When you purchase, lease or convert an Electric Vehicle in Washington State
- NO SALES TAX – In 2016 House Bill 2778-S was signed into law. Effective July 1, 2016, buyers or lessees of new electrically powered vehicles pay NO SALES TAX in Washington State on the first $32,000 of the selling price or total lease payments made for vehicles that meet these requirements: a) the base model Manufacturer’s Suggested Retail Price (MSRP) less than $42,500 as determined by the Department of Licensing; b) the vehicle is all-electric; c) vehicle is a plug in hybrid electric vehicle that has an internal combustion engine providing range extension and that has a battery only range of 30 miles or more . The new law requires the Department of Licensing to maintain a list of qualifying models of vehicle for the exemption based on its MSRP. The law expires two months following the determination that 7,500 qualified vehicles have been titled, with an ultimate expiration of June 30, 2019 regardless of the number of titled vehicles. The Department of Revenue must provide notice on its website of the expiration of the exemption and report to the transportation committees of the legislature on a semi-annual basis the number of eligible vehicles that have been titled. Leased vehicles must continue to receive the tax exemption through the life of the lease if signed before the expiration of the exemption. At 9.5% in Seattle, that could save you thousands of dollars.
- TAX CREDIT FOR EV PURCHASE – The federal government will give you a credit on your income taxes of up to $7,500 for purchasing a new electric vehicle. You must owe at least $7,500 in taxes to get the full tax credit. You receive this refund when you file your taxes for the year you purchase your vehicle. If you lease an electric vehicle, make sure the seller/dealer passes the federal tax credit on to you. You may need to fill out one or more of these forms:
- Form 8911 – Alternative Fuel Vehicle Refueling Property Credit – get a one-time credit of 30 percent of the cost of installing electric vehicle charging equipment. Anyone who purchased a home charging station and wants an refund for the sales tax they paid, or anyone who is considering purchasing a home charging station and wants to claim the Washington state exemption must submit a Buyers Retail Sales Tax Exemption Certificate.
- Form 6251 – Alternative Minimum Tax – Individuals. Required for anyone filing Form 8911, even if you do not owe or pay the alternative minimum tax.
- Form 8834 – Qualified Plug-in Electric and Electric Vehicle Credit – get one or more credits for the purchase of a two- or three-wheeled electric vehicle or a low-speed four-wheeled vehicle acquired before 2012.
- Form 8936 – Qualified Plug-in Electric Drive Motor Vehicle Credit – get one or more credits of up to $7,500 on the purchase of a new plug-in electric vehicle
- WASHINGTON BUSINESS TAX CREDIT – Washington businesses are eligible to receive tax credits for purchasing new alternative fuel commercial vehicles. Qualified commercial vehicles must be powered primarily by natural gas, propane, hydrogen, dimethyl ether, or electricity. Tax credit amounts vary based on gross vehicle weight rating (GVWR) and are up to 50% of the incremental cost, with maximum credit values as follows:
GVWR Maximum Credit Amount Per Vehicle Up to 14,000 pounds (lbs) $5,000 14,001 to 26,500 lbs $10,000 Over 26,500 lbs $20,000
This exemption also applies to qualified used vehicles modified with a U.S. Environmental Protection Agency-certified aftermarket conversion, as long as the vehicle is being sold for the first time after modification. The converted vehicle must be less than two years old and have an odometer reading of fewer than 30,000 miles. Modified vehicles are eligible for credits equal to 30% of the commercial vehicle conversion cost, up to $25,000.
Each entity may claim up to $250,000 or credits for 25 vehicles per year. Credits may be earned between January 1, 2016, and January 1, 2021. All credits earned must be used in that calendar year or the subsequent year. Tax credits are available on a first-in-time basis and are subject to annual limits of $2 million per weight class.
- ELECTRICITY AVAILABLE – Make sure you have a regular household 110-volt outlet available to charge your new vehicle at home. You can use any electrical outlet in a garage or on the exterior of a house. For faster charging, you can install a 220-volt charging station at home, and if you do, the federal government will give you a 30% federal tax credit on your purchase (Form 8911).
- CHARGE ANYWHERE – All production electric vehicles come with a 110-volt adapter for charging at any household electrical outlet. You can plug in wherever you are visiting and top off the battery. Charge your car while you are working, shopping, dining or enjoying entertainment.
- CONVERSIONS – if you buy a vehicle that has been converted from gasoline to all-electric power, it qualifies for the federal tax credit the first time it is sold (Form 8911 above).
- USED ELECTRIC VEHICLES – Any purchase of an electric vehicle after initial ownership does not qualify for the federal tax credit or Washington State sales tax exemption.
- ROAD USAGE CHARGE – In Washington State, electric vehicles pay an annual $100 road usage charge, in lieu of paying gas taxes, to fund road maintenance and construction. Electric motorcycles also pay this $100 charge but the Seattle Electric Vehicle Association is trying to get this reduced.
- BATTERIES – The lithium batteries used to power today’s electric vehicles are extremely stable and long-lasting. Most batteries will maintain a viable charge for 8-10 years or more.
- RANGE – Battery pack size determines your maximum range. The larger the kWhr capacity of your battery pack, the further you can drive before having to recharge, but also the more your car will cost and the longer it will take to completely recharge your vehicle. Generally, 1 kWh equates to about 3-4 miles of range for normal driving. Larger battery packs also require longer to charge for the same type of charger.
- INSURANCE – Insuring an electric vehicle currently is similar to insuring a gasoline vehicle. Most insurance companies typically do not place any extra premium on insuring EVs. In the future, as EVs are proven safer than most gasoline vehicles, insurance rates may actually go down!
- FUEL COSTS – How will charging your electric vehicle at home affect your electric bill? That depends on how much your utility company charges per kilowatt-hour of energy. In the Seattle area, the average cost per kilowatt is about 8 cents. Most electric vehicles can travel 3-4 miles per kilowatt-hour of electricity, which equates to 2-3 cents per mile. If you drive 1,000 miles per month, your cost for electricity will be about $20-$30.