Meals provided to senior residents

Taxability of Meals in Senior Living Communities

The taxability of meals provided by senior living communities depends on whether they are included in a resident’s rent or charged separately. A senior living community is any facility or campus operated by a person licensed or registered under Chapter 18.20 or Chapter 18.390 RCW.

Meals included in rental agreement

Senior living communities are not required to collect retail sales tax on food, drinks, or meals provided to residents as part of their rental agreement. However, the fair selling price of these items are generally subject to business and occupation (B&O) tax under the Service and Other Activities classification.

How the fair selling price is calculated

The fair selling price is estimated to be double the cost of the food, drinks, or meals provided unless records are kept showing the actual fair selling price.

The cost of the food, drinks, or meals includes the amount paid for the food and drinks served, the cost of preparing and serving them, and all other incidental costs, including overhead expenses.

Meals provided with a separate charge

Separate charges for food, drinks, and meals are subject to Retailing B&O tax and retail sales tax.

Note: This tax treatment is valid beginning July 23, 2023. Prior to this date, meals provided by senior living facilities that did not provide healthcare services were subject to Retailing B&O and retail sales tax on the fair selling price of the meals. Meals provided by senior living facilities that provided healthcare services were not subject to sales tax.

Because the change in taxability took effect in the middle of a month and quarter, senior living communities should reference How to calculate tax due on meals provided by senior living communities for July 2023 & Q3/2023 for reporting instructions.