SB 5795

In Committee

Senate

Sales and use tax rate

Reducing the state sales and use tax rate.

Introduced (completed)
2
Committee (current stage)
3
Floor Vote (not started)
4
Opposite Chamber (not started)
5
Governor (not started)
6
Signed (not started)

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.

Introduced: March 20, 2025

Last Action: January 12, 2026

Status: S Ways & Means

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AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.

People & CommunitiesBalancedCorporate & Wealthy Interests

This bill lowers Washington’s base sales and use tax rate from 6.5% to 6.0% to reduce the regressive impact of the state’s tax system, especially on low- and middle-income households. It preserves existing additional taxes on car rentals and motor vehicle purchases, and keeps funding for performance audits intact.

Reduces the statewide sales and use tax rate from 6.5% to 6.0% on most retail sales of goods and services.
Maintains the existing 5.9% additional tax on car rentals, with revenue going to the multimodal transportation account.
Keeps the 0.3% motor vehicle tax, with revenue also going to the multimodal transportation account.
Continues the 0.16% deduction from general sales tax revenue to fund performance audits of government programs.
Applies the new 6.0% rate to all retail sales of tangible personal property, digital goods, and certain services, as defined in existing law.

Who is affected

Low- and middle-income households — Low- and middle-income households will pay less in sales tax on everyday purchases, reducing the portion of their income spent on state and local taxes.
Retail businesses — Retail businesses will collect a lower sales tax rate on most transactions, which may affect cash flow and accounting systems but is not expected to change overall compliance requirements.
State and local governments — The state and local governments will collect less revenue from the general sales tax, potentially affecting funding for public services unless offset by other revenue sources.
Car renters — People who rent cars will still pay the existing additional 5.9% tax, so their overall tax burden on car rentals remains unchanged.
Motor vehicle buyers — People buying motor vehicles will continue to pay the existing 0.3% vehicle tax, so this portion of their purchase cost remains the same.

Effective: 2027-01-01Fiscal impact: The bill reduces the state sales tax rate from 6.5% to 6.0%, which is expected to decrease state and local tax revenue by an estimated $1.2 billion annually. This reduction could affect funding for public services unless offset by other revenue sources or spending adjustments.

Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 20, 2026, 3:11 AM

Pro/Con Analysis

Potential Benefits (5)

Lowering the sales tax from 6.5% to 6.0% directly reduces the tax burden on everyday purchases for low- and middle-income households, who spend a larger share of income on taxable goods — making this a meaningful, if partial, correction to Washington’s regressive tax structure.
FinancialPeopleRef: Sec. 1(2); Sec. 2(1)
The reduction improves progressivity by narrowing the gap in tax burden between high- and low-income households — though it does not eliminate it — and may modestly increase disposable income for working families, supporting short-term economic stability.
FinancialPeopleRef: Sec. 1(2); Sec. 2(1)
Preserving the 5.9% car rental tax and 0.3% motor vehicle tax ensures continued funding for the multimodal transportation account, supporting transit infrastructure without adding new regressive layers.
TransportationRef: Sec. 2(2) & (3)
Maintaining the 0.16% deduction for performance audits supports government accountability and efficiency — helping prevent waste and misuse of remaining public funds during a period of tighter budgets.
Local GovernmentRef: Sec. 2(5)
Retail businesses may experience modest cash flow improvements from lower tax collection responsibilities and reduced administrative burden — though savings are likely small relative to overall operating costs, and most benefit flows to larger chains with scale advantages.
Business & EmploymentLean peopleRef: Sec. 1(2); Sec. 2(1)

Potential Concerns (5)

Reduction in state and local sales tax revenue by ~$1.2B annually will likely lead to cuts in public services (e.g., education, transportation, social services) unless offset by other revenue sources — a risk disproportionately borne by households that rely most on those services.
FinancialRef: Sec. 2(1)
The 0.5% reduction applies broadly to all retail sales, but because sales taxes are regressive, low- and middle-income households will see a *smaller absolute dollar savings* than high-income households — even though their *relative burden* decreases more — limiting overall equity gains.
FinancialRef: Sec. 2(1)
The 0.16% deduction for performance audits remains unchanged, meaning audit funding is preserved, but the overall revenue reduction still strains general fund budgets — potentially forcing trade-offs that reduce oversight capacity if total revenue shrinks.
FinancialRef: Sec. 2(5)
While car renters and vehicle buyers face no change in their additional taxes, the bill does not address the regressive nature of those specific taxes — meaning transportation-related tax burdens remain regressive for lower-income households who rely more on rentals or used vehicles.
FinancialRef: Sec. 2(2) & (3)
Local governments that rely on sales tax revenue (e.g., for schools, libraries, emergency services) may face budget shortfalls unless the state fully compensates them — and the bill does not include explicit local revenue replacement, risking service reductions in fiscally vulnerable jurisdictions.
Local GovernmentRef: Sec. 2(1)

Who Is Most Affected

Low- and middle-income householdsPositive Impact
Low- and middle-income households benefit most from the lower sales tax rate in relative terms — especially those spending most of their income on taxable essentials — but may see limited absolute savings due to the small rate change (0.5%).
Retail businessesMixed Impact
Large retail chains and high-volume sellers benefit more in absolute dollars from the tax cut due to higher sales volume, while small retailers see smaller net gains — and all face potential downstream budget pressures from reduced state/local revenue.
State and local governmentsNegative Impact
State and local governments face a $1.2B annual revenue loss, which may lead to cuts in public services unless offset — disproportionately affecting communities with limited alternative revenue sources and high reliance on state funding.
Car renters and motor vehicle buyersPositive Impact
Car renters and vehicle buyers face no change in their additional taxes, so their overall burden remains unchanged — but they avoid further regressivity from the base rate cut, yielding a small net benefit.
Public service workers and program recipientsNegative Impact
State employees and program recipients may face service reductions or hiring freezes if the revenue loss triggers budget cuts — especially in education, social services, and transportation maintenance — though audit funding is preserved.