SENATE BILL REPORT
SB 5711
As of March 11, 2025
Title: An act relating to defining the rental or lease of individual storage space at self-service storage facilities as a retail transaction for the imposition of business and occupation and sales and use taxes.
Brief Description: Defining the rental or lease of individual storage space at self-service storage facilities as a retail transaction for the imposition of business and occupation and sales and use taxes.
Sponsors: Senators Bateman, Alvarado, Nobles and Trudeau.
Brief History:
Committee Activity: Ways & Means: 3/13/25.
Brief Summary of Bill
  • Defines the rental of individual storage space at self-service storage facilities as a retail transaction subject to the business and occupation and retail sales and use taxes.
SENATE COMMITTEE ON WAYS & MEANS
Staff: Alia Kennedy (786-7405)
Background:

Business and Occupation Tax.  Washington's major business tax is the business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. Revenues are deposited in the State General Fund. There are several rate categories, and a business may be subject to more than one B&O tax rate, depending on the types of activities conducted. The general B&O tax rates are 0.471 percent for retailing; 0.484 percent for manufacturing, wholesaling, and extracting; and 1.5 or 1.75 percent for services and for activities not classified elsewhere—depending on taxable income. Current law authorizes multiple exemptions, deductions, and credits to reduce the B&O tax liability for specific taxpayers and business industries.

 

Retail Sales and Use Tax.  Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services.  A retail sale is a sale to the final consumer or end user of the property, digital product, or service.  If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use tax applies to the value of property, digital product, or service when used in this state.  The state, all counties, and all cities levy retail sales and use taxes.  The state sales and use tax rate is 6.5 percent. Local sales and use tax rates vary from 0.5 percent to 4.1 percent, depending on the location.  

 

Rental of Real Estate.  The rental of individual self-service storage space at self-storage facilities is considered a rental of real property and is exempt from B&O tax when customers have direct access to individual storage units and the space is rented for 30 days or longer.  The customers are not charged retail sales and use tax on the amount of their rent.
Summary of Bill:

Beginning January 1, 2026, the rental or lease of individual self-service storage space at self-storage facilities, regardless of duration, is defined in statute as a retail sale.  The change in definition makes the gross receipts of self-storage space rentals subject to the retailing B&O tax classification at a rate of 0.471 percent and makes the rental of such space by consumers subject to retail sales and use taxes.

 

The Legislature intends for the revenue generated from this bill to be appropriated by agencies and programs that will direct the revenue toward the establishment and preservation of cooperatively owned manufactured home communities and programs to support and maintain affordable housing.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: The bill contains an emergency clause and takes effect on January 1, 2026.