Retail Sales and Use Tax

Businesses in Washington collect and remit a retail sales tax on the sale of tangible personal property and certain services.  Washington State sales tax is 6.5% with local governments having the power to levy additional sales tax, adding 0.5 to 2.4% to the base rate.  The combined sales tax rate in the Tri-Cities is 8.3 percent.

 

Use tax is due on the value of tangible personal property used in the state on which retail sales tax has not been paid. For example, use tax is imposed on equipment included in the purchase of an existing business.  Exemptions to retail sales and use taxes include groceries, prescription drugs, hospitals, certain government activities, newspapers and some sales to farmers.

 

Businesses engaged in manufacturing activities are not required to pay sales or use tax on machinery and equipment used directly in manufacturing operations.  Charges made for labor and services for installing the machinery and equipment are also exempt.

 

Businesses do not pay sales and use taxes on the purchase of materials that are to become components of finished products for sale. Qualified firms are allowed to defer/exempt payment of the sales and use tax on new or expanded facilities.