New sales/use tax exemption for purchases of certain retail services by schools and libraries

Intended audience: Sellers of certain retail services to schools and libraries.

Starting Jul. 1, 2026, public libraries, library districts, library service centers, K-12 schools, school districts, and educational service districts are exempt from retail sales and use tax on purchases of the following retail services:

• Information technology services.
• Custom website development.
• Live presentations.
• Investigation, security, and armored car services.
• Temporary staffing.
• Custom software and customization of prewritten software.

How do I report these sales?

You will report these sales under the Retailing business and occupation (B&O) and the retail sales tax classifications. However, you will then take a “Sales of Exempt Services to Libraries and Schools” deduction from the retail sales tax.

How do I document these sales?

The department is developing an exemption certificate that buyers must use to claim the exemption. The exemption form will be available before the Jul. 1, 2026, effective date. You must keep a copy of the exemption form in your records for five years.

Do I have to collect sales tax on exempt services provided prior to July 1, 2026?

You do not have to collect sales tax if the exempt services meet the requirements for existing contract treatment as provided in our interim guidance statement. The department is extending the grace period for newly excluded services through June 30, 2026. You must collect sales tax through June 30, 2026, if you do not meet the requirements for existing contract treatment.

Tribal consultation and guidance status

This notice provides information on select changes enacted during the 2026 legislative session. The department has not issued an Interim Guidance Statement, Excise Tax Advisory, or initiated rulemaking on this topic. The department is consulting with tribes on ESSB 5814 (2025). Vendors with tribal customers should request a ruling.