Washington rolled out its new sales tax on advertising services, and it’s brutal.
Starting October 1, 2025, if you are located in Washington and you buy or sell ads, the new rule says you must pay sales tax on advertising services.
What makes this especially frustrating is the uncertainty. The law passed quickly, guidance is confusing, and business owners are left wondering how much of their ad spend the Department of Revenue will try to pull into the tax base.
All in all, this is unfair, it’s confusing, and it puts a huge burden on businesses that already have enough to worry about.
As if that’s not enough, many other states are following the lead, which means there could be another layer of sales tax compliance difficulty for many businesses countrywide.
What Changed on October 1, 2025?
Under ESSB 5814, Washington now treats advertising services as a taxable “retail sale” beginning October 1, 2025.
If you are a Washington-based business, you will now see sales tax on invoices related to advertising purchases. For ad campaigns that span multiple states, WA law allows for the use of a Multiple Points of Use (MPU) certificate. An MPU is a document that tells the seller that a service will be used in more than one state.
Furthermore, Washington has suggested that a business use “reasonable methods” for proper apportionment of the tax in recent guidance, but it has not explained what it will consider acceptable.
What’s Not Included & Why it Matters?
Washington’s new law doesn’t hit every type of advertising. The statute specifically excludes several traditional formats, including:
- Newspaper ads
- Billboards
- Radio spots
- Television commercials
The Costs and Impact
ESSB 5814 was signed alongside the state’s $78 billion budget, and lawmakers expect it to bring in hundreds of millions. The Department of Revenue has already said that if the ad tax were removed, it would leave a $475 million hole over the next four years.
Industry groups estimate the tax will add roughly 10% to the cost of digital campaigns in Washington. For companies competing in tight markets, that’s a shift in how much reach their budgets can buy.
For buyers, even a $200,000 digital ad buy could trigger close to $18,000 in tax. That kind of expense can eat into already thin margins or force businesses to cut back on marketing spend.
Why Documentation Matters
Washington hasn’t said what it will consider an acceptable method for splitting ad costs, and that has created a big gray area.
If a WA business opts to submit an MPU to their advertising service provider, we strongly encourage thorough and detailed documentation regarding your apportionment methods and data. This law is so new that nobody has any idea what Washington will or will not accept as proper apportionment methods and documentation.
Invoices, reports, and contracts that show the basis for your calculation are, therefore, the only logical way you can defend yourself.
Without that paper trail, you run the risk of Washington taxing the full amount of your campaign.
Not All Providers Support Use Tax
One of the hardest parts of Washington’s new tax is that businesses are the ones responsible for remitting use tax when sales tax isn’t collected.
The problem is, not every compliance provider helps with that. Some providers do not include use tax on the regular return and will tell you to amend your returns after they file them.
That’s a disaster waiting to happen. Amended returns are more likely to get flagged for audit. If use tax gets missed, Washington can assess the original liability at around 9–10% of your spend, plus 7% interest and penalties of 9% to 29% depending on how long it sits unpaid.
We don’t leave clients hanging like that. At TaxValet, we take care of both sales and use tax from the start, so you’re not blind sided in an audit or stuck cleaning up someone else’s half-done work.
Will Other States Follow?
It’s not a question of if, but when.
States are under pressure to raise revenue, and taxing online services is one of the simplest ways to do it.
Maryland already tried to roll out a digital ad tax, only to end up in a long court battle. New York, Michigan, and Massachusetts have floated similar proposals.
Each time, businesses push back, but the idea keeps resurfacing.
The good news is that the systems you build today to track, document, and remit use tax will put you ahead of the curve when other states decide to follow the same path.
Be Confident in Your Sales Tax Compliance
Washington’s new ad tax puts businesses squarely on the hook. The rules are murky, the documentation burden is heavy, and the risk of being taxed on an entire campaign is real.
That’s all together a lot of risk and extra work.
TaxValet takes that weight off your shoulders while eliminating the risks.
We handle registrations, filings, exemption certificates, and audit defense. With Washington’s new rules, we fold those requirements into a sales tax compliance system built to protect you.
Instead of scrambling to track every detail yourself, you gain a team that manages the process and shields you from costly surprises.
Let TaxValet carry the weight of sales tax compliance so you can stay focused on growing your business.