The person who pays depends on what is being taxed
In Washington State, excise tax is paid by the seller at the point of sale, but the cost is usually passed to the buyer through a higher price. The state does not care who ultimately bears the cost — the law requires the seller to remit the tax to the Department of Revenue. What you pay at checkout includes the excise tax built into the price.
The seller is legally responsible for collecting the tax from customers and sending it to the state. This applies whether you buy from a large retailer, a small business, or a licensed producer. The seller must have a reseller permit or producer license to legally collect and report excise tax.
For some products — cannabis, alcohol, and fuel — the tax is collected at multiple points in the supply chain. A producer pays excise tax when they make or import the product, then a retailer collects it again when they sell to you. You see only the final retail excise tax on your receipt, but the total tax burden has accumulated through the chain.
Key Takeaways
- The seller is legally required to collect excise tax and send it to Washington's Department of Revenue, though the cost is typically passed to buyers through higher prices.
- For cannabis and alcohol, excise tax is collected multiple times — by producers, wholesalers, and retailers — before the product reaches you.
- You cannot avoid paying excise tax by buying from out of state; Washington taxes purchases made by residents regardless of where the seller is located.
- Businesses that fail to collect and remit excise tax face penalties, interest, and potential license suspension or revocation.
- The excise tax rate varies by product: cannabis has a 37% tax, spirits have a per-gallon rate, and fuel has a per-gallon rate that changes with market conditions.
How excise tax moves through the supply chain
Cannabis and alcohol are taxed at every stage from production to retail. A cannabis producer pays excise tax when they harvest and package the product. A wholesaler or distributor pays excise tax again when they buy from the producer. Finally, a retailer pays excise tax when they purchase from the wholesaler, and then collects it from you when you buy at the counter.
This layering means the final price you pay includes tax paid by multiple businesses upstream. A $20 cannabis product might have $7.40 in excise tax built into that price, but that $7.40 represents taxes paid by the producer, the wholesaler, and the retailer combined. You do not pay separate excise tax on top of that — you pay one total price that includes all the accumulated tax.
Fuel excise tax works differently. The state taxes fuel at the refinery or import point, and that tax is passed through distributors to gas stations. When you pump gas, you pay the excise tax once, collected by the gas station and remitted to the state.
What happens if a seller does not collect excise tax
A business that fails to collect excise tax is still liable to the state for the full amount, even if they did not charge customers. The Department of Revenue can assess the tax plus interest and penalties. A business that repeatedly fails to remit excise tax can lose its license to operate.
If you discover a seller is not charging excise tax, you can report it to the Department of Revenue. The state investigates and pursues collection. As a buyer, you are not responsible for the seller's failure to remit — the liability falls entirely on the business.
Excise tax on out-of-state purchases
If you buy a taxable product from an out-of-state seller and have it shipped to Washington, you owe Washington excise tax on that purchase. The out-of-state seller may not collect it, which means you are responsible for reporting and paying it yourself through the state's use tax system.
In practice, most people do not report use tax on small personal purchases, and the state does not pursue individual consumers for minor amounts. However, if you operate a business and buy taxable products from out of state, you must track and report those purchases. Failure to do so can result in an audit and assessment of back taxes plus penalties.
Excise tax on resales and transfers
If you sell a used item that was already taxed when first sold, excise tax does not apply to the resale. Excise tax is a one-time tax on the original sale, not on every subsequent transaction. A used car, used furniture, or used appliance sold between individuals is not subject to excise tax.
The exception is cannabis and alcohol. These products cannot be legally resold by individuals — only licensed retailers can sell them. Any transfer outside the licensed system is illegal, regardless of tax status.
Businesses and excise tax responsibility
If you own a business that sells taxable products, you must register with the Department of Revenue and obtain a reseller permit or producer license. You are responsible for collecting excise tax from customers, tracking it, and remitting it to the state on a regular schedule — usually monthly or quarterly depending on your sales volume.
You must keep records of all taxable sales and excise tax collected. The Department of Revenue conducts audits and can assess additional tax, penalties, and interest if records are incomplete or inaccurate. If your business sells cannabis or alcohol, you face additional licensing requirements and compliance rules beyond excise tax collection.
Frequently Asked Questions
Do I pay excise tax if I buy something online from a Washington seller?
Yes. If the seller is located in Washington or has a business presence in Washington, they must collect excise tax on taxable products. This applies to online purchases the same way it applies to in-store purchases. The tax appears in your total at checkout.
Can I get a refund of excise tax I already paid?
No. Excise tax is not refundable once paid. If you return a product and receive a refund, the excise tax portion is also refunded, but you cannot claim a refund of excise tax on products you keep. Some businesses offer store credit instead of cash refunds to avoid processing excise tax refunds.
Who pays excise tax on gifts?
The person who buys the gift pays excise tax at the point of purchase. If someone gives you a product that was already taxed when purchased, no additional excise tax is owed. The tax was paid once, when the original buyer bought it from a seller.
Does excise tax apply to items bought at a thrift store or secondhand?
No. Secondhand sales are not subject to excise tax because the product was already taxed when first sold. Thrift stores and individual sellers do not collect excise tax on used items. The only exception is cannabis and alcohol, which cannot be legally resold outside the licensed retail system.
What if a seller charges me excise tax twice by mistake?
Contact the seller and ask for a refund of the duplicate tax. Keep your receipt as proof. If the seller refuses, you can file a complaint with the Department of Revenue, which can investigate and force a refund. Document the error clearly before contacting the state.