Washington state bill that would tax digital advertising services passes, but will it take effect?

Washington state lawmakers have given their OK to a law that would require services related to online advertising be subject to sales tax — while exempting many legacy media campaigns. 

The bill appears to call for taxing many types of advertising-related services in general, but then specifically exempts services done for print, radio, television and digital signage and billboards. The state’s revenue department does not currently list advertising-related services as being taxable at all.

The law notably does not mention exemptions for services provided in relation to streaming, digital or online advertising, so it essentially becomes a tax targeted to those types of mediums. 

SB 5814 still requires Gov. Bob Ferguson’s signature and multiple advertising trade groups are pressuring him to veto the law after it narrowly passed both the state house and senate earlier in April 2025.

It is not certain what the tax rate would be, though it would likely be between 7.5% to 10.6%.

The bill does not propose taxing the actual costs of placing advertisements, however.

It’s not clear how the tax might be broken down for muliplatform campaigns that include a mix of, for example, print, legacy broadcasting and online and other digital ads, especially when some services, such as strategy and design, are applied to more than one medium. 

While the law would presumably add some revenue to state coffers, it’s also possible that it could drive Washington-based advertisers to seek agencies located elsewhere.

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States vary on their approach to taxing services. Washington state does currently charge sales tax on services ranging from construction and dating to landscaping and personal training.