Legislature Modifies Electric Vehicle Sales Tax Exemption

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.