Effective October 1, 2025 (ESSB 5814)

Washington DOR is actively publishing guidance ahead of the October 1, 2025, effective date, including interim guidance and special notices throughout September 2025.

What’s not included

• Telehealth/telemedicine is specifically excluded from the definition of digital automated services (DAS); income remains taxable under Service & Other B&O (not retail sales).
• Affiliate exceptions (non-retail sales):
  • Advertising services sold to affiliated group members.
  • Live presentations delivered via internet/telecom between affiliated group members.
• Category-specific carve-outs:
  • Locksmith services are not part of investigation/security/armored car.
  • Hospital staffing: temporary staffing sold to licensed hospitals is not a retail sale; tax follows the underlying activity.

What’s now taxable 

• Advertising services – All digital and non-digital services tied to creating, preparing, producing, or disseminating ads (e.g., layout/design, placement, referrals, SEM/lead gen, web campaign planning, and campaign analytics). Not included: web hosting, domain registration, services to newspapers/printing/in-state broadcasting, and specified out-of-home (billboards, street furniture, transit, place-based, event signage, naming rights, fixed signage; note: direct mail is not OOH). Advertising sold to affiliates is not a retail sale.
• Live presentations – Lectures, seminars, workshops, or courses, attended in person or via internet/telecom that allow real-time two-way interaction. When sold between affiliates and delivered via the internet/telecom, they are not retail sales.
• Information technology (IT) services – Training, technical support, help desk, network operations/support, network system support, data entry, and data processing, plus implementation services.
• Custom website development services – The design, development, and support of a website provided by a website developer to a customer.
• Sales of custom software & customization of prewritten software – Defined as retail sales (rather than services) regardless of delivery method, including charges for access/use and use for data processing.
• Temporary staffing services – Providing workers to other businesses for limited periods on a contract/fee basis; gross income includes fees, wages, and employee costs. Exception: services to licensed hospitals are not retail sales (tax depends on the underlying activity performed).
• Investigation, security, security monitoring, and armored car services – Includes background checks, guard/patrol, personal/event security, security system services/monitoring, and armored transport. Locksmith services are excluded.

DAS changes tied to ESSB 5814

ESSB 5814 removed four prior exclusions from DAS (primarily human effort, live presentations, advertising services, and data processing) and added a new DAS exclusion for telehealth/telemedicine; DOR also clarified that DAS in those four categories, when sold to affiliates, are not retail sales.

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