HB 2742
In CommitteeHouse
Sales tax holiday
Providing financial relief for families by establishing a sales tax and use tax holiday.
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 creates an annual four-day sales tax holiday in Washington during the weekend after Thanksgiving, exempting from tax any item costing $500 or less. It applies to both in-state purchases and use of items brought into the state, and requires the Department of Revenue to provide guidance and rules for implementation.
- Establishes a sales and use tax holiday each year from Friday after Thanksgiving through the following Monday (4 days total).
- Exempts from tax any item costing $500 or less per item (e.g., clothing, electronics, appliances).
- Applies to both retail sales and use of items (e.g., out-of-state purchases brought into Washington).
- Requires the Washington Department of Revenue to issue guidance and adopt emergency rules to implement the holiday.
- Exempts the holiday from certain existing tax reporting and audit rules (RCW 82.32.805 and 82.32.808 do not apply).
Who is affected
- Washington consumers — Families and individuals who plan to make purchases during the holiday period may save money on sales tax for qualifying items.
- Retail businesses — Retailers must track and report tax-exempt sales during the holiday period and adjust their point-of-sale systems accordingly.
- Local governments — Local governments may see a temporary reduction in sales tax revenue during the holiday weekend.
- Washington Department of Revenue — The Washington Department of Revenue must develop and distribute guidance, and possibly adopt emergency rules, to implement the holiday.
Pro/Con Analysis
Potential Benefits (4)
Low- and middle-income households—especially those budgeting for back-to-school, holiday, or essential purchases—will save 6.5–10.1% (state + local rates) on items ≤$500, improving short-term purchasing power during peak shopping periods.
FinancialPeopleRef: Sec. 1(1), Sec. 2(1)Families may use savings from tax-exempt purchases of essential appliances (e.g., refrigerators, HVAC units ≤$500) to offset housing-related costs or delay needed repairs, indirectly supporting housing stability.
HousingPeopleRef: Sec. 1(2), Sec. 2(2)Retailers may see increased foot traffic and sales volume during the holiday weekend, potentially boosting short-term employment and inventory turnover—though net profit gains are uncertain due to margin pressure and compliance costs.
Business & EmploymentRef: Sec. 1(3), Sec. 2(3)Increased consumer spending during the holiday weekend may support local economies that fund police and fire departments through sales tax revenue—though the net effect is offset by the biennial $100M revenue loss.
Public SafetyLean peopleRef: Sec. 1(3), Sec. 2(3)
Potential Concerns (4)
The $100 million biennial revenue loss from the sales tax holiday will reduce state and local government budgets, potentially leading to cuts in public services like education, infrastructure, or social programs—disproportionately affecting low- and middle-income households who rely most on those services.
FinancialRef: Sec. 1(2), Sec. 2(2)The tax exemption applies only to items ≤$500, meaning higher-income households (who spend more per item and often buy pricier electronics, appliances, or clothing) capture a larger share of the total tax savings, while lower-income households save less in absolute terms despite a higher marginal benefit.
FinancialRef: Sec. 1(1), Sec. 2(1)Local governments—especially those in lower-revenue jurisdictions—may face budget shortfalls during the holiday weekend and may not recoup lost revenue through other taxes, forcing cuts to local services like parks, libraries, or public safety.
Local GovernmentPeopleRef: Fiscal Impact SummaryRetailers must modify point-of-sale systems and train staff to implement the holiday, incurring compliance costs—especially burdensome for small retailers without automated tax systems—potentially diverting resources from other investments.
Business & EmploymentRef: Sec. 3
Who Is Most Affected
Low- and middle-income households benefit most in relative terms—especially those purchasing qualifying items during the holiday. Absolute savings are modest ($32.50–$50.50 per $500 item), but meaningful for tight budgets.
Higher-income households benefit more in absolute dollars (e.g., buying multiple $500 items), but the policy does not include income or need-based targeting, making the benefit regressive in relative terms.
Large retailers (e.g., Amazon, Best Buy, Walmart) can absorb compliance costs more easily and may see volume-driven revenue gains; small retailers face disproportionate administrative burden and may not see net revenue increases.
Local governments in high-population or high-tourism areas (e.g., King, Snohomish, Pierce counties) may see net gains if holiday shopping draws out-of-county shoppers, but rural or lower-traffic jurisdictions may lose net revenue.
The Department of Revenue must allocate staff and resources to develop guidance and emergency rules, but this is a one-time administrative cost with no long-term operational burden.