Washington Expands Sales Tax Exclusions for Live Presentations (Effective July 1, 2026)

On April 3, 2026, the Washington State Department of Revenue announced an important update that will affect businesses, nonprofits, and individuals offering live presentations for a fee. Starting July 1, 2026, the state is expanding what qualifies as excluded from retail sales, meaning certain services will no longer be subject to retail sales tax, though they may still be subject to B&O tax.

If you run classes, performances, or educational programs in Washington, this blog is for you.

What’s Changing?

Washington already excludes some live presentations from the definition of “retail sales.” With this update, four new categories are being added:

1. Before & After School Care

In-person, on-site care provided by elementary schools will now be excluded.

This is particularly relevant for schools and organizations running structured childcare programs outside regular school hours.

2. Nonprofit Presentations

Live presentations delivered by organizations exempt under 501(c) of the federal tax code are now excluded.

This applies to many nonprofits but not all activities are tax-free (more on that below).

3. Music Lessons (All Formats)

Music instruction is now excluded regardless of class size.

Whether it’s one-on-one piano lessons or group guitar classes, these are no longer considered retail sales.

4. Incidental Instruction

Instruction that is secondary to a performance (e.g., a workshop tied to a theater or comedy event) is now excluded.

Think of a short acting lesson before a play or a Q&A session after a performance.

What Taxes Still Apply?

Here’s where things get nuanced:

“Excluded from retail sales” ≠ “tax-free.”

Most of these services are still subject to Business & Occupation (B&O) tax, depending on the activity:

• Childcare services → taxed under the Child Care classification

• Nonprofit presentations → typically under Service and Other Activities, unless it’s an exempt fundraiser

• Music lessons & incidental instruction → also under Service and Other Activities

  
  

Bottom line: You may stop collecting sales tax, but you likely still owe B&O tax.

What About Services Before July 1, 2026?

The state is offering a grace period through June 30, 2026 but with conditions:

• If your services qualify under existing contract treatment, you don’t need to collect sales tax

• If they don’t qualify, you must continue collecting sales tax until June 30, 2026

This gives businesses time to transition, but it’s not a blanket exemption.

Tribal Consultation Still Ongoing

The Department noted that:

• Formal guidance (like rulemaking or advisories) has not yet been finalized

• The state is consulting with tribes regarding ESSB 5814 (2025)

• Businesses working with tribal customers are encouraged to request a ruling

Expect more clarity in the coming months.

What This Means for You

This change simplifies tax treatment for many service providers but also introduces new compliance considerations.

You may benefit if you:

• Run music schools or private lessons

• Offer nonprofit educational or cultural programs

• Provide school-based childcare services

• Host performances with instructional components

  
  

You should take action if you:

• Currently collect sales tax on these services

• Have contracts spanning July 1, 2026

• Work with tribal entities or customers

  
  

Washington’s expansion of sales tax exclusions reflects a broader shift toward recognizing educational, cultural, and community-based services as distinct from traditional retail transactions.

However, don’t mistake “excluded” for “exempt.” The tax burden doesn’t disappear, it just shifts.

If you’re unsure how this applies to your business, now is the time to review your services, contracts, and tax classifications before the July 1 deadline.