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Washington’s exemption for green vehicles under fire

  • Oct 18, 2016 | Gail Cole

 Washington voters to decide the fate of a sales and use tax exemption for green vehicles.

To encourage cleaner, greener choices, many states provide sales and use tax exemptions and other tax incentives for certain alternative fuel vehicles. Washington State has been at the forefront of this movement; it was one of the first states to offer a sales tax exemption for electric vehicles to help offset the larger sticker price these cars often have.

When it came time to extend the exemption for electric vehicles in 2015, however, the legislature limited it. It created a cap: new electric vehicles costing less than $35,000 were eligible for the exemption, but those costing more were not. The cap was established so that the exemption would not benefit people wealthy enough to purchase pricey Teslas and electric BMWs.

Then the legislature again changed its tax policy on alternative fuel and plug-in hybrid vehicles when it enacted HB 2778. Among other changes, as of July 1, 2016, the exemption applies only to the first $32,000 of the cost of eligible vehicles with a selling price of $42,500 (for the lowest base model).

Now Washington voters are invited to weigh in on this matter. On November 8, they will vote on The Washington Modifying Tax Exemption Criteria for Alternative Fuel Vehicles. As explained by BallotPedia:

  • A “yes” vote supports House Bill 2778, which limits the sales tax exemption available for certain alternative fuel vehicles, thereby increasing the tax revenue received by the state.
  • A “no” vote opposes House Bill 2778, thereby advising against this limitation of the tax exemption offered for certain alternative fuel vehicles.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.