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Washington State 2025 Tax Reform
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ARTICLE | June 30, 2025
Navigating Washington State’s 2025 Tax Reforms: How Larson Gross Can Help
Washington State’s 2025 tax reforms introduce broad changes to Sales and Business & Occupation (B&O) taxes. These changes will impact a wide array of businesses—particularly those offering newly taxable services or operating at scale. Here’s a breakdown of the reforms and how Larson Gross can support you every step of the way.
Expanded Sales Tax Categories (Effective October 1, 2025)
Under Senate Bill 5814, several previously exempt services will become taxable. Affected service categories include:
- Information Technology Services: IT training, tech support, custom software development
- Digital Automated Services (DAS): Electronically delivered services like data processing and digital advertising
- Security Services: Investigation, monitoring, and armored transport
- Temporary Staffing Services: Non-healthcare temp staffing solutions
- Advertising Services: Digital marketing and associated services
- Live Presentations: Real-time in-person or virtual lectures, seminars, or courses
How We Can Help:Tax Registration Services: We help newly impacted service providers register with the Washington Department of Revenue. Billing System Overhaul: Our experts work with your team to update invoicing platforms to accurately reflect new sales tax requirements. Customized Staff Training: Receive training tailored to sourcing rules and multistate service delivery nuances. |
B&O Tax Changes & New Categories
Key Changes:
- Rate Increases (Effective Jan 1, 2027):
- Retailing, Wholesaling, Manufacturing: From ~0.471%-0.484% to 0.5%
- Service Businesses (Effective Oct 1, 2025):
- $1M – $5M annual gross income: Rate remains at 1.75%
- Over $5M: Increased to 2.1%
- Surcharges:
- Large Businesses (>$250M income): 0.5% surcharge (2026-2029)
- Financial Institutions: Increase from 1.2% to 1.5% (Oct 1, 2025)
- Advanced Computing: Surcharge rises from 1.22% to 7.5%; cap increases to $75M
- Newly Taxed Activities:
- Payment Card Processing Services: New rate and deductions (Effective Jan 1, 2026)
- Self-Storage Rentals: Subject to B&O tax (Effective Apr 1, 2026)
How We Can Help:Strategic Revenue Review: We’ll assess your gross income and business model to determine exposure to new rates and surcharges. Business Activity Mapping: We help reclassify business activities where needed for accurate tax compliance. Systems Integration & Configuration: Our team assists in updating accounting software to reflect new tax obligations. Ongoing Education & Planning: We offer workshops, planning sessions, and tailored guidance to ensure your business remains compliant and agile. |
Why Partner with Us?
Tax law changes can be daunting, but you don’t have to navigate them alone. Larson Gross provides proactive, tailored, and hands-on support to ensure you’re not just compliant—but optimized for growth and efficiency.
Contact us below today to learn how we can support your transition through Washington’s 2025 tax reforms and beyond.
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