUTA), and Washington joined the SSTP in 2008 and has implemented the SSUTA.

Sales tax nexus table in Washington

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FAQs

Do I need a Washington seller's permit if I’m only a wholesaler?

Yes, wholesalers in Washington still need a seller's permit, even if they are not making retail sales. Wholesale sales are subject to the state's business and occupation (B&O) tax.

Do I need a Washington seller's permit if I only sell temporarily in the state?

Yes, even temporary or seasonal sellers in Washington need a seller's permit if they meet the sales tax nexus thresholds. There are no exceptions for temporary selling.

What's taxable and what's exempt

When selling in Washington, you need to remember the products and services that are taxable and exempt from taxes in Washington to avoid penalties. 

What's taxable in Washington

Most retail sales of tangible goods are taxable in Washington unless specifically exempted. Some taxable items include:

• Clothing and footwear
• Prepared food
• Digital products and software
• Alcoholic beverages
• Recreational marijuana

Exemptions from sales tax in Washington

Some exemptions include:

• Most grocery food and beverages
• Prescription drugs and OTC medications
• Medical devices
• Farm equipment and machinery
• Newspapers and periodicals

FAQs

Are groceries taxable in Washington?

Most grocery food and beverages are exempt from sales tax in Washington. However, prepared foods, soft drinks, alcohol, and dietary supplements are taxable.

Is clothing taxable in Washington?

Yes, all clothing and footwear are taxable in Washington unless specifically exempted.

Are digital products taxable in Washington?

Yes, digital products, including digital books, music, movies, and software, are taxable in Washington.

Is software-as-a-service (SaaS) taxable in Washington?

Yes, SaaS is considered a digital product and is taxable in Washington.

Are services taxable in Washington?

Generally no, only limited services are taxable in Washington such as lodging, construction, and physical fitness activities. Most professional and personal services are not taxable.

Excise taxes in Washington (alcohol, tobacco, gasoline, fuel, marijuana)

Washington has excise taxes on alcohol, tobacco, gasoline, marijuana, and other select items. Some examples:

• Cigarettes - $3.025 per pack of 20 or $30.25 per carton (10 packs)
• Marijuana - 37% retail excise tax
• Motor fuel - 49.4 cents per gallon

Food and beverage tax in Washington

Washington does not have a general sales tax on food and beverages. However, there are excise taxes on some specific items:

• Soft drinks - $0.175 per fluid ounce
• Beer - For breweries that produce less than 60,000 barrels a year, it’s $4.782 per barrel. For those producing over 60,000 barrells, the tax is $8.08 per barrel.

Remote sellers in Washington

Remote sellers with no physical presence in Washington must collect sales tax if they meet the $100,000 economic nexus threshold for gross retail sales or 200 retail transactions.

Washington is also part of the Streamlined Sales Tax program, which requires remote sellers to collect sales tax.

Prepaid sales tax rates for fuel products in Washington

Washington has the following prepaid sales tax rates for fuel:

• Motor vehicle fuel - 49.4 cents per gallon
• Special fuel (diesel) - 49.4 cents per gallon

Discretionary taxes in Washington (local sales taxes)

In addition to the 6.5% state sales tax, cities, counties, and other districts in Washington can impose local discretionary sales taxes up to 3.9% for transportation, criminal justice, public facilities, culture, and other purposes. Local rates vary but can reach as high as 10.4% combined state and local.

Collecting sales tax in Washington

Let’s look at the steps to collect sales tax in Washington now.

How to collect sales tax in Washington if you are not based in Washington (Out-of-State)

If you do not have nexus in Washington but make sales into the state exceeding $100,000 or 200 transactions annually, you meet the economic nexus threshold and are required to register and collect Washington sales tax.

Register for a seller's permit with the Washington Department of Revenue. Once registered, you must collect and remit sales tax on all taxable sales shipped into Washington, even if you do not have a physical presence.

Washington is also a Streamlined Sales Tax program member, which requires out-of-state sellers to collect Washington sales tax once registered.

Should you collect sales tax on shipping charges in Washington?

Yes, if the product being shipped is taxable, then the shipping charges are also taxable in Washington. If shipping a non-taxable product, the shipping charges would not be taxable.

For orders with both taxable and non-taxable items, the shipping charges should be allocated proportionately between the taxable and non-taxable portions.

Filing and paying sales taxes in Washington

Businesses must file and pay Washington sales tax monthly, quarterly, or annually, depending on their assigned filing frequency. Sales tax returns are due on or before the last day of the month following the reporting period.

Sales tax return filing schedule and due dates in Washington

Take a look at the sales tax filing schedules divided by month, quarter and annual frequencies.

Monthly

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Quarterly

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Annually

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Filing penalties in Washington

Businesses that fail to file their sales tax returns on time may be subject to penalties.

• 19% penalty at the end of the following month (after the due date);
• 29% penalty at the end of the second month following the due date.
• Note: The minimum penalty for late payment is $5.

When are returns due in Washington?

The due date for filing returns in Washington is the last day of the month following the period end date.

For instance, if you file quarterly and the filing period ends on March 31, your return filing due date will be April 30.

Similarly, for yearly billing where the filing period ends on December 31, you can file your taxes by January 31.

FAQs

What are the Washington sales tax due dates?

The due dates for filing sales tax returns in Washington are:

• Monthly: Last day of the following month
• Quarterly: Last day of the month after the quarter ends
• Annual: January 31

Can I get an extension on filing my Washington sales tax return?

You can request an extension to file your Washington sales tax return. The request must be made before the due date, and you must still pay any owed tax on time.

Can I amend a Washington sales tax return?

You can file an amended return in Washington to correct errors or omissions. When filing an amended return, you may owe additional tax, interest, and penalties.

What is the penalty for filing and/or paying Washington sales tax late?

Washington has a 19% penalty for returns filed 1-30 days late. This increases to 29% for returns over 30 days late. 

Audit & appeals process

The audit & appeals process is a series of steps a business must go through if the Washington Department of Revenue audits them. The process begins with the auditor contacting the business to schedule an audit.

The auditor will then review the business's records and tax returns to determine if sales tax was not paid. If the auditor finds any discrepancies, they will report their findings.

The business then has the opportunity to appeal the findings. If the appeal is denied, the business can petition the Department or appeal to the Washington Superior Court.

Washington sales tax audit process

The Washington sales tax audit process is as follows:

1. Notification of audit
2. Initial meeting and information request
3. Field examination
4. Audit findings and assessment
5. Appeal process

What to expect during the audit?

The auditor will review your books, records, accounting systems, and internal controls. They will examine your sales tax returns, transactions, and exemptions claimed. Expect to provide invoices, bank statements, tax returns, and other financial records.

After the audit – Appealing the results

Contesting audit findings with the auditor in Washington helps you:

• Correct factual errors
• Provide additional documentation
• Request a supervisor review
• Clarify misunderstandings
• Negotiate a settlement

If not satisfied, you can continue appealing up to Superior Court.

Sales tax registration

Here are the steps for registering for sales tax in Washington:

How to register for sales tax in Washington?

Visit the Washington business licensing wizard and follow the steps required to complete the filing. 

You will need to provide the following information:

• Your business name and address
• Your tax identification number (EIN or SSN)
• The type of business structure
• A description of your business activities
• Your estimated annual gross income

Once registered, you will be issued a sales tax account number and must collect and remit sales tax on taxable sales. You can use sales tax software or file manually.

Registration requirements for online sellers in Washington

If you are an online seller, you may be required to register for sales tax in Washington if you:

• Have over $100,000 in Washington sales annually (economic nexus threshold)
• Have a physical presence in Washington
• Actively target Washington customers through advertising or your website
• Sell on a marketplace with Washington nexus

Cost of registration for a Washington sales tax license

There is no fee to register for a standard Washington seller's permit. Certain business types may have additional fees.

Agencies to register within Washington

You register for sales tax in Washington through the Department of Revenue. Some cities may require additional registration.

More information

For sales tax filing and appeals in Washington, you would contact:

• Washington Department of Revenue
• Phone number: 1-800-647-7706
• Website: dor.wa.gov

There you have it—an extensive sales tax guide for ecommerce brands selling into Washington.