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Washington State: Sales tax and B&O tax bills enacted

Expanded retail sales tax base, increased tax rates under B&O tax, and repealed B&O tax preferences

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May 28, 2025

The Washington state legislature recently passed several revenue-raising bills to address a looming budget deficit. On May 20, 2025, the governor took action on these bills, signing some and partially vetoing others. Three measures are particularly significant for businesses operating in Washington, including:

  • Senate Bill 5814, which expands the retail sales tax base to include certain services
  • House Bill 2081, which increases the tax rate for multiple classifications under the business and occupation (B&O) tax
  • Senate Bill 5794, which repeals several B&O tax preferences

Read a May 2025 report prepared by KPMG LLP that provides more information on each of these bills.

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