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include extending the retail sales tax to a wider array of services, such as computer-related services, and eliminating outdated exemptions for digital automated services.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. Notably, it introduces new taxable service categories, including information technology training and custom website development, while requiring certain large businesses to make a one-time prepayment of state sales tax collections.

Additionally, the bill revises definitions and regulations surrounding retail sales, particularly concerning physical fitness activities, digital goods, and recreational services. It clarifies that physical fitness activities include various exercises and specifies exclusions from the definition of retail sales for certain services, such as construction and agricultural products. The bill also updates the definition of "tobacco products" to include nicotine-containing items, while excluding FDA-approved products. New sections are introduced to ensure the act's severability and outline effective dates for implementation, which are set for October 1, 2025, and January 1, 2026, for different provisions. Overall, the legislation aims to generate additional revenue while providing clarity and consistency in tax regulations across various sectors.

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