Washington businesses that sell services just got another compliance reminder: the Department of Revenue says there are new exclusions and exemptions in effect as of July 1, 2026, and it is still publishing guidance as the state works through ESSB 5814.

That matters because this is not one of those policy updates you can safely ignore until year-end. The DOR page says sellers of certain services must collect retail sales tax, buyers should expect tax on their bills, and affected taxpayers must report, collect, and remit taxes under current guidance even while legal challenges continue. Washington DOR

The practical read for owners is simple: if you bill Washington customers for services, recheck your invoice template before the next run. The state’s current guidance covers categories such as IT services, custom website development, live presentations, investigation and security services, and temporary staffing. In the same table, the department also spells out exclusions for items such as web hosting, domain registration, payment processing, and locksmith services. Washington DOR

That combination is exactly where businesses get tripped up. A consulting invoice that worked last quarter may now need tax added to some line items but not others. If your accounting system treats all service work the same, you can end up overcollecting from customers, undercollecting from the state, or both.

The good news is that Washington is not pretending the transition is frictionless. The department says it has launched a temporary penalty relief program for uncollected or unpaid retail sales or use taxes caused by the change. That does not eliminate the tax, but it does tell you the state expects businesses to be updating systems rather than guessing. Washington DOR

For owners, the safest next move is boring and specific:

• Check whether any Washington-facing services in your billing stack are now taxable.
• Make sure your invoices show sales tax clearly where it applies.
• If a customer is buying services for resale, confirm the reseller permit before you skip tax.
• Review the DOR special notices for the service category you sell most often.

The bigger lesson is that state tax changes are now a systems problem, not just an accounting problem. The businesses that update the invoice rules first will spend less time fixing old bills later.

Sources: Washington Department of Revenue: Services newly subject to retail sales tax; ESSB 5814 penalty relief program