Washington sales tax guide for SaaS businesses

Is your product taxable in Washington? Get up-to-date rates, nexus thresholds, and more from Anrok’s team of tax experts.

Automate sales tax for SaaS
Sales tax index

2024 SaaS sales tax rates for Washington

Reach out to our team to start automating compliance for your business.

Tax rates

Statewide base rate
6.50%
Average combined rate
9.40%
Local tax rates?
Yes

Nexus thresholds

Sales volume
$100,000
Transaction count
N/A
Physical nexus?
Yes

Products taxed

SaaS
Yes
Digital goods
Yes
Other digital products
Contact us

Table of contents

Is SaaS taxable in Washington?

Washington has been a leader in the technology industry, with Seattle being home to some of the world’s largest tech companies like Amazon and Microsoft. With the rise of SaaS, the state has been quick to adapt its tax laws to include digital products. This has helped the state to maintain its position as a hub for innovation and technology.

Washington taxes a wide range of digital products, including SaaS, and it was one of the first states to specifically call out NFTs as a taxable digital product. 

In Washington businesses can be subject to both retail sales tax and Business and Occupation (B&O) tax. B&O tax is a gross receipts tax levied on the value of products, services, and certain activities conducted within the state. Washington’s B&O tax rates vary depending on the classification of your business and the type of activity being taxed.

How to determine if your product is taxable in Washington

To determine if your SaaS or digital product is taxable in Washington, it’s essential first to understand how your product is classified in the state. In most cases, digital products will be considered taxable in Washington.

Next, you must determine if your business has “nexus” in the state of Washington. Nexus is a sufficient connection between a business and a state that requires the business to comply with the state’s tax laws. Washington’s nexus laws have expanded in recent years to include remote sellers and online businesses, so it’s important to be aware of the current criteria

The two primary types of nexus in Washington are physical presence and economic nexus. A physical presence can be established through various means, such as maintaining an office, warehouse, or inventory in the state.

Economic nexus refers to a business that meets or exceeds specific sales thresholds in the state, even without a physical presence. In Washington, economic nexus is triggered when a business has more than $100,000 in annual sales within the state in the current or prior calendar year.

Sales tax compliance in Washington

After determining the taxability of your SaaS or digital product and calculating the appropriate tax rates, the final step is to ensure compliance with Washington’s tax laws. This involves timely registration, collection, reporting, and remittance of sales tax to the DOR. Businesses with a taxable presence in Washington must register for a tax account with the DOR.

Businesses must collect sales tax at the point of sale and report their tax collections and liability to the DOR on a regular basis. The frequency of filing sales tax returns will depend on your business’s tax liability and can range from monthly to annually. Additionally, periodically check for any changes in tax laws or rates that may affect your obligations as a business owner.

Because SaaS and digital products are subject to sales tax in Washington, it’s essential for businesses to understand their tax obligations to ensure compliance. Be aware of the state’s nexus laws, register for a tax account with the DOR, and develop a strategy for the accurate collection and remittance of sales tax to minimize risk and avoid potential penalties.

Sales tax index

SaaS sales tax rates for every state

Up-to-date sales tax rates, nexus thresholds, and product taxability for every state, built by Anrok’s team of SaaS tax experts.

Explore the index
What is anrok?

Automated sales tax compliance, built for SaaS

Connect your financial stack

Sync your billing, payment, and HR systems with just a few clicks

Monitor exposure across the globe

Instantly see how growing sales affect your liability—and quickly take action

Calculate sales tax in real time

Always collect the right tax, with the most accurate rules for SaaS

File and report on autopilot

Built-in filing, remittance, and reconciliation simplify reporting

Get a demo today

Talk to our team to learn more.