New sales tax on services in Washington takes effect Wednesday

Washington's new sales tax on services, effective Wednesday, is expected to raise $3. 6 billion over the next two years, addressing a budget shortfall. A key aspect of this law, the tax on advertising services, faces legal challenges from Comcast, which argues its illegality. If successful, Comcast's lawsuit could undermine the projected $475 million revenue from this provision. The tax law also encompasses various services, including temporary staffing and security, impacting more than 90,000 businesses statewide.

Local governments will receive a portion of state sales tax proceeds, enhancing community funding. The state Department of Revenue previously engaged with businesses to clarify tax implementation amid concerns over financial impacts. As the next legislative session approaches in January, the resolution of the lawsuit will play a crucial role in shaping the budget landscape. The law also introduces increased taxes on emerging nicotine products and raises business and occupation tax rates for large financial institutions.