UPDATED: February 2, 2026

IMPORTANT NOTICE TO MEMBERS

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. 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.

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 - $1,000,000	1.5%	Service and Other Activities (Less Than $1,000,000 in the prior year)
$1,000,000 or more	1.75%	Service and Other Activities ($1,000,000 or greater in prior year)

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

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

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 a membership webinar and ballot vote (required by our bylaws to engage legal counsel)
4.     Comply with the tax requirements while the challenge proceeds – failure to file and pay could result in penalties and interest

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.

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: Available in the documents provided with this notice

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,

WA-SSA Board of Directors

Washington Self Storage Association