HB 2424
In CommitteeHouse
Temporary staffing/sales tax
Exempting temporary staffing services from retail sales tax.
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 removes retail sales tax on temporary staffing services in Washington State. It amends the state’s definition of a 'retail sale' to exclude services where staffing agencies provide workers to other businesses on a temporary, contract, or fee basis—except for hospitals. The change takes effect in July 2026 and is expected to reduce state tax revenue.
- Exempts 'temporary staffing services' from the definition of 'retail sale' and thus from retail sales tax under RCW 82.04.050.
- Defines 'temporary staffing services' as providing workers to other businesses (excluding hospitals) for limited periods to supplement workforce or fill vacancies, on a contract or fee basis.
- Amends existing law to remove temporary staffing services from the list of taxable services previously included under subsection (3)(j) of RCW 82.04.050.
- Clarifies that the exemption applies only to the staffing service itself—not to any other services or products provided alongside it.
Who is affected
- Temporary staffing agencies — Staffing agencies that provide temporary workers to other businesses will no longer have to collect and remit retail sales tax on their fees for those services.
- Businesses that hire temporary workers — Businesses that use temporary staffing services will no longer be charged sales tax on those services, potentially lowering their operating costs.
- Washington Department of Revenue — The Washington Department of Revenue will need to update its tax collection systems and guidance to reflect the new exemption.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (2)
Businesses that use temporary staffing services will no longer pay sales tax on those services, lowering their operating costs—potentially supporting modest hiring or investment, though evidence suggests most savings go to larger or more profitable firms.
Business & EmploymentRef: Sec. 1, amending RCW 82.04.050(3)(j)Temporary staffing agencies will no longer collect and remit sales tax on their services, reducing compliance burden and administrative costs—though many agencies are small or mid-sized, the primary operational savings accrue to firms with higher volume or more complex client contracts.
Business & EmploymentLean peopleRef: Sec. 1, amending RCW 82.04.050(3)(j)
Potential Concerns (3)
The state will lose approximately $12 million over the 2025–27 biennium in retail sales tax revenue, reducing funds available for public services like education, transportation, and healthcare that many everyday Washingtonians rely on.
FinancialPeopleRef: Sec. 1, amending RCW 82.04.050(3)(j)While businesses using temporary staffing may save on sales tax, staffing agencies themselves face administrative costs to adjust billing and tax systems, and may not pass savings fully to workers—many of whom earn low wages and see no direct benefit.
Business & EmploymentLean peopleRef: Sec. 1, amending RCW 82.04.050(3)(j)Local governments that rely on retail sales tax revenue (e.g., through shared revenue formulas) may experience reduced funding for local services like police, fire, and parks, disproportionately affecting communities already under-resourced.
Local GovernmentPeopleRef: Sec. 1, amending RCW 82.04.050(3)(j)
Who Is Most Affected
Staffing agencies—especially larger, for-profit agencies—will benefit from reduced compliance costs and potentially higher net revenue per placement, but small or marginally profitable agencies may see little net gain after adjusting pricing strategies.
Businesses that hire temps (e.g., warehouses, factories, offices) may see lower operating costs, but savings are likely modest per worker and concentrated among larger firms with high temp usage—small businesses with few temps benefit less in absolute terms.
Workers placed through staffing agencies—many of whom earn near-minimum wage—receive no direct financial benefit from the tax exemption, and may even face wage stagnation if employers absorb savings rather than raise pay.
State and local governments lose $12M over two years, which could reduce funding for K–12 schools, community health clinics, or transportation infrastructure—services disproportionately used by low- and middle-income households.
Workers in industries that heavily use temp staffing (e.g., logistics, manufacturing, hospitality) may see indirect benefits if employers invest savings in hiring or wage increases—but current evidence suggests such spillovers are weak and delayed.