Impact of WA State Retail Sales Definition Change
When you run a small shop or freelance in Washington, you get used to juggling: invoicing on Sundays, figuring out how to cover health insurance, explaining to your family why “being your own boss” doesn’t actually mean you take afternoons off. Most of us don’t mind—it’s part of the independence we signed up for, and we’re proud to be part of the fabric that makes Washington’s creative and civic life thrive.
That’s why the recent sales tax change under ESSB 5814 feels like such a blow. The state legislature passed the bill back in April. But freelancers and small businesses didn’t hear a word about it until mid july and August. We got our notice on August 19, when the Department of Revenue sent out a notice—just six weeks before the October 1 effective date.
Six weeks to overhaul contracts, re-price services, and figure out compliance systems. Six weeks is not enough.
Here’s what makes it especially tough:
- We already pay Washington’s B&O tax on our professional services. Adding sales tax on top is double taxation.
- In theory, sales tax is paid by the client. In reality, most freelancers absorb it to keep quotes simple. That means higher rates—or thinner margins—for us.
- The state has classified work like websites, public awareness campaigns, and nonprofit communications as “advertising.” That might sound fine on paper, but in practice it treats public-benefit work—like fire safety campaigns or public health outreach—the same as retail ads.
- Nonprofits, many of which are not sales tax exempt, will see their already-tight budgets squeezed even further.
- Out-of-state providers won’t have to tack on this cost, making Washington freelancers and small businesses less competitive in our own backyard.
So what do we do?
We speak up. Respectfully, clearly, and together.
At Rhizome, we’re reaching out to our elected officials to ask for three simple things:
- Review and mitigate the unintended impacts of ESSB 5814.
- Give small businesses at least a year’s notice before changes of this magnitude.
- Clarify or amend the rules so that professional services and public-benefit work aren’t misclassified as taxable advertising.
If you’re a freelancer or small business owner in Washington, we hope you’ll join us. Here’s how:
- Call or email your state legislators and share your story. [Find yours here.]
Wondering what to say? We’ve got you! Here’s a concise one-pager with essential talking points. - Encourage your clients — particularly nonprofits — to raise their voices, too.
- Share this post so more of us understand what’s at stake.
Freelancers and small businesses are essential to Washington’s economy—and to the nonprofits, governments, civic groups, and local businesses that rely on us. This isn’t about dodging our responsibility; we’re proud to pay our fair share. It’s about making sure the rules are fair, clear, and don’t undermine the very work that strengthens our communities.
Together, we can make sure Washington stays not only an extraordinary place to live, but also a fair place to work.
Download our boilerplate advocacy brief for phone scripts, letters and posts.