If five bills passed by the Washington state legislature are signed by the governor, state businesses could be on the hook for a $4+ billion tax increase, according to an article in the Washington State Standard.

“Business tax hikes make up more than half of the roughly $9 billion package, which still needs a sign-off from Gov. Bob Ferguson,” writes the Standard.

Senate Bill 5814, one of those five bills, could raise $2.7 billion over four years by expanding retail sales taxes to more services, such as temporary staffing, advertising, and security. If approved, this bill eliminates the human effort exclusion that could make many professional services currently exempt from sales tax now subject to sales tax. The bill would impact “any service transferred electronically that uses one or more software applications,” according to the Washington Society of CPAs.

House Bill 2081 increases Washington’s primary business tax, the business and occupation (B&O) tax, as well as B&O surcharges.

Other tax changes impacting Washington businesses include an increase to diesel fuel taxes, which will see a 3-cent increase in July, with another 3-cent increase the following year, followed by annual increases of 2% starting in July 2028. The state gas tax also could increase to 55.4 cents per gallon and continue to increase by 2% each year to account for inflation.

So, what is the solution for Evergreen state businesses?

Start by not paying more taxes than you owe:

• Consider doing a Reverse Sales & Use Tax Audit. If your company isn’t conducting these backward-looking audits, you’re probably overpaying your taxes. With constantly changing state and local excise tax regulations that vary across regions, overpayments are inevitable without a thorough review.
• Research any unexpected assessments related to Mixed Element Software Maintenance Agreements (MESMA).
• Use AI to your advantage. Improve your AP processes with AI-driven software and the industry’s best audit team. With CPRS, you get innovative cost-recovery solutions created for the world’s largest corporations.
• Consider an AP Recovery Audit. CPRS has helped companies like yours recover over a billion dollars in lost profits.
• Catch invoice errors before they occur. Using CPRS Active Invoice Review, you can catch errors before you pay an invoice.

CPRS recovers billions in overpaid taxes for our clients while protecting vendor and government relationships. We perform comprehensive services at the national, state, and local levels – reverse sales and use tax audits, audit representations, and more.

Don’t wait for government tax increases to impact your bottom line. Contact CPRS today.