UPDATED: March 16, 2026

IMPORTANT NOTICE TO MEMBERS

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

Dear WA-SSA Members,

We are 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.

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What Happened

Our legislative efforts last session to defeat two 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. As operators you do not collect or remit sales tax on self storage rents.

However, Governor Ferguson signed ESSB 5794 into law earlier this year. This new law imposes B&O tax on gross income derived from self-storage rentals, effective April 1, 2026.

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Understanding the New Tax

In January 2026, the Washington Department of Revenue published comprehensive guidance clarifying how this new tax applies to self-storage facilities. According to DOR’s Industry Guide and Special Notice, starting April 1, 2026, income from the rental or lease of storage space at self-service storage facilities is subject to business and occupation (B&O) tax under the Service and Other Activities classification. You do not need to collect sales tax on rental or lease income.

Other Taxable Activities

In addition to rental income from storage units, other activities commonly conducted at self-storage facilities are also subject to B&O tax under the Service and Other Activities classification, including:

• Truck rentals
• Equipment rentals
• Administrative fees
• Other service-related income

Tax Rates Based on Prior Year Income

The B&O tax rate you will pay depends on your facility’s gross income from calendar year 2025:

2025 Gross Income	B&O Tax Rate	Classification Name
$0 – $999,999	1.5%	Service and Other Activities (Less Than $1,000,000 in the prior year)
$1,000,000 – $4,999,999	1.75%	Service and Other Activities ($1,000,000 – $4,999,999 in prior year)
$5,000,000 or more	2.1%	Service and Other Activities ($5,000,000 or greater in prior year)

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Registration & Filing Requirements

Active Non-Reporting (ANR) Status No Longer Applies

Self-storage businesses no longer qualify for Active Non-Reporting (ANR) status if their annual income exceeds $125,000, even if they don’t make retail sales. You must begin filing excise tax returns.

What You Need to Do:

• If currently on ANR status with gross annual income over $125,000: Update your filing frequency through My DOR at secure.dor.wa.gov or call 360-705-6705
• If not yet registered: Complete a business license application at dor.wa.gov/open-business

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How to File and Pay

B&O taxes must be filed electronically through the DOR’s My DOR system. Most self-storage operators will file quarterly, with the first filing due July 25, 2026 (covering April–June 2026 income).

Steps to Add the Service and Other Activities Classification:

1. Log in to My DOR at secure.dor.wa.gov
2. Click “Get Started” on the My DOR Services page
3. In the Excise Tax Return panel, click “File Return”
4. Click “Add/Delete Tax Classifications” and add the appropriate Service & Other Activities classification based on your 2025 gross income

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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. By singling out self-storage rental income for B&O taxation while exempting all other forms of real estate rental income, the legislature has created a constitutionally impermissible distinction.

Our legal analysis indicates this tax violates the Washington Constitution’s uniformity clause, which requires that taxes be applied uniformly to members of the same class. This is not an abstract legal theory — it is the same constitutional argument that is at the heart of the opposition to Washington’s recently approved tax on high-income earners, commonly referred to as the “millionaires tax.” Both taxes face the same legal crux: targeted taxation of a narrow class in violation of the uniformity clause.

WA-SSA has decided to monitor the millionaires tax and any potential litigation before proceeding with our own legal action. The outcome of that case will provide important legal guidance — and potentially binding precedent — that could strengthen our challenge.

Proceeding in parallel now would require significant member resources without the benefit of that guidance. This is a strategic decision, not an abandonment of the fight.

A membership webinar and ballot vote will still be required before WA-SSA formally engages legal counsel. We will schedule that process when the timing is right. Watch for further communication.

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What We Need From You

Here’s how you can help while we monitor developments:

1. Keep your WA-SSA membership current — this ensures you receive all critical updates and preserves your right to vote on legal action when the time comes
2. Watch for upcoming communications about the millionaires tax litigation and WA-SSA’s legal strategy as it develops
3. Comply with the tax requirements while the challenge proceeds — failure to file and pay could result in penalties and interest

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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. Therefore, all members must pay the tax as required while the legal challenge proceeds.

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Official DOR Resources

The Washington Department of Revenue has published comprehensive guidance on the new B&O tax requirements:

• Industry Guide for Self-Service Storage Businesses (updated January 2026): dor.wa.gov/education/industry-guides/self-service-storage-businesses
• Special Notice (issued January 27, 2026): dor.wa.gov/forms-publications/publications-subject/special-notices/self-storage-businesses-now-subject-bo-tax
• DOR Phone: 360-705-6705
• Full Text of ESSB 5794: lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/Session Laws/Senate/5794-S.SL.pdf

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Next Steps

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

• Provide detailed information about the legal strategy
• Answer your questions about compliance and filing
• 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.

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

Sincerely,

Board of Directors, Washington Self Storage Association

Find the Recordings to the 2025 Webinars in the Members Only Tab 

WA-SSA Membership

Your Local Association Is More Valuable Than You Think

Joining WA-SSA is one of the best ways to stay informed, connected, and ahead of the curve. Our association offers valuable resources, legislative updates, educational events, and networking opportunities with fellow operators and industry professionals. Whether you’re new to the business or a seasoned pro, being part of your state’s association helps you stay connected, learn best practices, and make smarter decisions for your facility’s growth.

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Self Storage Association's Legal Resource Center Is Now Open

The Self Storage Association has launched the Legal Resource Center, a growing library of information made available to SSA members on subjects that affect their business every day.

Visitors to the Resource Center will find up to 20 topics, including: summaries and full text of state lien laws and tenant insurance laws; 50-state surveys on SSA’s lien law priorities; employment law; ADA compliance resources; improvements to International Building Code; legal webinars and manuals; answers to your frequently asked questions; and more. When clicking on the individual categories, members will find breakdowns when appropriate of each state to help them better understand the respective laws by which they are governed.

Note: The contents of the Legal Resource Center are provided for informational purposes only. They are not and should not be construed as legal advice. For more information, email Joe Doherty, SSA's chief legal and legislative officer.

Thank you for standing with us in this fight.

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