Which Amazon services are affected by the new Washington sales tax?

Advertising services on Amazon, including Display and Sponsored Ads products, are now subject to sales tax for customers with invoicing addresses in Washington.

How is the sales tax calculated on Amazon advertising invoices?

The tax is calculated on the final sale price of each product or service, considering both the statewide rate of 6.5% and local rates ranging from 0.5% to 4.1%.

Does the type of Amazon account affect sales tax calculation?

For Manager Accounts, the linked address determines the tax jurisdiction. For Advertiser Account-level invoicing, the specific invoicing profile address is used.

Are there exemptions for the new sales tax on Amazon ads?

Businesses with valid Washington tax exemption certificates, such as reseller or multiple points of use (MPU) certificates, can claim exemptions for qualifying purchases.

When did the new Washington sales tax on business services take effect?

The law expanding retail sales tax to various business services, including advertising, took effect on October 1, 2025.

What should other businesses operating in Washington do about these changes?

Businesses should review their tax obligations, update invoicing systems, and check exemption eligibility to ensure compliance with the new rules.

Washington Sales Tax Now Applies to Amazon Ads

The beginning of October marked the enforcement of the law that significantly expanded the scope of activities subject to retail sales tax in Washington. The law requires businesses to start collecting sales tax on a wide range of business services, including advertising, live presentations, IT, custom website development, and a few other services. One of the companies that already announced changes to its invoicing practices under the new Washington legislation is Amazon.

Impact on Amazon Advertising Services

Amazon informed its customers that starting October 1, 2025, those with invoicing addresses in Washington will see sales tax added to their invoices for advertising expenses on platforms like Amazon, including Display and Sponsored Ads products.

The sales tax is calculated on the final sale price of each individual product or service. The exact amount of due tax depends on several factors, including the type of service and the customer’s physical or invoicing location within the state. It is essential to note that, in addition to the statewide 6.5% sales and use tax rate, local sales and use tax rates range between 0.5% and 4.1%.

In its announcement, Amazon stated that for businesses using a Manager Account invoicing structure, the address linked to that account will determine the tax jurisdiction. Advertisers using Advertiser Account-level invoicing will have tax calculated based on their specific invoicing profile address. Once the invoice is completed, the sales tax collected will be separately stated on the customer’s PDF invoice.

Amazon also emphasized that specific exemptions remain in effect. Notably, businesses with a valid Washington tax exemption certificate may still claim the exemption for qualifying purchases of advertising services. Some examples include reseller certificates for agencies that purchase advertising services for resale, and multiple points of use (MPU) certificates for businesses that utilize advertising services across various jurisdictions.

Conclusion

The Amazon announcement represents a practical example of how businesses respond to and adjust their operations in response to new rules and requirements. Other taxable persons, including individuals and companies, operating in or invoicing to Washington, should also review their tax obligations, invoicing systems, and exemption eligibility.

Source: Washington Department of Revenue, Amazon, VATabout