Is Shipping Taxable in Washington? Washington Sales Tax Rules for Delivery Charges
In Washington, delivery charges by a seller are generally part of the selling price, whether separately billed, itemized on the invoice, or when the seller is also the carrier. Retail sales tax applies to delivery charges for products subject to retail sales tax. If the sale of the goods is exempt, the related delivery charge is also exempt. This article explains Washington shipping sales tax rules for ecommerce sellers.
On this page
- Is Shipping Taxable in Washington?
- General Rule: Seller Delivery Charges Are Part of the Selling Price
- Does Separately Stating Shipping Make It Non-Taxable?
- What Counts as Delivery Charges in Washington?
- Delivery Charges on Wholesale Sales
- Delivery Charges for Exempt Goods
- Common Compliance Issues for Ecommerce Sellers
- Practical Tips for Sellers Shipping to Washington
- Conclusion
Is Shipping Taxable in Washington?
In Washington, delivery charges by a seller are part of the selling price, whether they are billed separately, itemized on the sales invoice, or the seller is also the carrier. The seller may not deduct or exclude the cost of delivery.
Retail sales tax applies to delivery charges on products that are subject to retail sales tax. If the sale of the goods is exempt from retail sales tax, then the delivery charge is also exempt.
General Rule: Seller Delivery Charges Are Part of the Selling Price
Washington generally includes seller delivery charges in the selling price.
For example:
Product price: USD 100 Delivery charge: USD 8 Taxable selling price: USD 108
If the product is subject to retail sales tax, Washington retail sales tax generally applies to the full USD 108 amount.
Does Separately Stating Shipping Make It Non-Taxable?
Generally, no. Washington states that delivery charges by a seller are part of the selling price whether they are separately billed, itemized on the sales invoice, or the seller is also the carrier.
For example:
Product price: USD 100 Shipping charge: USD 8 Total: USD 108
If the product is subject to retail sales tax and the shipping charge is imposed by the seller, the USD 8 charge is generally taxable even if separately stated.
What Counts as Delivery Charges in Washington?
Washington defines delivery charges broadly. Delivery charges include charges for:
- shipping and handling;
- postage;
- freight;
- transportation;
- drayage;
- transfer;
- crating;
- packing;
- wrapping;
- parcel post;
- portage;
- loading;
- rigging;
- lading;
- tonnage;
- weight;
- burden;
- documentation.
Delivery charges may vary by weight, size, fragility, and speed of shipping.
For example:
Product price: USD 100 Shipping charge: USD 8 Handling charge: USD 3 Packing charge: USD 2 Taxable selling price: USD 113
If the underlying product is subject to retail sales tax, these delivery-related charges are generally taxable.
Delivery Charges on Wholesale Sales
When items are sold at wholesale, the delivery charge is not subject to retail sales tax. However, the charge is included in gross income subject to Washington business and occupation tax under the wholesaling classification.
For example:
Wholesale product price: USD 100 Delivery charge: USD 8 Total: USD 108
The USD 8 delivery charge is generally not subject to retail sales tax in a wholesale transaction, but it may be included in gross income for B&O tax purposes.
Delivery Charges for Exempt Goods
If the sale of the goods is exempt from retail sales tax, the delivery charge is also exempt from retail sales tax.
Examples may include:
- exempt products;
- wholesale sales;
- sales for resale;
- transactions supported by valid exemption documentation;
- other exempt sales under Washington law.
For example:
Exempt product price: USD 100 Delivery charge: USD 8 Total: USD 108
If the sale of the goods is exempt, the related delivery charge is generally exempt as well.
Common Compliance Issues for Ecommerce Sellers
Assuming separately stated shipping is exempt
In Washington, separately stated seller delivery charges generally remain part of the selling price.
Taxing only the product price
If a seller excludes delivery charges from taxable Washington retail sales, the seller may under-collect tax.
Ignoring broad delivery charge categories
Washington’s delivery charge definition includes more than shipping. Handling, freight, packing, wrapping, loading, and documentation charges should also be reviewed.
Misclassifying wholesale sales
Wholesale delivery charges are not subject to retail sales tax, but they may be included in gross income for B&O tax purposes.
Applying another state’s rule to Washington
Shipping taxability varies by state. Washington should be configured separately from states where separately stated shipping may be non-taxable.
Practical Tips for Sellers Shipping to Washington
Sellers shipping taxable products to Washington customers should generally include seller delivery charges in the taxable selling price. This includes shipping and handling, postage, freight, transportation, packing, wrapping, and similar charges.
For wholesale or exempt sales, sellers should retain resale certificates, exemption certificates, invoices, product taxability records, order details, shipping records, marketplace reports, and tax filing records. Sellers should also review whether delivery charges are included in B&O tax gross income where applicable.
Conclusion
In Washington, delivery charges by a seller are part of the selling price whether separately billed, itemized on the invoice, or imposed when the seller is also the carrier. The seller may not deduct or exclude the cost of delivery.
Retail sales tax applies to delivery charges on products that are subject to retail sales tax. If the sale of goods is exempt, the delivery charge is also exempt. For wholesale sales, delivery charges are not subject to retail sales tax but are included in gross income for B&O tax under the wholesaling classification.