Starting October 1, 2025, Washington businesses providing advertising services must collect retail sales tax and report income under the Retailing B&O tax classification. This change comes from ESSB 5814, Chapter 422, Laws of 2025, modernizing how services are taxed.
Advertising services include both digital and nondigital activities related to creating, preparing, producing, or disseminating ads. Examples include graphic design, layout, production supervision, placement, web campaign planning, online referrals, search engine marketing, and traffic monitoring.
Some services are excluded, such as web hosting, domain registration, newspaper publishing, radio and TV broadcasting, and out-of-home advertising like billboards, transit ads, and in-store signage. Advertising sold to members of an affiliated group is also exempt.
Businesses must report income from advertising services on their excise tax returns under Retailing B&O, retail sales, and local sales tax classifications. The tax rate depends on where the customer receives the service. New tax classifications can be added via My DOR at dor.wa.gov/Login.
For guidance, visit dor.wa.gov/NewRetailServices or call 360-705-6705.
