Yes, SaaS is taxable in Washington. The Washington Department of Revenue (DOR) treats prewritten software that customers access on the seller's or a third party's server as "remote access software," a digital product subject to retail sales tax and use tax. The state rate is 6.5%, local rates apply on top, and the seller also owes retailing business and occupation (B&O) tax on its gross receipts. Business buyers do not get a general exemption, but those using the software in and outside Washington can claim the multiple-points-of-use exemption.
This guide covers how Washington classifies SaaS, what changed on October 1, 2025 under ESSB 5814, how sales are sourced, and the nexus threshold. It is educational information, not tax advice. For other states, see our SaaS sales tax by state guide.
Washington SaaS sales tax at a glance
| Question | Answer |
|---|---|
| Is SaaS taxable? | Yes, as remote access software |
| Key authority | RCW 82.04.050(6) and RCW 82.04.192; WAC 458-20-15503; DOR digital products guidance |
| Rate | 6.5% state plus local sales tax |
| Seller-side tax | Retailing B&O tax on gross receipts |
| B2B vs B2C | Both taxable; multiple-points-of-use exemption for concurrent use in and outside Washington |
| Sourcing | RCW 82.32.730 (Streamlined sourcing rules) |
| Nexus threshold | More than $100,000 in combined gross receipts sourced to Washington |
How Washington classifies SaaS
Washington's digital products law, in effect since 2009, covers three categories: digital goods, digital automated services (DAS), and remote access software (RAS). DOR describes remote access software as prewritten software provided remotely, where the buyer pays for the right to access and use software that resides on the seller's server or a third party's server. It names application service providers as an example. Retail sales tax applies whether the buyer obtains a permanent or nonpermanent right to use it.
A SaaS product that adds data, information, or other functionality beyond the software itself may instead be a digital automated service. Both RAS and DAS are taxable, so the classification usually matters less for SaaS than for the exclusions and exemptions that attach to each.
What changed on October 1, 2025
ESSB 5814 did not newly tax SaaS, which Washington already taxed. It did expand the tax to services that SaaS companies often sell alongside subscriptions. Since October 1, 2025:
- Information technology services such as help desk, network support, training, IT consulting, data processing, and data entry are retail sales.
- Custom software and customization of prewritten software are retail sales, including access to and use of custom software.
- Several DAS exclusions were removed, including those for advertising, live presentations, data processing, and services provided primarily through human effort. Telehealth services were added as an exclusion.
SaaS companies that bill implementation, configuration, training, or support in Washington should review those charges under DOR's interim guidance.
B2B vs B2C
Washington taxes SaaS sold to businesses and consumers alike. The digital goods business-purpose exemption applies only to digital goods, not to remote access software or DAS.
Businesses that buy digital products, including RAS, that may be used at the same time in and outside Washington can claim the multiple-points-of-use (MPU) exemption. The buyer gives the seller an exemption certificate and then reports use tax on the portion used in Washington. Resale certificates and other standard exemptions also apply with proper documentation.
B&O tax
Washington's B&O tax is a gross receipts tax on the seller. A SaaS company with Washington nexus owes retailing B&O tax on its retail sales sourced to Washington, in addition to collecting retail sales tax from its customers. B&O is not charged to customers as a separate tax.
Sourcing
Washington uses the Streamlined Sales and Use Tax Agreement sourcing rules, implemented in RCW 82.32.730. In order, a sale is sourced to where the buyer receives the product, then to the buyer's address in the seller's business records, then to the address obtained during the sale, and so on. DOR notes that RAS is used in Washington when the customer first accesses the software there. Local sales tax is based on the sourced location.
Nexus and registration
Since January 1, 2020, a remote seller must register with Washington, collect retail sales tax, and report B&O tax if it has more than $100,000 in combined gross receipts sourced or attributed to Washington in the current or prior calendar year. Washington has no transaction-count threshold.
For rates, filing frequencies, and registration steps, see our Washington sales tax guide.
What to do next
- Collect retail sales tax at the state and local rate for the customer's location.
- Review services billed with subscriptions (implementation, training, support, customization) under the ESSB 5814 rules.
- Accept and store MPU exemption certificates from business customers using the software in several states.
- Register for B&O tax and track Washington gross receipts against the $100,000 threshold.
Kintsugi calculates Washington sales tax at the address level and files your returns. See Kintsugi for SaaS.
Frequently asked questions
Is SaaS taxable in Washington?
Yes. Washington treats SaaS as remote access software, a digital product subject to retail sales tax and use tax.
What is the Washington sales tax rate on SaaS?
The state rate is 6.5%, plus the local rate where the sale is sourced.
Did ESSB 5814 make SaaS taxable in Washington?
No. SaaS was already taxable. ESSB 5814, effective October 1, 2025, made IT services, custom software, and customization of prewritten software retail sales, and removed several DAS exclusions.
Is B2B SaaS exempt in Washington?
No. The business-purpose exemption applies only to digital goods. Businesses using SaaS in and outside Washington at the same time can claim the multiple-points-of-use exemption.
What is Washington's economic nexus threshold?
More than $100,000 in combined gross receipts sourced or attributed to Washington in the current or prior calendar year.
Sources
- Washington Department of Revenue, Digital products including digital goods
- Washington Department of Revenue, Services newly subject to retail sales tax (ESSB 5814)
- Washington Department of Revenue, Remote sellers
- Revised Code of Washington, RCW 82.04.192 and RCW 82.32.730
Look up the exact rate for any address with our US sales tax calculator.
