HB 2083
In CommitteeHouse
Excise taxes
Modernizing the excise taxes on select services and nicotine products and requiring certain large businesses to make a one-time prepayment of state sales tax collection.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill modernizes Washington’s tax code by expanding the retail sales tax to include select services (e.g., IT consulting, fitness facility access, recreation) and digital products/services previously exempt, while also taxing emerging nicotine products like e-cigarettes. It also requires large businesses to make a one-time prepayment of sales tax to improve state cash flow.
- Expands the definition of 'retail sale' to include services such as custom website development, IT consulting, IT training, fitness facility access (with specific exclusions), and various recreational activities (e.g., golf, bowling, climbing, swimming, hunting, fishing).
- Removes exemptions for digital automated services (e.g., cloud-based software access, data processing, certain digital content delivery) and digital goods, making them subject to sales tax.
- Expands the definition of 'tobacco products' to include any product containing nicotine—whether derived from tobacco or synthetically produced—that is intended for human consumption or placement in the oral or nasal cavity, thereby taxing e-cigarettes, vapes, and similar products.
- Requires large businesses (with ≥$3M in 2026 taxable retail sales) to make a one-time prepayment of 80% of their June 2026 sales tax collections by June 25, 2027, with final return due July 26, 2027.
- Imposes a 10% penalty on underpayment of the one-time prepayment, with a waiver available if a business demonstrates a decline in June 2027 sales compared to June 2026.
Who is affected
- Large businesses (>$3M annual taxable retail sales) — Large businesses with $3 million or more in taxable retail sales in 2026 must make a one-time prepayment equal to 80% of their June 2026 sales tax collections by June 25, 2027, with the final return due July 26, 2027. Failure to pay the full prepayment may trigger a 10% penalty unless sales decline as documented.
- Consumers — Consumers will pay sales tax on previously exempt services like custom website development, IT consulting, fitness facility access (with specific exclusions), and certain digital services. This increases the cost of these services.
- Nicotine product manufacturers and retailers — Producers and sellers of nicotine products (including e-cigarettes, vapes, and other non-traditional tobacco/nicotine items) will now be subject to excise tax under updated definitions, potentially increasing product prices.
- Recreation and entertainment businesses — Athletic/fitness facilities, golf courses, amusement parks, and similar businesses must now collect sales tax on many of their admission and activity fees, increasing administrative burden and potentially affecting pricing.
- Technology and software service providers — Software and digital service providers must now collect sales tax on services like custom website development, IT training, and access to cloud-based software—previously exempt or ambiguous.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The bill explicitly funds public health programs—including behavioral health services, substance use disorder treatment, and supervision of individuals under criminal supervision—through new revenue from services and nicotine taxation, directly supporting vulnerable populations and reducing long-term public costs of unmet health needs.
HealthcarePeopleRef: Sec. 101, subsection (3)(m)(ii)(D) and Sec. 501 (funding findings)Taxing recreational activities like swimming, skating, and playgrounds generates revenue that supports public safety infrastructure and community programs, especially in underserved areas where access to safe recreational spaces is limited—helping reduce youth risk factors and improve community well-being.
Public SafetyPeopleRef: Sec. 101, subsection (15)(a)(viii) and (xviii); Sec. 501 (funding findings)By exempting physical and occupational therapy when provided under medical referral, the bill supports continuity of care for people with disabilities or chronic conditions—reducing out-of-pocket costs and improving access to essential rehabilitative services for low- and middle-income Washingtonians.
HealthcarePeopleRef: Sec. 101, subsection (3)(m)(ii)(D) and Sec. 501 (funding findings)Excluding charges for athletic/fitness facility access by educational institutions for students and staff helps maintain equitable access to wellness infrastructure in schools and universities—supporting student health and academic performance, especially for students from low-income households who may not have alternative access to fitness resources.
EducationPeopleRef: Sec. 101, subsection (3)(m)(ii)(G) and Sec. 501 (funding findings)The one-time prepayment improves state cash flow without increasing total tax liability, allowing more predictable budgeting and reducing the need for short-term borrowing—benefiting local governments that rely on state revenue allocations for education, housing, and social services.
Local GovernmentLean peopleRef: Sec. 401, subsection (1)(b)(ii) and Sec. 501 (funding findings)
Potential Concerns (5)
Expanding sales tax to services like fitness facility access, IT consulting, digital products, and recreation activities increases costs for consumers on discretionary and professional services—especially affecting middle-income households who rely on these services for work, health, and leisure. The tax applies broadly to services previously exempt, raising effective tax rates on modern economic activity without corresponding exemptions for low-income households.
FinancialIndustryRef: Sec. 101, subsection (3)(m)(i) and (15)(a)(i)-(xx); Sec. 201, subsection (3)(a) and (6)(b)The one-time 80% prepayment requirement for large businesses ($3M+ in 2026 taxable retail sales) creates significant short-term cash flow pressure and administrative burden, with a 10% penalty for underpayment—disproportionately affecting large corporations with complex cash management systems, while small and medium businesses are exempt. The penalty waiver is only available if sales decline, which rewards firms already struggling rather than proactively supporting compliance.
FinancialIndustryRef: Sec. 401, subsection (1)(b)(i) and Sec. 402, subsection (5)(a)Expanding the definition of tobacco products to include e-cigarettes and synthetic nicotine products subjects consumers to higher prices on vaping products, which are disproportionately used by young adults and lower-income populations—effectively raising regressive excise taxes on a product not currently taxed under Washington’s general excise tax framework.
FinancialIndustryRef: Sec. 301, subsection (21) (definition of 'tobacco products' now includes synthetic nicotine products)Exclusions for physical therapy and occupational therapy when provided under referral from a licensed health care practitioner are narrow and do not extend to mental health or substance use disorder services—limiting access to affordable care for vulnerable populations despite the bill’s stated goals of funding behavioral health programs.
HealthcareLean industryRef: Sec. 101, subsection (3)(m)(ii)(C), (ii)(D), and (ii)(G)Excluding charges by educational institutions for activities like golf, swimming, or amusement park visits only applies to students and staff—excluding alumni, community members, and families, thereby limiting public benefit and reinforcing inequitable access to recreational services for lower-income community members who cannot afford membership or admission fees.
EducationLean industryRef: Sec. 101, subsection (15)(b)(ii) and (iv)
Who Is Most Affected
Low- and middle-income households face higher costs for services like fitness, digital tools, and recreation due to expanded sales tax—disproportionately affecting those who rely on these services for work, health, and social engagement. While some exemptions exist (e.g., therapy under referral), most provisions lack income-based safeguards.
Large retailers and service providers (e.g., gyms, tech firms, cloud platforms) must now collect and remit sales tax on previously exempt services, increasing compliance costs and potentially passing costs to consumers. However, they benefit from a level playing field with brick-and-mortar businesses and may gain competitive advantage over unregistered digital-only competitors.
Vape and e-cigarette retailers face new regulatory and tax obligations, potentially reducing profit margins on a product increasingly used by youth and low-income adults. However, the tax may reduce youth access over time and create a more regulated market for responsible sellers.
Fitness and recreation facilities must now collect sales tax on admission and activity fees, increasing administrative burden and potentially reducing participation—especially for community-based programs serving low-income populations. However, new revenue supports public recreation infrastructure and safety programs.
Local governments benefit from more stable state revenue flows and expanded funding for public health, education, and social services—particularly behavioral health and substance use programs. However, they may face indirect pressure if state funding prioritizes new programs over existing local needs.