What Changed?
The State of Washington recently announced changes to the services subject to retail sales tax. Engrossed Substitute Senate Bill (ESSB) 5814 now includes temporary staffing services as taxable activities.
Effective Date
October 1, 2025 is the date when businesses must:
- Collect retail sales tax on temporary staffing services.
- Report gross income from these services under the Business and Occupation (B&O) tax using the Retailing classification.
The taxability of temporary staffing services is no longer determined by the specific activities of the temporary staff.
What Are Temporary Staffing Services?
Temporary staffing services are defined as providing workers to other businesses for limited periods of time to supplement their workforce and fill vacancies on a contract or fee basis.
Exceptions to Taxability
Temporary staffing services provided to hospitals licensed under chapters 70.41 or 71.12 RCW are not considered a retail sale. Income from these services continues to be taxed based on the activity performed by the assigned worker(s).
Additional Services Subject to Sales Tax
Washington’s new rules also apply to:
- Information technology services, including:
- Training
- Technical support & help desk
- Network operations and system support
- Data entry & data processing
- Implementation services
- Custom website development
- Custom software sales and development
- Customization of prewritten software
Retail sales tax is applied based on the location where the customer receives the service or product.
Recommended Next Steps for Staffing Firms
To maintain smooth operations and strong customer relationships, we recommend:
- Informing customers about the new sales tax requirements effective October 1, 2025.
- Confirming whether their worksite or services qualify for an exemption.
- Discussing the cost impact and updating invoices as needed.
Sample Customer Message:
- Brief explanation of the new Washington State sales tax rules
- Request to verify exemption status by September 19, 2025
- Note of your commitment to ensure compliance together
How Madison Resources Can Help
We have updated our systems to comply with the new sales tax rules. Starting October 1, 2025, WA Sales Tax will be applied to all invoices for employee assignments within Washington.
Resources & Contacts
Email: Rulings@dor.wa.gov
Washington New Retail Services: dor.wa.gov/NewRetailServices
ESSB 5814 Text: Chapter 422, Laws of 2025
Exemption Forms: dor.wa.gov/forms-publications/forms-subject/exemption-forms
FAQs on ESSB 5814: dor.wa.gov/faqs
Washington Department of Revenue Contact:
Phone: (360) 705-6705
Stay Informed. Stay Compliant. Grow With Confidence.
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