The bill seeks to enhance funding for public schools, health care, and social services in Washington by updating the state's tax code to better align with the transition from a goods-based to a service-based economy. Key changes include extending the retail sales tax to a wider array of services, such as computer-related services, and eliminating outdated exemptions for digital automated services. The legislation also modernizes the taxation of tobacco products to encompass new nicotine products, ensuring fair competition. Additionally, it introduces a one-time prepayment requirement for certain large businesses regarding state sales tax collections, aiming to generate additional revenue for essential programs.

The bill revises definitions related to retail sales, expanding the scope to include various services and tangible personal property, while clarifying that certain transactions between affiliated groups are excluded. It specifies that fees for activities like instructional lessons and recreational services are not considered retail sales, while also introducing a new category of "specified services" subject to retail sales tax. The definition of "digital automated service" is broadened to include telehealth services and digital product storage, and the definition of "tobacco products" is amended to include all nicotine-containing products intended for human consumption, with specific exclusions. The bill emphasizes the importance of its provisions for supporting state government and public institutions, with a phased implementation set for late 2025 and early 2026.

Statutes affected:
Original Bill: 82.04.192, 82.26.010, 82.32.045
Substitute Bill: 82.04.192, 82.26.010, 82.32.045
Engrossed Substitute: 82.04.192, 82.26.010, 82.32.045
Bill as Passed Legislature: 82.04.192, 82.26.010
Session Law: 82.04.192, 82.26.010