drinking bottled water, sales tax

There’s a new tax on bottled water in Washington.

These are thirsty times in Washington. Seattle and many other parts of the state have not had measurable precipitation since June 17. That’s record-breaking. The region hasn’t experienced this many consecutive days of dryness since 1951. Furthermore, it’s unusually hot.

Hydration is essential during dry, hot days. According to the World Health Organization, “During hot weather and heat-waves, people must drink even if they do not feel thirsty.” The more active a person, the more fluids are necessary — and with no rain, Washingtonians are out and about and active (despite the current poor air quality caused by smoke from distant wildfires).

So, it’s perhaps untimely that Washington’s sales and use tax exemption for bottled water was eliminated on August 1, 2017.

Taxable bottled water

Tax now applies to bottled water sold “in a safety-sealed container or package” and for human consumption — though consumers are unlikely to avoid the tax when purchasing water for thirsty dogs. As defined in House Bill 2163, bottled water is “calorie free and does not contain sweeteners or other additives” with the exception of the following:

  • Antimicrobial agents
  • Carbonation
  • Flavors, extracts, or essences derived from a spice or fruit
  • Fluoride
  • Preservatives
  • Vitamins, minerals, and electrolytes

Water delivered directly to buyers in reusable jugs not sold with the water is also subject to the tax.

Exempt bottled water

Bottled water purchased under the Supplemental Nutrition Assistance Program (SNAP), once known as the food stamp program, is exempt.

People who have no source of potable water are also eligible for an exemption from the tax, as are those who purchase it pursuant to a prescription. For these sales, sellers may accept either a Buyer’s Retail Sales Tax Exemption Certificate or the Streamlined Sales Tax (SST) Exemption Certificate when the water is purchased through a water delivery service. However, when eligible buyers purchase bottled water at a store, they must pay the tax and then seek a refund from the Washington Department of Revenue.

Buyer refunds are available once a qualifying taxpayer has paid at least $25 in sales tax for bottled water. They must provide copies of receipts showing the sales tax paid and request the refund within four years of the end of the year in which the tax was paid. Additional information.

Fortunately for hot, thirsty Washingtonians, there are a growing number of self-service water dispensers in the state (the kind made to fill bottles and cups, not water fountains). In the event there’s a charge for that water, it isn’t subject to the tax.

Bottled water isn’t the only beverage subject to tax in Washington. Tax also applies to soft drinks, prepared beverages, and more. For more details, see the department’s special notice, How to tax bottled water, soft drinks and other beverages.

Like other changes in sales tax policies, Washington’s new tax on bottled water can complicate sales and use tax compliance for anyone selling affected goods. Tax automation software helps make sales tax more manageable. Learn more.