New B&O Tax on Self-Storage Effective April 1, 2026

WA-SSA Needs Your Help to Defeat this Tax

Dear WA-SSA Members,

I'm writing to inform you about critical tax changes affecting our industry and important legal action the Washington Self Storage Association is preparing to take on your behalf.

What Happened

Our legislative efforts last session to defeat 2 bills that would have imposed both retail sales tax and Business and Occupation (B&O) tax on self-storage were only partially successful. We successfully defeated the proposed retail sales tax on storage rents. Going forward, you do not collect sales tax on self storage rents.

However, Governor Ferguson signed ESSB 5794 into law earlier this year. This law includes a new B&O tax on gross income derived from self-storage rentals, and it goes into effect on April 1, 2026.

How the Tax Works

Beginning with your first B&O tax filing after April 1, 2026, self-storage facilities will be subject to B&O tax at the following rates:

• 1.75% if your facility generated over $1 million in gross income during fiscal year 2025
• 1.5% if your facility generated less than $1 million in gross income during fiscal year 2025

The tax applies to gross revenues earned during each filing period. Most operators file quarterly, meaning your first payment should be due July 1, 2026, covering the April-June 2026 quarter.

How to Pay

B&O taxes are collected by the Washington Department of Revenue (DOR) through their electronic filing system. Visit dor.wa.gov/file-pay-taxes to file electronically.

For now, all storage operators should plan on paying the tax as required by law.

WA-SSA's Legal Challenge

WA-SSA firmly believes this tax is unconstitutional and unfairly targets self-storage while exempting warehouses, office buildings, and apartment rentals. We are in the process of engaging legal counsel to challenge this law in superior court.

Our legal analysis indicates this tax:

• Violates the Washington Constitution's uniformity clause
• Creates unequal treatment under the Equal Protection Clause
• Functions as a property tax in disguise

What We Need From You

Litigation of this magnitude will be costly and requires support from all members. Here's how you can help:

1. Keep your WA-SSA membership current – this ensures you receive all critical updates
2. Be prepared to contribute financially to the legal fund
3. Watch for upcoming communications about an informational webinar and watch for a ballot vote (required by our bylaws to engage legal counsel)
4. Stay informed – we'll be sharing updates via email, mail, and our website.

Important Note on Refunds

If our legal challenge is successful, members who have paid the B&O tax will be able to apply to the Department of Revenue for refunds of taxes paid.

Next Steps

We will be scheduling a membership webinar in the near future to:

• Provide detailed information about the legal strategy
• Answer your questions
• Present the proposal for legal action to the membership for a vote.

More information will be forthcoming. Please ensure your contact information is up-to-date with WA-SSA so you don't miss these critical communications.

Questions?

If you have questions about the tax filing requirements, please contact the Department of Revenue. For questions about WA-SSA's legal challenge, please reach out to the WA-SSA Board of Directors via our website or at info@wa-ssa.org.

Thank you for your continued membership and support as we work together to protect our industry from unfair and unconstitutional taxation.

Sincerely,

Lance Baker, Board President
Washington Self Storage Association