Free guide for contractors
Do contractors charge sales tax in Washington?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
WA Washington
Tax usually chargedYes. Washington treats construction for a property owner as a retail sale, taxed on the full contract price.
Washington law defines building, repairing, decorating or improving buildings and other structures for consumers as a retail sale. A prime contractor is taxed under the retailing classification and collects retail sales tax from the customer.
The tax is measured by the full contract price, labor and materials together. Showing a charge separately in a bid does not take it out of the taxable amount.
The tax has to be stated separately on the invoice. The Department of Revenue says the words 'tax included' are not enough. The rate is the one where the construction takes place.
A subcontractor working for a prime contractor makes a wholesale sale, and charges no sales tax, when the prime contractor gives it a valid reseller permit.
It turns on: whether the customer is the property owner or a contractor with a reseller permit; where the job site is (the local rate); whether the customer is a government and the work is public road or federal contract work.
Watch out for
- Public road construction for a government is not a retail sale, and retail sales tax does not apply to any part of the charge (WAC 458-20-171).
- On federal government contracts, retail sales tax does not apply to the contract price; the contractor pays sales or use tax on the materials instead (WAC 458-20-17001(3)(a)).
- Business and occupation (B&O) tax is the contractor's own tax, not an invoice line. The retailing rate is 0.471%, rising to 0.5% on January 1, 2027 (WA DOR, B&O tax classifications).
“Prime contractors are required to collect from consumers the retail sales tax measured by the full contract price.”WAC 458-20-170(4)(a)