Expanded Exclusions for Live Presentations Announced

The Washington State Department of Revenue has issued a special notice outlining changes to how certain live presentations are treated under Washington tax law. Beginning July 1, 2026, several activities will be excluded from the definition of retail sales of live presentations.

The updated exclusions include before and after school care provided in person by elementary schools, presentations by nonprofit organizations exempt from federal income tax under Section 501(c) of the Internal Revenue Code, music lessons regardless of the number of participants, and instruction that is incidental to already excluded presentations such as musical, dramatic, or comedic performances.

The notice also provides guidance on how income from these activities should be reported for Business and Occupation tax purposes. Income from before and after school care is generally reported under the Child Care classification. Revenue from nonprofit presentations is reported under the Service and Other Activities classification unless the activity qualifies as an exempt fundraising event. Income from music lessons and incidental instruction is also reported under the Service and Other Activities classification.

For services that become newly excluded beginning July 1, 2026, the Department is extending a grace period through June 30, 2026. If existing contract treatment requirements are met, businesses are not required to collect sales tax during this period. If those requirements are not met, sales tax must continue to be collected through June 30, 2026.

Businesses that provide live presentations, instruction, nonprofit programming, or before and after school care are encouraged to review the full special notice and contact the Department of Revenue or request a ruling for guidance specific to their operations.