Sales tax exemptions

AN ACT Relating to permanently exempting from sales and use tax 1
bottled water, prepared food, and clothing; amending RCW 82.08.0293; 2
adding a new section to chapter 82.08 RCW; adding a new section to 3
chapter 82.12 RCW; and creating a new section. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 82.08.0293 and 2022 c 16 s 152 are each amended to 6
read as follows: 7
(1) The tax levied by RCW 82.08.020 does not apply to sales of 8
food and food ingredients. "Food and food ingredients" means 9
substances, whether in liquid, concentrated, solid, frozen, dried, or 10
dehydrated form, that are sold for ingestion or chewing by humans and 11
are consumed for their taste or nutritional value. "Food and food 12
ingredients" includes bottled water. "Food and food ingredients" 13
includes "prepared food." "Food and food ingredients" does not 14
include: 15
(a) "Alcoholic beverages," which means beverages that are 16
suitable for human consumption and contain ((one-half of one )) 0.5 17
percent or more of alcohol by volume; 18
(b) "Tobacco," which means cigarettes, cigars, chewing or pipe 19
tobacco, or any other item that contains tobacco; and20
(c) Cannabis, useable cannabis, or cannabis-infused products.21
S-0609.1
SENATE BILL 5340
State of Washington 69th Legislature 2025 Regular Session
By Senator Fortunato
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(2) The exemption of "food and food ingredients" provided for in 1
subsection (1) of this section does not apply to ((prepared food, )) 2
soft drinks ((, bottled water ,)) or dietary supplements. The 3
definitions in this subsection apply throughout this section unless 4
the context clearly requires otherwise. 5
(a) "Bottled water" means water that is placed in a safety sealed 6
container or package for human consumption. Bottled water is calorie 7
free and does not contain sweeteners or other additives except that 8
it may contain: (i) Antimicrobial agents; (ii) fluoride; (iii) 9
carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen; 10
(vi) preservatives; and (vii) only those flavors, extracts, or 11
essences derived from a spice or fruit. "Bottled water" includes 12
water that is delivered to the buyer in a reusable container that is 13
not sold with the water. 14
(b) "Dietary supplement" means any product, other than tobacco, 15
intended to supplement the diet that: 16
(i) Contains one or more of the following dietary ingredients:17
(A) A vitamin; 18
(B) A mineral; 19
(C) An herb or other botanical; 20
(D) An amino acid; 21
(E) A dietary substance for use by humans to supplement the diet 22
by increasing the total dietary intake; or 23
(F) A concentrate, metabolite, constituent, extract, or 24
combination of any ingredient described in this subsection;25
(ii) Is intended for ingestion in tablet, capsule, powder, 26
softgel, gelcap, or liquid form, or if not intended for ingestion in 27
such form, is not represented as conventional food and is not 28
represented for use as a sole item of a meal or of the diet; and29
(iii) Is required to be labeled as a dietary supplement, 30
identifiable by the "supplement facts" box found on the label as 31
required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered 32
as of January 1, 2003. 33
(c)(i) "Prepared food" means: 34
(A) Food sold in a heated state or heated by the seller;35
(B) Food sold with eating utensils provided by the seller, 36
including plates, knives, forks, spoons, glasses, cups, napkins, or 37
straws. A plate does not include a container or packaging used to 38
transport the food; or 39
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(C) Two or more food ingredients mixed or combined by the seller 1
for sale as a single item, except: 2
(I) Food that is only cut, repackaged, or pasteurized by the 3
seller; or 4
(II) Raw eggs, fish, meat, poultry, and foods containing these 5
raw animal foods requiring cooking by the consumer as recommended by 6
the federal food and drug administration in chapter 3, part 401.11 of 7
The Food Code, published by the food and drug administration, as 8
amended or renumbered as of January 1, 2003, so as to prevent 9
foodborne illness. 10
(ii) Food is "sold with eating utensils provided by the seller" 11
if: 12
(A) The seller's customary practice for that item is to 13
physically deliver or hand a utensil to the customer with the food or 14
food ingredient as part of the sales transaction. If the food or food 15
ingredient is prepackaged with a utensil, the seller is considered to 16
have physically delivered a utensil to the customer unless the food 17
and utensil are prepackaged together by a food manufacturer 18
classified under sector 311 of the North American industry 19
classification system (NAICS); 20
(B) A plate, glass, cup, or bowl is necessary to receive the food 21
or food ingredient, and the seller makes those utensils available to 22
its customers; or 23
(C)(I) The seller makes utensils available to its customers, and 24
the seller has more than ((seventy-five)) 75 percent prepared food 25
sales. For purposes of this subsection (2)(c)(ii)(C), a seller has 26
more than ((seventy-five)) 75 percent prepared food sales if the 27
seller's gross retail sales of prepared food under (c)(i)(A), 28
(c)(i)(C), and (c)(ii)(B) of this subsection equal more than 29
((seventy-five)) 75 percent of the seller's gross retail sales of all 30
food and food ingredients, including prepared food, soft drinks, and 31
dietary supplements. 32
(II) However, even if a seller has more than ((seventy-five)) 75 33
percent prepared food sales, four servings or more of food or food 34
ingredients packaged for sale as a single item and sold for a single 35
price are not "sold with utensils provided by the seller" unless the 36
seller's customary practice for the package is to physically hand or 37
otherwise deliver a utensil to the customer as part of the sales 38
transaction. Whenever available, the number of servings included in a 39
package of food or food ingredients must be determined based on the 40
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manufacturer's product label. If no label is available, the seller 1
must reasonably determine the number of servings. 2
(III) The seller must determine a single prepared food sales 3
percentage annually for all the seller's establishments in the state 4
based on the prior year of sales. The seller may elect to determine 5
its prepared food sales percentage based either on the prior calendar 6
year or on the prior fiscal year. A seller may not change its elected 7
method for determining its prepared food percentage without the 8
written consent of the department. The seller must determine its 9
annual prepared food sales percentage as soon as possible after 10
accounting records are available, but in no event later than 11
((ninety)) 90 days after the beginning of the seller's calendar or 12
fiscal year. A seller may make a good faith estimate of its first 13
annual prepared food sales percentage if the seller's records for the 14
prior year are not sufficient to allow the seller to calculate the 15
prepared food sales percentage. The seller must adjust its good faith 16
estimate prospectively if its relative sales of prepared foods in the 17
first ((ninety)) 90 days of operation materially depart from the 18
seller's estimate. 19
(iii) "Prepared food" ((does not )) includes the following 20
items((, if sold without eating utensils provided by the seller)):21
(A) Food sold by a seller whose proper primary NAICS 22
classification is manufacturing in sector 311, except subsector 3118 23
(bakeries), as provided in the "North American industry 24
classification system— United States, 2002"; 25
(B) Food sold in an unheated state by weight or volume as a 26
single item; or 27
(C) Bakery items. The term "bakery items" includes bread, rolls, 28
buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, 29
tortes, pies, tarts, muffins, bars, cookies, or tortillas.30
(d) "Soft drinks" means nonalcoholic beverages that contain 31
natural or artificial sweeteners. Soft drinks do not include 32
beverages that contain: Milk or milk products; soy, rice, or similar 33
milk substitutes; or greater than ((fifty)) 50 percent of vegetable 34
or fruit juice by volume. 35
(3) Notwithstanding anything in this section to the contrary, the 36
exemption of "food and food ingredients" provided in this section 37
applies to food and food ingredients that are furnished, prepared, or 38
served as meals: 39
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(a) Under a state administered nutrition program for the aged as 1
provided for in the older Americans act (P.L. 95-478 Title III) and 2
RCW 74.38.040(6); 3
(b) That are provided to senior citizens, individuals with 4
disabilities, or low-income persons by a nonprofit organization 5
organized under chapter 24.03A or 24.12 RCW; or 6
(c) That are provided to residents, ((sixty-two)) 62 years of age 7
or older, of a qualified low-income senior housing facility by the 8
lessor or operator of the facility. The sale of a meal that is billed 9
to both spouses of a marital community or both domestic partners of a 10
domestic partnership meets the age requirement in this subsection 11
(3)(c) if at least one of the spouses or domestic partners is at 12
least ((sixty-two)) 62 years of age. For purposes of this subsection, 13
"qualified low-income senior housing facility" means a facility:14
(i) That meets the definition of a qualified low-income housing 15
project under 26 U.S.C. Sec. 42 of the federal internal revenue code, 16
as existing on August 1, 2009; 17
(ii) That has been partially funded under 42 U.S.C. Sec. 1485; 18
and 19
(iii) For which the lessor or operator has at any time been 20
entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42 21
of the federal internal revenue code. 22
(4)(a) Subsection (1) of this section notwithstanding, the retail 23
sale of food and food ingredients is subject to sales tax under RCW 24
82.08.020 if the food and food ingredients are sold through a vending 25
machine. Except as provided in (b) of this subsection, the selling 26
price of food and food ingredients sold through a vending machine for 27
purposes of RCW 82.08.020 is ((fifty-seven)) 57 percent of the gross 28
receipts. 29
(b) For soft drinks, bottled water, and hot prepared food and 30
food ingredients, other than food and food ingredients which are 31
heated after they have been dispensed from the vending machine, the 32
selling price is the total gross receipts of such sales divided by 33
the sum of one plus the sales tax rate expressed as a decimal.34
(c) For tax collected under this subsection (4), the requirements 35
that the tax be collected from the buyer and that the amount of tax 36
be stated as a separate item are waived. 37
NEW SECTION. Sec. 2. A new section is added to chapter 82.08 38
RCW to read as follows: 39
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(1) The tax levied by RCW 82.08.020 does not apply to sales of 1
clothing and footwear for human use. 2
(2) For the purposes of this section: 3
(a)(i) "Clothing" means all human wearing apparel suitable for 4
general use. "Clothing" also includes: 5
(A) Protective equipment necessary for the daily work of the 6
user; and 7
(B) Sewing equipment and supplies. 8
(ii) "Clothing" does not include: Clothing accessories or 9
equipment, fur clothing, and sport or recreational equipment.10
(b) "Clothing accessories or equipment" means incidental items 11
worn on the person or in conjunction with clothing that are sold 12
separately. 13
(c) "Fur clothing" means clothing that is required to be labeled 14
as a fur product under 15 U.S.C. Sec. 69, and the value of the fur 15
components in the product is more than three times the value of the 16
next most valuable tangible component. For the purposes of this 17
subsection, "fur" means any animal skin or part thereof with hair, 18
fleece, or fur fibers attached thereto, either in its raw or 19
processed state, but does not include such skins that have been 20
converted into leather or suede, or which in processing the hair, 21
fleece, or fur fiber has been completely removed. 22
(d) "Protective equipment" means items for human wear and 23
designed as protection of the wearer against injury or disease or as 24
protections against damage or injury of other persons or property but 25
not suitable for general use. 26
(e) "Sewing equipment and supplies" means sewing materials 27
including, but not limited to: Fabrics, thread, knitting yarn, 28
buttons, and zippers, purchased by noncommercial purchasers for 29
incorporation into clothing as a constituent part thereof.30
(f) "Sport or recreational equipment" means items designed for 31
human use and worn in conjunction with an athletic or recreational 32
activity that are not suitable for general use. 33
NEW SECTION. Sec. 3. A new section is added to chapter 82.12 34
RCW to read as follows: 35
(1) The provisions of this chapter do not apply with respect to 36
the use of clothing and footwear for human use. 37
(2) The definitions in section 2 of this act apply to this 38
section. 39
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NEW SECTION. Sec. 4. RCW 82.32.805 and 82.32.808 do not apply 1
to this act.2
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