Manufacturer's warranty included in price

A manufacturer's warranty included in the sales price of a vehicle is subject to the Retailing B&O and retail sales taxes.

Extended warranties not included in selling price

An extended warranty is an agreement for a specific period of time to replace or repair tangible personal property at no additional charge or a reduced charge, or to compensate for a loss by replacing or repairing tangible personal property.

A separate charge for an extended warranty sold to a consumer is subject to the Retailing B&O and retail sales taxes but a deduction is allowed under the Retailing classification for sales of third party warranties.

Commissions for selling third party warranties

Amounts received as commissions or other considerations for selling a warranty of a third-party warrantor are subject to the Service and Other Activities B&O tax. Since warranties are not insurance products regulated by the Office of the Insurance Commission, the seller's commission is not taxed under the Insurance Agent B&O tax classification.

Repairs by manufacturer/warrantor

When the repair is made by the manufacturer or warrantor, the value of labor and parts is not subject to B&O tax.

Repairs by third person

When a person other than the manufacturer or warrantor does the repairs, the value of the labor and parts is taxable under the Wholesaling classification of B&O tax.


The amount the customer is required to pay, in addition to any warranty or maintenance agreement payment or amounts not covered by the warranty or maintenance agreement, is subject to the Retailing B&O tax and the retail sales tax.

Warrantor purchase of insurance policy

When a warrantor purchases an insurance policy to cover the warranty, amounts received by the warrantor under the insurance policy are insurance claims reimbursements and are not subject to the B&O tax.

Maintenance agreements

See Maintenance Agreements.


An automobile dealer sells a vehicle to a customer for $15,000. This price includes a limited manufacturer's warranty for five years or 50,000 miles. The owner then has some warranty work performed by the dealer who is not the manufacturer-warrantor for a cost of $600 ($200 parts and $400 labor), with no deductible.

The dealer is liable for:

  1. Retailing B&O tax and collection of the retail sales tax on the original selling price of $15,000.
  2. Wholesaling B&O tax on the $600 repair charge. No retail sales tax or use tax is due on the repair parts or labor.


Washington Administrative Code (WAC) 458-20-257